Abstract

To access critical resources and learn, entrepreneurial firms increasingly seek R&D alliances with larger partners. The unbalanced bargaining power often makes it difficult for the entrepreneurial firm to assert its rights. When the large firm gains access to the ventures’ technology, even the venture’s long-term survival is compromised (Alvarez and Barney 2001). But how can entrepreneurial firms effectively reduce the considerable risks associated with such partnerships? Our study illuminates (1) how powerful several safeguards are in mitigating two salient risks, strategic manipulation and knowledge leakages, and (2) how these risks affect partnership performance. Specifically, we draw on logic from transaction cost economics and agency theory to argue that the risks of strategic manipulation and knowledge leakages are substantially decreased by contractual safeguards (H1a and 1b), formalization (H 2a and 2b), and goal alignment (H3a and 3b). Moreover, we hypothesize that both risks reduce the perceived partnership performance, in terms of relationship value and satisfaction (H4 and 5).

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