Distance Costs and the Degree of Inter-Partner Involvement in International Relational-Based Technology Alliances

Abstract

This research studies the effect of specific institutional and distance cost issues, in particular the protection of intellectual property rights and geographic distance, on the preference of companies for different governance modalities in terms of the degree of their involvement in international relational-based technology alliances. In the sample, all technology alliances contain exclusive technology agreements. We find that international differences in intellectual property rights protection regimes between the home countries of partnering companies are a significant factor: the larger the difference, the more likely that partnering companies prefer to form an equity relational-based technology alliance with substantial inter-partner involvement. The degree of geographic distance between partners also affects the preference of companies for a particular form of relational-based agreement. Companies prefer to engage in deeper inter-partner involvement, albeit of a non-equity nature, in case of large geographic distance between the home countries of the partnering companies.