The Impact of Alliances on Knowledge Growth Within Firms

How do alliances lead to knowledge growth and learning for parent firms? Prior research focuses on knowledge inflows from a partner when a firm enters into an alliance. In this paper, we examine factors that enable firms to make better use of their own knowledge and capabilities as a consequence of alliances. To demonstrate the latter dimension of knowledge growth, we depart from prior research that has focused on cross citations of patents between partners, and instead a study self-citation activity. We examine the effect of four factors on self-citations, each of which reflects distinct learning mechanisms and cooperative dynamics, namely knowledge inflows from the alliance partner, knowledge outflows to the alliance partner, partner characteristics, and alliance governance. Results suggest that knowledge inflows from the partner were positively associated with changes in self-citations in alliance domains, whereas knowledge outflows to the partner had a positive impact on changes in self-citations for the smaller firm in the alliance. In contrast, firm specific knowledge possessed by the partner and equity governance had a negative impact on changes in self-citations in alliance domains. This paper develops a fuller understanding of the learning effects of alliances by highlighting that apart from better utilization of the partner's capabilities, alliances also lead to enhanced utilization of the firm's own knowledge and capabilities in further innovative activity.