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Equity links and information acquisition in biotechnology alliances

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  • Filson, Darren
  • Morales, Rosa

Abstract

We use a simple model of collaborative innovation to structure an empirical analysis of minority equity links in biotechnology alliances between clients and R&D firms. In the model, an equity link is an investment in information acquisition: it improves the ability of the client to learn about the R&D firm’s ability and the alliance project’s quality. The model generates several testable hypotheses about how the R&D firm’s project characteristics and previous alliances affect the use of equity links in new alliances. We test the hypotheses using a large data set of biotechnology alliances and find empirical support.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 59 (2006)
Issue (Month): 1 (January)
Pages: 1-28

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Handle: RePEc:eee:jeborg:v:59:y:2006:i:1:p:1-28

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Web page: http://www.elsevier.com/locate/jebo

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  1. Argyres, Nicholas S. & Liebeskind, Julia Porter, 2002. "Governance inseparability and the evolution of US biotechnology industry," Journal of Economic Behavior & Organization, Elsevier, vol. 47(2), pages 197-219, February.
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Cited by:
  1. Abel Lucena, 2009. "The antecedents and innovation consequences of organizational search: empirical evidence for Spain," Working Papers XREAP2009-08, Xarxa de Referència en Economia Aplicada (XREAP), revised Oct 2009.
  2. Rick Harbaugh, 2001. "Equity Stakes and Hold-up Problems," Claremont Colleges Working Papers 2001-31, Claremont Colleges.

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