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How agglomeration affects alliance governance and innovation performance: The role of cluster size

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  • Wonsang Ryu
  • Thomas H. Brush
  • Joonhyung Bae

Abstract

We investigate how the size of the geographic cluster in which a firm is located influences its governance choice between equity and non‐equity alliances and subsequent innovation performance. We argue that firms located in larger clusters tend to form non‐equity alliances rather than equity alliances because the communication and control benefits of cluster membership, which increase with cluster size, reduce in‐cluster firms' need to form equity alliances. We also claim that the effect of this preferential use of non‐equity alliances on innovation becomes stronger when firms are located in larger clusters. Our arguments are supported by a panel analysis of alliances formed by US‐listed semiconductor firms.

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  • Wonsang Ryu & Thomas H. Brush & Joonhyung Bae, 2023. "How agglomeration affects alliance governance and innovation performance: The role of cluster size," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(1), pages 297-310, January.
    • Handle: RePEc:wly:mgtdec:v:44:y:2023:i:1:p:297-310
    DOI: 10.1002/mde.3681
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