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Market Networks and the Value in Knowledge Exchanges: Evidence from Biotechnology Strategic Alliances

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  • Anastasios Karamanos
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    Abstract

    Researchers have argued that market networks are an integral part of the firm's value output, but the extent to which the structural characteristics of firms and their partners in market networks mediate the link between network embeddedness and value generation remains a largely unexplored area of research. This paper argues that diffusion mechanisms within market networks enable them to selectively impute and know the value of inter-organisational knowledge exchanges. The purpose of this paper is to empirically determine the extent of this phenomenon in the context of the strategic alliance market network in the biotechnology industry. I find evidence that the position of firms' partners in the network of strategic alliances is a significant predictor of wealth gains from the announcement of knowledge exchange deals. Also, for explicit knowledge exchanges, the market reacts more to announcements by firms that are in the periphery of the strategic alliance network.

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    File URL: http://www.cbr.cam.ac.uk/pdf/WP240.pdf
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    Bibliographic Info

    Paper provided by ESRC Centre for Business Research in its series ESRC Centre for Business Research - Working Papers with number wp240.

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    Date of creation: Sep 2002
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    Handle: RePEc:cbr:cbrwps:wp240

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    Web page: http://www.cbr.cam.ac.uk/

    Related research

    Keywords: alliances; networks; value; centrality;

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    1. Inkpen, Andrew C. & Birkenshaw, Julian, 1994. "International joint ventures and performance: an interorganizational perspective," International Business Review, Elsevier, vol. 3(3), pages 201-217, September.
    2. Franklin Allen, 1993. "Strategic Management and Financial Markets," Center for Financial Institutions Working Papers 94-04, Wharton School Center for Financial Institutions, University of Pennsylvania.
    3. Fama, Eugene F, 1991. " Efficient Capital Markets: II," Journal of Finance, American Finance Association, vol. 46(5), pages 1575-617, December.
    4. Zucker, Lynne G & Darby, Michael R & Brewer, Marilynn B, 1998. "Intellectual Human Capital and the Birth of U.S. Biotechnology Enterprises," American Economic Review, American Economic Association, vol. 88(1), pages 290-306, March.
    5. Szulanski, Gabriel, 2000. "The Process of Knowledge Transfer: A Diachronic Analysis of Stickiness," Organizational Behavior and Human Decision Processes, Elsevier, vol. 82(1), pages 9-27, May.
    6. Park, Seung Ho & Kim, Dongcheol, 1997. "Market valuation of joint ventures: Joint venture characteristics and wealth gains," Journal of Business Venturing, Elsevier, vol. 12(2), pages 83-108, March.
    7. Anastasios Karamanos, 2002. "Network Embeddedness and the Value of Complex Resources," ESRC Centre for Business Research - Working Papers wp227, ESRC Centre for Business Research.
    8. Cowan, Robin & Foray, Dominique, 1997. "The Economics of Codification and the Diffusion of Knowledge," Industrial and Corporate Change, Oxford University Press, vol. 6(3), pages 595-622, September.
    9. Pisano, Gary P, 1989. "Using Equity Participation to Support Exchange: Evidence from the Biotechnology Industry," Journal of Law, Economics and Organization, Oxford University Press, vol. 5(1), pages 109-26, Spring.
    10. Su, Han Chan & Kensinger, John W. & Keown, Arthur J. & Martin, John D., 1997. "Do strategic alliances create value?," Journal of Financial Economics, Elsevier, vol. 46(2), pages 199-221, November.
    11. Julia Porter Liebeskind & Amalya Lumerman Oliver & Lynne G. Zucker & Marilynn B. Brewer, 1995. "Social Networks, Learning, and Flexibility: Sourcing Scientific Knowledge in New Biotechnology Firms," NBER Working Papers 5320, National Bureau of Economic Research, Inc.
    12. Noreen, Eric, 1988. "The economics of ethics: A new perspective on agency theory," Accounting, Organizations and Society, Elsevier, vol. 13(4), pages 359-369, June.
    13. Bruce H. Clark & David B. Montgomery, 1998. "Deterrence, Reputations, and Competitive Cognition," Management Science, INFORMS, vol. 44(1), pages 62-82, January.
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