Complementarities of internal R&D and alliances with different partner types

In many innovation projects firms search for external knowledge sources since they cannot rely solely on their own R&D efforts. This study of technology alliances argues that collaborations with external partners affect the innovation output of firms not only directly but also indirectly by influencing the efficiency of internal R&D. Using a sample of firms in electrical and electronic equipment, empirical evidence identifies heterogeneous interaction between alliances and internal R&D efforts dependent on the type of partner. While collaboration with partners in related industries is more beneficial to a firm's internal R&D for producing innovations in comparison to alliances with partners in the same industry, collaboration with partners in unrelated fields decreases the efficiency of internal R&D efforts.