The Impact of Network Centrality on Related and Unrelated Knowledge Transfers in Alliances

Abstract

The formation of R&D alliances is a viable option for firms to supplement their in-house R&D and share the costs and risks inherent in innovations. Strategic R&D alliances promote knowledge transfers in alliance-related areas (intended knowledge transfers) that serve the common scope of the alliance, while also leading to spillovers of knowledge in alliance-unrelated areas, outside the scope of the alliance (unintended knowledge transfers). This paper looks at the social network of the partnering firms, in particular, network centrality which reveals the firm’s position and status in its network. By partnering with other firms, firms can extend their access to resources and information, so the number of partners they have (the centrality of the firm) becomes important. We argue that network centrality promotes cooperation and thus increases the intended knowledge transfer. Furthermore, network centrality also predicts opportunistic behavior in alliances, reducing the transfer of unintended knowledge. The results support the predictions made.