Chapter 2: Knowledge Management in International R&D Alliances: A Cultural Perspective

Drawing on transaction cost economics and the cultural distance literature, we explore how knowledge management mechanisms vary across three types of international R&D alliances differentiated by partner nationality and alliance location: Home-Home (both partners are from the same home country and the R&D alliance activity takes place in the host country), Home-Host (one partner is from the home country and the other from the host country where the alliance activity occurs), and Home-Foreign (one partner is from the home and the other from a third country, with the alliance activity taking place in the host country). We argue that cultural difference (a) between partner firms and/or (b) between partner firms and alliance location increases the difficulties of knowledge management for the alliance partners and affects partner decisions about alliance governance structure and scope. We expect that the uncertainty of tasks intended for the alliance moderates these relationships. Our analysis of 531 international R&D alliances over a 10-year period demonstrates that the Home-Foreign alliance is most likely to have an equity-based governance structure, whereas the Home-Home alliance is most likely to have a broad scope. The degree of task uncertainty weakens these relationships. We also find that governance structure and alliance scope can substitute for each other as knowledge management mechanisms.