R&D Alliance and Product Market Competition among Alliance Partners

We examined the impact of R&D strategic alliances on the product market competition among alliance partners at a later date. Based on arguments of the resource-based view and knowledge transfer, we argue that R&D alliances facilitate more and smoother knowledge transfer among partners than other types of strategic alliances, which may help a firm launch a new product that is similar to those of (former) R&D alliance partners. Non-R&D alliances are more about a firm’s attempt to access knowledge owned or controlled by its alliance partners, whereas R&D alliances are more about integrating a piece of alliance partners’ knowledge with its existing stock of knowledge. Through such integration, this firm absorbs a piece of the alliance partners’ knowledge and may end up launching a similar product. The results show that biotechnology and pharmaceutical firms are more likely to introduce new drugs into therapeutic classes where their (former) R&D alliance partners have already had presence. The implication is that knowledge-based cooperation may end up increasing competition in the product market.