Can Market-Based Contracts Substitute for Alliances in High Technology Markets?

Most current research on technology alliances assumes that trading partners are free to select an optimal governance structure. However, for international scientific research centers working with advanced technologies, the choices for industrial collaboration are often limited to short-term contracts. This research investigates whether in high technology settings, such short-term contracts can substitute for longer-term cooperative alliances. While the short-term transaction costs are high, the results suggest that, similar to alliances, certain market-based contracts do result in long-term learning and transferable firm-specific advantages.

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