Balancing innovation value creation and appropriability in R&D alliances

This paper investigates how searching across different knowledge domains affects innovation value creation and appropriability. Focusing on the alliance level of analysis, we advance that, in R&D strategic alliances, search span has a curvilinear (inverted U-shape) relationship with value creation and a linear positive relationship with value appropriability. Our analysis on a sample of 1,515 interfirm dyadic R&D alliances confirms these hypotheses. We find that, after a threshold level of search span, joint value creation decreases. Conversely, the partners ability to jointly appropriate the value of their jointly developed inventions grows exponentially as the alliance search span increases. Thus, we observe that value creation and appropriability may have conflicting exigencies. We conclude that firms involved in innovation-oriented strategic alliances should develop the interorganizational relational capability to jointly manage the processes of innovation, and in particular the span of their search, in a way that balances the needs of value creation and appropriability.