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The Control of Technology Alliances: An Empirical Analysis of the Biotechnology Industry
Author(s) -
Lerner Josh,
Merges Robert P.
Publication year - 1998
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/1467-6451.00066
Subject(s) - alliance , control (management) , economics , empirical evidence , value (mathematics) , industrial organization , business , microeconomics , management , political science , law , mathematics , philosophy , statistics , epistemology
We examine the determinants of control rights in biotechnology alliances through three case studies and a quantitative analysis. Aghion and Tirole [1994] argue that control rights will be assigned so as to maximize the value of the final output, as long as the R&D firm has sufficient financial resources. Consistent with this framework, the allocation of control rights to the R&D firm increases with the firm’s financial resources. The empirical evidence regarding the relationship between control rights and the stage of the project at the time the alliance is signed is more ambiguous.