Partners’ Litigation History and Collaborative Engagement

This paper examines the role of partnering firms’ litigation experience on their alliance scope decisions. Prior alliance research has not devoted systematic attention to the interplay of competition and cooperation and its implications for partnering firms’ alliance design choices. In this study, we attempt to fill this theoretical gap by unpacking partnering firms’ patent litigation activities as a novel dimension of experience that has not been considered in previous alliance research. We suggest that partnering firms’ litigation experience will be negatively associated with their choice of a broad scope alliance, owing to the knowledge spillover risks that attend such collaborations. We also suggest that the competitive concerns induced by litigation experience will diminish insofar as partnering firms share dyadic experiences, such as common collaborative and technological experiences. Empirical analyses using a sample of R&D agreements in the biopharmaceutical industry furnish evidence for our theory.