The Effect of Supplier Diversity on Buyer Firm’s Alliance Formation

Abstract

Knowledge-based view literature demonstrates that diverse knowledge can lead to alliance formation. By relying on the knowledge flow from suppliers to buyers, we explore how the diversity of knowledge obtained from suppliers affects R&D alliance formation. we argue that the differences in the level of knowledge diversity between partners and the similarity in knowledge matter. By using OECD input-output data from 2005 to 2019, we show that knowledge diversity difference has an inverted U-shaped relationship with R&D alliance likelihood. We also demonstrate the moderation effect by the similarity in supplier industries. This paper has an implication that it moves away from patent data to buyer-supplier relationships to measure the knowledge diversity of the firm and observe how it affects R&D alliance likelihood.