This study advances previous research on the competitive aspects of R&D collaborations that has been mainly interested in knowledge protection concerns in alliances between direct rivals. We join the alliance and agglomeration literatures and argue that geographic co-location between a focal firm's partner and rivals introduces potential indirect paths of knowledge leakage to rivals.Geographic co-location creates significant risks of unintentional knowledge spillovers to rivals while it also increases the likelihood of transactions between the partner firm and the rivals in which firm knowledge can be misappropriated. As a consequence of these risks associated with the co-location of partners and rivals, the focal firm is more likely to employ defense mechanisms when designing alliances. In particular, the focal firm will use equity structures to provide greater monitoring, control, and incentive alignment and will reduce the alliance's scope as well as task interdependence to address knowledge leakage concerns.

Research summary: We investigate how multimarket contact between prospective partners affects their partner selection for technology cooperation. Drawing on the multimarket competition literature, we argue that multimarket contact generates mutual forbearance from opportunism by enabling broad retaliation across the shared markets against opportunism. As a result, multimarket contact between potential partners makes them prefer each other as partners for technology cooperation. We also claim that this positive effect of multimarket contact on the formation of cooperative agreements is more pronounced when the partners have reciprocal contacts rather than nonreciprocal ones. Managerial summary: This article explains one of the reasons why rival firms can be good partners to each other for technology cooperation. Managers might conjecture that firms tend to avoid partnering with rival firms for R&D because they may be more opportunistic than those without product market overlap. However, our theory suggests a counter-intuitive argument that market overlap between partners rather deters them from engaging in opportunistic behaviors because market overlap enables them to broadly retaliate against such behaviors across the shared product markets. Consistent with this idea, our empirical results show that global top 200 biopharmaceutical companies are more likely to choose each other for

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We investigate how the size of the geographic cluster in which a firm is located influences its governance choice between equity and non-equity alliances and subsequent innovation performance. We argue that firms located in larger clusters tend to form non-equity alliances rather than equity alliances because the communication and control benefits of cluster membership, which increase with cluster size, reduce in-cluster firms' need to form equity alliances. We also claim that the effect of this preferential use of non-equity alliances on innovation becomes stronger when firms are located in larger clusters. Our arguments are supported by a panel analysis of alliances formed by US-listed semiconductor firms. | INTRODUCTIONThe geographical agglomeration of similar firms is an important economic phenomenon frequently observed across various industries and countries. Since Marshall (1920) suggested access to specialized resources (labor and inputs) and knowledge spillovers as the main benefits of geographical collocation, the agglomeration literature has sought to understand why agglomeration might occur and what benefits (i.e., agglomeration externalities) firms can enjoy from collocating. In particular, several studies have focused on how membership in a cluster 1 affects innovation performance in high-technology industries, such as the semiconductor (Almeida &