Market Networks and the Value in Knowledge Exchanges: Evidence from Biotechnology Strategic Alliances
Researchers have argued that market networks are an integral part of the firm's value output, but the extent to which the structural characteristics of firms and their partners in market networks mediate the link between network embeddedness and value generation remains a largely unexplored area of research. This paper argues that diffusion mechanisms within market networks enable them to selectively impute and know the value of inter-organisational knowledge exchanges. The purpose of this paper is to empirically determine the extent of this phenomenon in the context of the strategic alliance market network in the biotechnology industry. I find evidence that the position of firms' partners in the network of strategic alliances is a significant predictor of wealth gains from the announcement of knowledge exchange deals. Also, for explicit knowledge exchanges, the market reacts more to announcements by firms that are in the periphery of the strategic alliance network.