Innovation beyond Firm Boundaries: Strategic Alliances and Corporate Innovation

We analyze the role of common equity blockholders in fostering the formation of strategic alliances, establish a positive causal effect of strategic alliances on corporate innovation, and analyze the channels through which strategic alliances foster innovation. Our findings may be summarized as follows. First, there is a positive relation between the fraction of a firm's industry peers with which it shares common blockholders and the number of strategic alliances that it enters into. Second, there is a positive relation between the RD and second, by using an instrumental variables approach. Fifth, we establish that an important channel through which strategic alliances foster greater innovation is through the more efficient redeployment of human capital (inventors) across alliance partners.