To have or to be? The interplay between knowledge structure and market identity in knowledge-based alliance formation

We explore how a firm's knowledge structure characteristics and market identity—as reflected in its position in the industry value chain and market status—influence knowledge-based alliance (KBA) formation. We propose that a firm's propensity to form KBAs is affected by the congruence (or misalignment) between its knowledge structure characteristics (i.e., knowledge depth and scope) and the role it plays in the industry, as demanded by its position in the value chain. We further argue that while a firm's market status can amplify the positive effect of the congruence, thereby enhancing a firm's proclivity to form KBAs, being prominent can also hurt a firm when it faces a misalignment between its knowledge structure characteristics and externally induced expectations related to its value chain position. We validate our arguments using panel data on 1051 firm-year observations for 197 firms patenting in the global fuel cell industry for the period 1999–2009. By developing a richer understanding of the relationship between a firm's knowledge-based resources and KBA formation, we answer the call for a better understanding of how and when firms can leverage their internal knowledge configurations to improve their proclivity to form alliances.