Which signal to rely on? The impact of the quality of board interlocks and inventive capabilities on research and development alliance formation under uncertainty

In this study, we demonstrate that the quality of a firm's board interlocks and a firm's inventive capabilities can serve as signals of its quality as a research and development alliance partner to other firms. The extent of the signaling effects, however, varies under different types of uncertainty. Using research and development alliance, patent and board interlock data from the US biotechnology industry during the period 1990-2003, we find that the board interlock quality as well as the strength and focus of a firm's inventive capabilities have positive and significant effects on the likelihood of research and development alliance formation. Importantly, we further find that the impact of the strength of a firm's inventive capabilities is weaker, while the impact of the quality of the firm's board interlocks is stronger, under both market uncertainty and firm-specific uncertainty. The implications for studies of board interlocks, uncertainty, and research and development alliances are discussed.