Opening Up but Staying Local: Insights from Partnership Formations between Established and Startup Firms

Thomas Klueter, IESE Business School, and Lori Rosenkopf, Management, The Wharton School

Abstract: In this paper, we develop and test a theoretical framework that considers how established firms forming partnerships with startups may be subject to spatial and temporal myopia and how these tendencies are moderated by the established firms’ histories of experiencing essential failures and successes in solving R&D problems. We argue that prior failures and successes differ in the extent to which they challenge established firm’s conventional ways of solving problems and in the extent to which they allow firms to balance long term and short term organizational demands, so that prior failures and successes very differently shape myopic behavior in partnership formations. The study argues for the value of integrating perspectives on myopia and local search with studies examining events of failures and successes to organizational decisions in technological search.

Read the full paper here.