In Alliances, Information Firewalls Can Backfire
University of Texas at AustinPeer-Reviewed Publication
From the Wright brothers’ first flight to the speedy development of COVID-19 vaccines, collaboration has been key to innovation. Paradoxically, even competitors can benefit from collaboration — when they hold different pieces of the same puzzle.
But these companies must strike a delicate balance, according to new research from the McCombs School of Business at The University of Texas at Austin. Ramkumar Ranganathan, associate professor of management, offers some principles for managing the balance between competition and collaboration — particularly when it involves sharing information. "Firms need to pay attention to these longer-term issues,” he says. “It’s very easy to look at the short term and think, ‘This alliance partner is giving me X amount of money to co-develop this technology. So, what if I don’t let this person talk to this other person for a few months? That shouldn’t matter, right?’ But it does matter.”
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