As firms face intense competitions, innovation has become more critical. To increase access to diverse knowledge and technologies beyond their resources, knowledge, and technologies, firms form R&D alliances. Cross-border alliances allow the firm to b...
As firms face intense competitions, innovation has become more critical. To increase access to diverse knowledge and technologies beyond their resources, knowledge, and technologies, firms form R&D alliances. Cross-border alliances allow the firm to broaden its pool of diverse knowledge and technologies because partners in different countries have different sets of knowledge and technologies from the focal firm. However, cross-border alliances come with relational risks. For example, the relationships with foreign partners are challenging due to national differences and the lack of social mechanisms in the relationship with foreign partners. Taking a network perspective, the current study examines how the network centrality gap between the focal and partner firms affects innovation performance of the focal firm. We argue that the centrality gap mitigates the relational risks because an asymmetric relationship creates relational stability as the firms of high centrality dominate the relationship at an early stage of the relationship and reduce conflicts. The centrality gap also increases knowledge complementarity because the amount and characteristics of knowledge that central and peripheral firms can access differ. I also examine how the relationship is moderated by who is more central between the focal and partner firms. I suggest that the relationship between the centrality gap between focal and partner firms and the focal firm’s innovation performance is strengthened when the focal firm is more central than the partner firm. The empirical findings support the hypotheses. The current study contributes to the literature on alliance partner choice and network centrality by providing empirical evidence that asymmetric relationships in alliances increase innovation performance.