Rent-seeking behaviour: Knowledge transfer as informal control mechanism in high technology alliances

This study focuses on the knowledge transfer rent-seeking behaviour of MNCs and aims to analyse how MNCs safeguard the alliance by utilising knowledge transfer as an informal control mechanism. Therefore, this study underlines the notion that, as contracts are inherently incomplete, alliance relationships need to maintain mutual dependence based on control mechanisms, in addition to a contract. The alliance relationship of the focal-firm STMicroelectronics and its alliance partners Nokia and Ericsson in the semiconductor industry is examined using qualitative data collected through semi-structured face-to-face interviews. The findings highlight mutual dependence through inter-firm knowledge sharing in incomplete contracts. The study confirms the knowledge transfer rent-seeking behaviour of the partner firms when the strategic motive is to transfer knowledge with the objective of creating synergy and mutual dependence. Lastly, the findings establish knowledge transfer as a control mechanism in alliances.