Innovators' gains from incumbents' exit options in <scp>R&amp;D</scp> alliances: A reconciliation of real options and transaction costs logics

Research summary The transaction costs logic suggests that innovators cannot gain value from incumbents' unconditional termination rights in their RD yet, innovators' gains them depend on the likelihood of opportunistic uses by incumbents at exercises. The tests biopharmaceutical R&D alliances setting support our hypotheses. Managerial summary Incumbents form with to explore new technologies and join these commercialize technologies. Yet, typically possess alternative commercialization options activated once are terminated. In such intensive alliances, granting help alliances. This is because operate as exit they enable easy timely terminations This, turn, allows not persist troubled begin exploring options. However, opportunism option exercises matters. likely be higher partner‐specific alliance experience increases joint history mitigates opportunism.