Technological Competition and Strategic Alliances*

Using a novel measure of technological competition, we show that firms facing greater technological competition are more likely to form alliances. We further show that those alliances lead to more patents at both client and partner firms. Finally, we show that the number of related patents increase significantly at both client and partner firms, whereas the number of unrelated patents, R&D expenditures, and R&D efficiency increase significantly only at partner firms facing greater technological competition. Our results are robust to endogeneity concerns. We conclude that technological competition is an important impetu