Do They Know Something We Don't? Endorsements from Foreign MNCs and Domestic Network Advantages for Start-Ups

Plain language summary: This article examines the effects of alliances with foreign multinational corporations (MNCs) on a local start-up's attractiveness as a partner in its domestic research networks. We argue that such international strategic alliances enhance a start-up's subsequent alliance activity and its status in its domestic R&D network. The analysis shows that, indeed, alliances with foreign MNCs significantly enhance the start-up's attractiveness and its future alliance activity, especially when the start-up is young (up to the age of five). Furthermore, alliances with foreign MNCs from a variety of different countries of origin (e.g., U.K., Germany, and France) have stronger effects on a start-up's subsequent alliance activity, supporting the argument that even in the age of globalization, location still matters. Technical summary: This article examines the effects of endorsements from foreign multinational corporations (MNCs) on the centrality of biotech start-ups within their domestic research networks. We argue that international strategic alliances enhance a start-up's subsequent movement toward a more central position in its domestic R&D network. Analyzing U.S. biotech start-ups over time, our findings show that endorsements from foreign MNCs significantly enhance the subsequent network centrality of U.S. biotech start-ups. This endorsement effect is magnified in the early stages of the start-up's life cycle. Furthermore, endorsements by foreign MNCs from a variety of different countries of origin have stronger effects on a start-up's subsequent network centrality, supporting the contention that even in the age of globalization, location still matters.