The Compensatory Relationship between Technological Relatedness, Social Interaction, and Knowledge Flow between Firms

Knowledge flow between two firms has been found to be enhanced by both technological relatedness and social interaction. We build on work in education psychology and consider how cognitive and social aspects of learning may be compensatory. Using a sample of 61 alliances involving Eli Lilly and its partners, we find the importance of social interaction between Lilly and its partner to partner learning decreased as their technological relatedness increased. Likewise, the importance of technological relatedness to partner learning decreased as social interaction increased. This study provides nuance on the criticality of technological relatedness and social interaction for learning. Copyright (C) 2012 Strategic Management Society.