Given the variety of possible collaborative arrangements, from simple licensing, to contracts with option clauses, to more interactive “relational” alliances, to equity-based alliances such as joint ventures, which alliance governance structure is appropriate? The objectives are (a) to maximize recombinant knowledge, (b) maximize synergistic commercial benefits accruing to both partners, while at the same time, each partner wishes to (c) increase their share of net benefits captured and (d) lower their transaction costs and risk. These objectives are not always congruent, and the optimum governance mode is also a function of type of technology, technological distance between the allies, and external factors such as market potential and the regulatory environment within which the alliance operates.