One set of underexplored issues in the entrepreneurship literature is at what point entrepreneurial firms grow and become the acquisition targets of larger firms in the same industry versus situations where such entrepreneurial firms develop contractual relations with such larger firms, and what role law has in this process. The basic problem for an entrepreneurial firm is that such a firm lacks capital, distribution networks, an effective sales force, or knowledge of manufacturing to reap the gains of its innovations. In a world short of acquisition, vertical contractual relations provide an entrepreneur the ability to create new opportunities that the entrepreneurial firm on its own may not be able to capture. Consequently, entrepreneurial firms look to larger and more established firms for “strategic alliances” to fill these gaps.1