This paper examines the relationship between cognitive distance and innovation performance in firms engaged in technology-based alliances. The key findings confirm an inverted U-shaped effect of cognitive distance on innovation performance, with the positive effect being more pronounced in radical, exploratory alliances compared to more exploitative alliances. The study also explores the impact of cumulative R&D (RD) on absorptive capacity and novelty value, finding that while RD can increase absorptive capacity, it also reduces the effect of cognitive distance on novelty value. The authors propose that larger cognitive distances create both challenges and opportunities, and that the optimal cognitive distance for innovation performance is at a point where the benefits of novelty and the costs of absorption balance out. The results support the hypothesis that exploratory alliances benefit more from cognitive distance than exploitative alliances, and that technological capital can both enhance and temper the effects of cognitive distance on innovation performance.This paper examines the relationship between cognitive distance and innovation performance in firms engaged in technology-based alliances. The key findings confirm an inverted U-shaped effect of cognitive distance on innovation performance, with the positive effect being more pronounced in radical, exploratory alliances compared to more exploitative alliances. The study also explores the impact of cumulative R&D (RD) on absorptive capacity and novelty value, finding that while RD can increase absorptive capacity, it also reduces the effect of cognitive distance on novelty value. The authors propose that larger cognitive distances create both challenges and opportunities, and that the optimal cognitive distance for innovation performance is at a point where the benefits of novelty and the costs of absorption balance out. The results support the hypothesis that exploratory alliances benefit more from cognitive distance than exploitative alliances, and that technological capital can both enhance and temper the effects of cognitive distance on innovation performance.