Alliance governance choices: Disentangling the effects of uncertainty and alliance experience

This article analyses the interaction between alliance experience and behavioural uncertainty to improve our understanding of alliance governance. We investigate the extent to which the effect of alliance experience on governance choices is explained by a reduction in “mundane” transaction costs or by a reduction in “opportunistic” transaction costs. Based on more than 12,000 firm experiences with equity and non-equity alliances, we demonstrate a reduction in mundane transaction costs over time by firms reusing the same governance structure in successive alliances. We also find that in high behavioural uncertainty alliances, firms rely on their experience as a substitute for equity governance to reduce opportunistic transaction costs.     

Agent and Task Complexity in Multilateral Alliances: The Safeguarding Role of Equity Governance

Multilateral alliances are an inherently complex organizational form; managing these complexities is particularly difficult for alliance partners because alliances are plagued by both internal and external uncertainty. Using insights from transaction cost economics, our study identifies, articulates and tests different forms of alliance complexity and their impacts on alliance governance structure. Specifically, we investigate two forms of alliance complexity: agent and task. We decompose agent complexity into organizational and partner complexity, and decompose task complexity into geographic, transaction and technological complexity. Using a sample of 327 trilateral alliances, the most frequent form of multilateral alliances, we find that three forms of alliance complexity involving internal uncertainty (organizational, partner and technological complexity) favor equity-based governance, whereas external uncertainty in the form of geographic complexity discourages equity-based governance.     

The Impacts of Alliance Purpose and Partner Similarity on Alliance Governance

It is generally recognized that the governance structure of an alliance has an impact on its probability of success. In this study, we examine the choice between two alternative alliance governance structures: equity and non-equity. Drawing from transaction cost economics, two sets of factors, namely alliance purpose (R&D or marketing) and cultural distance between partners, are hypothesized to influence the above choice. We further hypothesize that collaborative R&D alliances, where both parties contribute technical knowledge, are more likely to lead to the formation of equity alliances than non-collaborative research agreements, where only one partner may be doing the research work. Based on a sample of 2407 alliances formed in the global biotechnology industry, we find partial support for the hypothesized relationships. Specifically, we find that collaborative R&D alliances are more likely to be equity alliances, whereas non-collaborative R&D alliances do not have any impact on the choice of the governance form. We also find that alliances formed with a marketing purpose are less likely to be equity alliances. We did not find any relationship between cultural distance and the choice of equity alliances.     

Neither complements nor substitutes: Examining the case for coalignment of contract-based and relation-based alliance governance mechanisms in coopetition contexts

Although the extant literature recognizes that the contract-based and relation-based alliance governance mechanisms (AGMs) play a significant role in the success of alliances, the nature of their interplay still remains ambiguous. In this study, we move away from the traditional debate between contract- and relation-based AGMs as substitutes versus complements. Instead, we offer the notion of “fit” or the “coalignment” as a more appropriate frame to explain the interplay between contract- and relation-based AGMs in the coopetition context. We conceptualize ‘Coalignment of Alliance Governance Mechanisms’ (CAGM) as a distinct higher-order construct and outline a methodological orientation to estimate the coalignment of the two forms of AGMs. We conduct a longitudinal study using primary data from 320 matched coopetition alliances in high-technology research-intensive sectors in India and find that the CAGM explains better the impact of governance mechanisms on value creation in coopetition alliances.     

动态环境下联盟竞合、治理机制与创新绩效的关系研究

本文从竞合视角审视联盟组合,结合动态关系观探讨有效的联盟治理机制,揭示了联盟组合中竞合关系(横向竞合、纵向竞合)、治理机制(契约治理、关系治理)和创新绩效之间的关系,并考察了动态环境特征(技术波动、竞争强度)的二次调节作用。在不同的竞合关系中,由于合作和竞争的强度不同,契约治理与关系治理机制的作用也存在差异,同时,治理机制与创新绩效之间的关系也受到两种不同环境动态性特征的影响。研究结果显示,在纵向竞合中,运用关系治理比运用契约治理能更好地提升创新绩效,技术波动正向调节契约治理、关系治理与创新绩效间的关系。在横向竞合中,运用契约治理比运用关系治理有效,竞争强度加强了契约治理对创新绩效的影响,即关系治理在波动的环境中更有效,契约治理在竞争的环境中更有效。本文为企业开展研发联盟组合管理提供了新的视角和管理对策。     

Managing Multiple Facets of Risk in New Product Alliances*

The trend of forming alliances to develop new products continues; however, many of these new product alliances fail. As such we explore how key risk types intrinsic in new product alliances, performance, relational, and knowledge appropriation risks, influence alliance success. Further, we theorize that different alliance governance mechanisms can reduce the negative impact of risks on alliance success. To disentangle possible heterogeneous factors across firms that may affect the interplay of risk assessments and the use of governance mechanisms, we employ latent class regression analysis on survey data collected from 128 new product alliance firms and find support for a two‐regime solution. Longer alliance relationships and lower technological turbulence are factors for some firms (regime one), while the opposite are factors for other firms (regime two). These two regimes show different patterns in the interplay of risk assessments and governance for alliance success. Our theory and results support viewing risk as a multiple‐factor concept and by understanding the different impacts of the risk types in new product alliances and how governance mechanisms mitigate such effects, we aid managers' decision making regarding the balance of contractual versus normative governance in new product alliances. Understanding the heterogeneous factors inherent in these complex relationships enables managers to understand the conditions in which various governance mechanisms promote new product alliance success.     

我国高技术企业联盟治理结构选择的实证研究

本文以交易成本理论和关系契约理论为基础,研究高技术企业战略联盟治理结构.作者运用108个高技术企业战略联盟的样本数据,对本文提出的基本研究假设进行了实证检验.实证结果揭示了交易成本理论和关系契约理论在联盟治理当中的互补作用,也证明了不确定性和伙伴关系是决定联盟治理结构选择的关键因素.最后,作者对实证结果进行了讨论,并指出了进一步的研究方向.     

Survival during a Crisis: Alliances by Singapore Firms

In this study, we focus on the under‐researched issue of how environmental shocks impact alliance survival. We draw from several different theoretical perspectives such as industrial organization economics, managerial theories of the firm (such as agency theory) and institutional theories. We argue that the relationship between the occurrence of environmental shock and alliance survival is a contingent one. Specifically, we hypothesize that the following types of alliances will exhibit better likelihood of survival: alliances that yield a balance of short‐term and long‐term benefits (scale alliances) rather than purely long‐term benefits (link alliances); alliances that lead to either cost reduction or near‐term improvement in revenue realization (marketing alliances); and alliances that bring together partners from different economic regions (those involving Western and Asian partners). Based on an analysis of 348 alliances formed by Singapore firms, we find that marketing alliances and those involving at least one Western partner indeed exhibit a better likelihood of survival during the Asian economic crisis. We conclude that alliances that can enhance revenue potential in the short‐term are more robust to environmental shocks and that alliances can benefit from an effect similar to risk reduction through international diversification.     

Centrality Asymmetry and Partner Complementarity as Influences on Alliance Dissolution

Research on interfirm alliances indicates that partner firms’ asymmetry in network centrality increases the likelihood of alliance dissolution because it gives rise to a power imbalance and opportunism in the partnership. We contend that this view of centrality asymmetry does not consider the binding force that network resource complementarity can provide in an alliance, which motivates partners to ally for the long term. We propose that centrality asymmetry can have both divisive and cohesive forces in an alliance, which – when considered together – lead to a prediction that centrality asymmetry has a U‐shaped relationship with alliance dissolution. Moderate levels of asymmetry lead to lower rates of dissolution than high and low levels of asymmetry. The degree of cooperation between partners and the degree of external competition reduce the effects of centrality asymmetry on alliance dissolution because they mitigate power imbalances while encouraging partners to strengthen the alliance to withstand competitive challenges.     

The Role of Trust and Contractual Safeguards on Cooperation in Non-equity Alliances

Because partners may behave opportunistically in alliances, contractual safeguards or trust between partners are necessary for successful outcomes. However, it remains controversial whether safeguards and trust substitute or complement each other. Drawing on transaction cost theory, this study conceptualizes both contractual safeguards and trust as important control mechanisms in non-equity alliances, and develops a model that relates contractual safeguards and trust to cooperative outcomes. We test our hypotheses with data collected from 233 architect-contractor partnerships in Hong Kong. The results show that the relationship between contractual safeguards and cooperative outcomes depends on both the level and type of trust.     

Improving the Progress of Research & Development (R&D) Projects by Selecting an Optimal Alliance Structure and Partner Type

This paper extends the study of alliance governance structure by examining what alliance structure, coordination mechanisms and partner type best enhance the likelihood of Research and Development (R&D) progress or performance. We specially focus on the coordination and interaction mechanism of alliances, through which we classify the alliance governance structures in order to reflect the more complex alliance types and contracts used in today's R&D. Using data from 255 biopharmaceuticals between the years 2000 and 2004, we found that, ceteris paribus, a moderate degree of inter‐partner interaction and a moderately complex (non‐equity‐based) alliance contract contributes more to a better R&D alliance performance than those structures that are too simple or too organizationally embedded (e.g. equity joint ventures), which possibly increase the risk of misalignment and miscommunication between allies. In addition, due to the reduced opportunism and the diverse resource (e.g. technology) pooled in the alliance, allying with diverse organizational partners such as non‐profit research institutes and universities is more likely to enhance the R&D performance. Our findings provide insightful strategic implications to practitioners in designing an appropriate alliance governance structure and choosing the right partner type for a successful R&D collaboration.     

Equity alliances,stages of product development,and alliance instability

The purpose of this research is to analyze the stability of strategic alliances initiated at different stages of the new product development process and to determine the appropriateness of different governance structures (e.g., joint ventures, minority equity alliances, non-equity alliances). Specifically, we argue that the minority equity form of alliance is an inherently unstable structure for product development partnerships. Key findings of this study are: (a) minority equity alliances are more likely to be terminated within 5 years than joint ventures and non-equity alliances, (b) alliances are more likely to be terminated if they are initiated in the early and late stages of product development and less likely to be terminated if they are initiated in the mid-stages of product development, and (c) alliances are more likely to become acquisitions if they are initiated in the mid-stages of product development and less likely to become acquisitions if they are initiated in the early and late stages of product development.     

Embedded Networks and Suboptimal Resource Matching in Alliance Formations

Interest has been growing in alliance networks, and research has demonstrated several advantages of embedded networks, including joint problem solving. How embedded networks function as social capital and promote alliance formation has also been explored. However, less is known about constraints that they impose on firms’ extensive search for partners. In this study, we advance our understanding of the downsides of embedded networks by proposing that embedded networks facilitate alliance formations, but they may also cause suboptimal resource matching in alliance formations. Specifically, we predict that, in alliances where initial resource matching is more important than ex post collaborative activities, suboptimal resource matching is more likely when firms ally with partners with which they have pre‐existing direct or indirect ties and that such alliances decrease firm‐level resource utilization performance in operations. Using codeshare alliance data from the global airline industry, we find support for our predictions.     

How knowledge attributes influence alliance governance choices: A theory development note

This note develops theory regarding how attributes of corporate knowledge influence the selection of alliance governance mode. Different types of corporate knowledge are placed on a spectrum between a classic public good and deeply embedded knowledge. Hypotheses are developed regarding knowledge characteristics such as transfer costs, consequences of appropriation, observability, information asymmetry between negotiating partners, the difficulty of valuing knowledge, and the “disclosure dilemma.” Next, hypotheses are presented on the choice of alliance governance mode as determined by knowledge attributes (codification, newness, complexity, and teachability) and partner characteristics (such as knowledge absorptive capacity). These testable propositions should make for fruitful empirical studies on the relatively little researched area of alliance governance modal choice.     

International alliance formation and stock market responses:: Industry globalization as an environmental contingency

This study examines the effects of the degree of industry globalization on international alliance formation in terms of the type of alliance chosen by partner firms and stock market responses to the chosen type of alliance. Using a sample of 244 international alliances formed between U.S. and non-U.S. firms for the 1992–97 period, we find that nonjoint venture (joint venture) alliances take place relatively more frequently in global (multidomestic) industries than in multidomestic (global) industries. We also find that in global industries, abnormal returns to nonjoint venture partners are relatively greater than those to joint venture partners, whereas in multidomestic industries, abnormal returns to nonjoint venture partners are relatively smaller, though insignificant, than those to joint venture partners. Our findings suggest that the degree of industry globalization plays an important role in explaining which type of international alliance is likely to be chosen by partner firms when entering an alliance and how stock markets tend to respond to the chosen type of alliance.     

战略联盟内部的相互信任及其建立机制

战略联盟是近年来涌现的企业发展战略中极为重要的一种组织形式,也是管理理论界探讨的热门话题之一。本文探讨了战略联盟内部成员企业在组建和运转过程中的相互信任问题,剖析了战略联盟内部相互信任的定义、作用及其形式,并提出了建立相互信任的各种措施。     

Technological alliance portfolio configuration and firm performance

Firms pursuing technological alliances to gain competitive advantages have become a ubiquitous phenomenon in today’s business environment. This article examines which technological alliance portfolio configuration is better for focal firm performance using a portfolio rather than a dyadic perspective. To assess technological alliance portfolio effects on Korean pharmaceutical and biotechnology firms, we adopted three explanatory variables—number of alliances, number of partners, and spanning structural holes. The growth rate of revenue and the growth rate of profit are used as dependent variables. We identify two characteristics of technological alliance portfolios from the two-step generalized method of moments estimates. First, we find that between two firms with the same number of alliances, the firm with the larger number of partners would have a better performance. This result is unlike those in previous studies because it distinguishes between the number of alliances and number of partners based on the network theory. Second, we find that spanning structural holes affects firm performance rather like a double-edge sword—it positively affects the growth rate of profit but negatively affects the growth rate of revenue of firms. In short, spanning structural holes is simultaneously beneficial for firm profitability and unfavorable for firm growth. This result differs from those of earlier studies because it shows that a firm spanning structural holes among alliance partners produces either a positive or a negative effect, suggesting that a firm should vary its strategy depending on whether it prioritizes profitability or growth.     

Is experience valuable in international strategic alliances?

This study investigates whether firms benefit from prior alliance experiences as they undertake international strategic alliances. Different from previous studies that mostly focus on equity joint ventures, this study investigates non-equity alliances. This specific investigation is essential, because the complexity and uncertainty associated with such alliances potentially magnify the benefits of experiential learning. With a sample of 629 international, non-equity alliances formed by US firms, our results confirm the contribution of ISA experience in general, as well as that of experience specific to partner's country of origin and alliance activity type. The results also reveal a contingent benefit of ISA experiences, where experience of technological cooperation and experience with alliance partners from emerging countries both add more to firm value. We derive consistent evidence, as performance is assessed either by the market's perception of ISA value creation, or by the post announcement operating earnings in practice.     

The Dynamics of Research Alliances: Examining the Effect of Alliance Experience and Partner Characteristics on the Speed of Alliance Entry in the Biotech Industry

Few studies have moved beyond the dyadic level of an ongoing alliance and examined factors contributing to the success of entering a series of alliances. In this paper we expect biotechnology firms over time to learn from their alliance experience and to develop general alliance capabilities. Specifically, we expect the speed with which they enter into new research alliances, e.g. their alliance formation rate, to be affected by capabilities built up in prior alliances as well as by characteristics of their partners. We use longitudinal event history data for the complete population of US biotechnology firms for 1973–1999 to test four hypotheses about factors affecting the rate of new alliance formation. Our analysis suggests that the speed of entering research alliances is affected by prior experience of the focal firm, but not by partner characteristics. Our findings provide evidence that biotech firms learn how to learn more effectively from multiple research alliances; however, this effect is generalized and not tied to specific characteristics of the alliance partner.     

Too much of a good thing? Alliance portfolio size and alliance expansion

Drawing from the organizational learning, transactions costs and resource based theories, we argue that the larger the Alliance Portfolio Size (APS) of the partners, the lower the likelihood that the alliance will be expanded. We also argue for an interactive effect by proposing that high levels of experience will neutralize some (but not all) of the detrimental impact of a large APS on the likelihood of alliance expansion. We deploy the case-control methodology to select a sample of 182 alliances from the biotechnology and pharmaceutical industries spanning the period 1980–2004. Results from logistic regression analyses support our predictions.