Agent and Task Complexity in Multilateral Alliances: The Safeguarding Role of Equity Governance |
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| Institution: | 1. Department of Management & Entrepreneurship, Kelley School of Business, Indiana University, Bloomington, IN 47405, United States;2. Department of Management, Mays Business School, Texas A&M University, College Station, TX 77843, United States;1. School of Business, Jiangnan University, Wuxi, Jiangsu 214122, China;2. College of Business and Economics, University of Guelph, Ontario N1G 2W1, Canada;3. Antai College of Economics and Management, Shanghai Jiao Tong University, Shanghai 200052, China;4. Schulich School of Business, York University, Toronto, Ontario, M3J 1P3, Canada;1. University of Illinois at Chicago, Finance Department, College of Business Administration, 2431 UH MC 168, Chicago, IL 60607, United States;2. Tilburg University, Finance Department, and CentER, PO Box 90153, 5000LE Tilburg, Netherlands;3. INSEAD, Finance Department, Bd de Constance, 77305 Fontainebleau Cedex, France |
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| Abstract: | 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. |
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