Alliance Experience and Governance Flexibility

Jongkuk Lee (), Glenn Hoetker () and William Qualls ()
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Jongkuk Lee: Ewha School of Business, Ewha Womans University, Seoul 120-750 Korea
Glenn Hoetker: W. P. Carey School of Business, Arizona State University, Tempe, Arizona 85287
William Qualls: University of Illinois and Hunan University, Champaign, Illinois 61820

Organization Science, 2015, vol. 26, issue 5, 1536-1551

Abstract: Prior work has mapped the transaction at the heart of an alliance to the risks of opportunism inherent in that alliance and, ultimately, to how the alliance is structured and governed. We extend this approach by noting that the parties in an alliance do not necessarily perceive the same hazards as predominant and thus may have different preferences for how the alliance is structured. Nevertheless, it is in each party’s best interest to find a structure that protects its interests, while also allowing its partner to protect its interests sufficiently. Drawing from the alliance management capabilities literature, we argue that firms with more alliance experience are better able to protect their interests under any given alliance structure, making the choice of structure less consequential to them. The resulting governance versatility provides a competitive advantage by enabling firms to form advantageous alliances that are less available to inexperienced competitors. Our study of innovative alliances in biopharmaceutical industry lends support to the hypotheses, allowing us to advance the literature on governance choice in alliances, the literature on alliance management, and their intersection.

Keywords: strategic alliances; innovation; alliance experience; alliance capabilities; governance flexibility; pharmaceutical industry (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (9)

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