TY - JOUR
T1 - Alliance experience and governance flexibility
AU - Lee, Jongkuk
AU - Hoetker, Glenn
AU - Qualls, William
N1 - Funding Information:
The authors appreciate useful insights from editor Nick Argyres, two anonymous referees, and workshop attendees at the Wharton Technology and Innovation Conference, University of California at Irvine, University of Michigan, and University of Minnesota.
Publisher Copyright:
© 2015 INFORMS.
PY - 2015
Y1 - 2015
N2 - 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.
AB - 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.
KW - Alliance capabilities
KW - Alliance experience
KW - Governance flexibility
KW - Innovation
KW - Pharmaceutical industry
KW - Strategic alliances
UR - http://www.scopus.com/inward/record.url?scp=84997840865&partnerID=8YFLogxK
U2 - 10.1287/orsc.2015.0989
DO - 10.1287/orsc.2015.0989
M3 - Article
AN - SCOPUS:84997840865
SN - 1047-7039
VL - 26
SP - 1536
EP - 1551
JO - Organization Science
JF - Organization Science
IS - 5
ER -