When do firms enter a repeated partnership? The effect of contract terms and relative partner characteristics

Yoojin Oh, Jongkuk Lee

Research output: Contribution to journalArticlepeer-review

Abstract

Purpose: The purpose of this paper is to understand the mechanisms of partner selection from the transaction cost economics’ viewpoint. This paper reveals that a firm’s choice to initiate a new alliance with a new partner or form a repeated alliance with an existing partner depends on contract terms and the relative characteristics of partners. Design/methodology/approach: The authors examine 555 alliances in high-tech industries from 2001 to 2009, which the authors collected from secondary sources, including the Securities Data Company Platinum and Compustat databases. The authors use a logit model to reveal the effect of contract terms and relative partner characteristics on repeated partnership. Findings: The results show that repeated partnership is less likely to be combined with equity sharing. Repeated partnership is also negatively associated with the functional scope of a new alliance. Finally, a firm is more likely to enter a repeated partnership when its partner is from a different country. Originality/value: This research provides new insights into how the choice of an alliance partner depends on contract terms and the relative characteristics of partners. Identifying factors associated with partner selection helps us understand the fundamental mechanisms of initiating a new alliance. It allows focal firms to foresee the behavior of their peers or competitors in certain circumstances and thus provides important insights for developing corresponding strategies more effectively.

Original languageEnglish
Pages (from-to)2237-2255
Number of pages19
JournalManagement Decision
Volume55
Issue number10
DOIs
StatePublished - 2017

Bibliographical note

Publisher Copyright:
© 2017, © Emerald Publishing Limited.

Keywords

  • Country relatedness
  • Equity sharing
  • Functional scope
  • Partner selection
  • Product market relatedness
  • Repeated partnership

Fingerprint

Dive into the research topics of 'When do firms enter a repeated partnership? The effect of contract terms and relative partner characteristics'. Together they form a unique fingerprint.

Cite this