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Role of context and contest in the structuring of alliance governance

Role of context and contest in the structuring of alliance governance Purpose – The alliance governance – whether equity or non‐equity based – through which an alliance is governed serves as a mechanism to protect a firm from partner's opportunistic behavior, manage resource dependence and facilitate knowledge sharing. Alliance governance structure also reflects the risk, reward and control that partners perceive in a relationship. In light of the conflicts and instabilities reported in strategic alliances, the purpose of this paper is to examine the interorganizational domain that affects the endurance and continuity of collaboration and explain how the alliance interface contexts determines the structuring of alliance governance. Design/methodology/approach – An empirical examination of 179 strategic alliances, using survey and archival data conducted to test the hypothesized relationship between the choice of governance structure and the complexity of alliance task, balance of power and competitive scope between partners. Findings – A multinomial logistic regression of the hypothesized variables revealed that the complexity of alliance task, balance of power, and competitive scope between partners are significantly related to the mode of alliance governance – whether non‐equity, minority‐equity, or joint venture. Originality/value – This study makes a significant contribution to the understanding of the relationships between the contextual factors such as the alliance task, power dynamics, and competitive scope that shape the collaboration and structuring of appropriate alliance governance mode. Results of the study provide strong evidence for the hypotheses that the greater the task complexity, and greater the balance of power and scope of competition between partners, the alliance governance tends to be equity or joint venture based. Consistent with recommendations of several organizational scholars that the theory of alliance governance and performance must shift from individual partner firm to interaction domain and interface contexts (Luo, 2002; Gray and Wood, 1991; Oxley and Sampson, 2004), this study integrally examined the dyadic issues such as balance of power, task complexity, and the competitive scope and the dynamic role they play in decisions pertaining to alliance governance. While many extant studies on the choice of alliance governance structure have employed secondary data sources, the study employed data from survey measures (Gulati, 1995; Teng and Das, 2008; Oxley and Sampson, 2004) enhancing the validity of the results. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Strategy and Management Emerald Publishing

Role of context and contest in the structuring of alliance governance

Senthil Kumar Muthusamy
Journal of Strategy and Management , Volume 7 (2): 21 – May 13, 2014
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Publisher
Emerald Publishing
Copyright
Copyright © 2014 Emerald Group Publishing Limited. All rights reserved.
ISSN
1755-425X
DOI
10.1108/JSMA-04-2013-0022
Publisher site
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Abstract

Purpose – The alliance governance – whether equity or non‐equity based – through which an alliance is governed serves as a mechanism to protect a firm from partner's opportunistic behavior, manage resource dependence and facilitate knowledge sharing. Alliance governance structure also reflects the risk, reward and control that partners perceive in a relationship. In light of the conflicts and instabilities reported in strategic alliances, the purpose of this paper is to examine the interorganizational domain that affects the endurance and continuity of collaboration and explain how the alliance interface contexts determines the structuring of alliance governance. Design/methodology/approach – An empirical examination of 179 strategic alliances, using survey and archival data conducted to test the hypothesized relationship between the choice of governance structure and the complexity of alliance task, balance of power and competitive scope between partners. Findings – A multinomial logistic regression of the hypothesized variables revealed that the complexity of alliance task, balance of power, and competitive scope between partners are significantly related to the mode of alliance governance – whether non‐equity, minority‐equity, or joint venture. Originality/value – This study makes a significant contribution to the understanding of the relationships between the contextual factors such as the alliance task, power dynamics, and competitive scope that shape the collaboration and structuring of appropriate alliance governance mode. Results of the study provide strong evidence for the hypotheses that the greater the task complexity, and greater the balance of power and scope of competition between partners, the alliance governance tends to be equity or joint venture based. Consistent with recommendations of several organizational scholars that the theory of alliance governance and performance must shift from individual partner firm to interaction domain and interface contexts (Luo, 2002; Gray and Wood, 1991; Oxley and Sampson, 2004), this study integrally examined the dyadic issues such as balance of power, task complexity, and the competitive scope and the dynamic role they play in decisions pertaining to alliance governance. While many extant studies on the choice of alliance governance structure have employed secondary data sources, the study employed data from survey measures (Gulati, 1995; Teng and Das, 2008; Oxley and Sampson, 2004) enhancing the validity of the results.

Journal

Journal of Strategy and Management – Emerald Publishing

Published: May 13, 2014

Keywords: Alliance domain and interface; Alliance governance; Equity/joint venture; Power and competitive dynamics

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