Alliance experience and governance flexibility

Jongkuk Lee, Glenn Hoetker, William Qualls

Research output: Contribution to journalArticle

13 Scopus citations

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.

Original languageEnglish (US)
Pages (from-to)1536-1551
Number of pages16
JournalOrganization Science
Volume26
Issue number5
DOIs
StatePublished - 2015

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Keywords

  • Alliance capabilities
  • Alliance experience
  • Governance flexibility
  • Innovation
  • Pharmaceutical industry
  • Strategic alliances

ASJC Scopus subject areas

  • Strategy and Management
  • Organizational Behavior and Human Resource Management
  • Management of Technology and Innovation

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