The Structuring of Strategic Alliances in the ICT-Industry

Walter, Sascha

The Structuring of Strategic Alliances in the ICT-Industry

A Modelling Approach Using Selected Organisational Theories

von Sascha Walter (Autor:in)

Führung und Personal - Sonstiges

Zusammenfassung

Inhaltsangabe:Summary:
This study examines what factors determine the choice of governance structure made by alliance partners in the ICT-industry. First, the explanatory power of the transaction cost theory, the resource-based view, the structural contingency approach, strategic choice theory, resource dependence theory, organisational ecology and principal agent theory to answer this question is surveyed.
A deeper analysis using transaction cost theory, resource-based view and structural contingency approach is employed to develop three models of alliance structuring. Propositions related to the models are then tested on a sample of 101 strategic alliances in the ICT-industry. The findings suggest that there exist five influential factors: (1) the existence of alliance-specific investment by the partners, (2) the number of functional areas contained by the alliance, (3) a limited duration of the alliance, (4) the type of resources contributed by the partners, and (5) uncertainty of the tasks of the alliance. These factors are then recombined to form one integrated model. The success of this approach and the usefulness of such a modelling approach in general are discussed alongside future directions for research.

Inhaltsverzeichnis:Table of Contents:
1.INTRODUCTION1
2.THEORETICAL BACKGROUND AND PREVIOUS WORK4
2.1Approach to Construct the Theoretical Framework4
2.2Definitions of Strategic Alliances5
2.3Classifications of Strategic Alliances6
2.4Review of Previous Work9
2.5Review of Theoretical Approaches13
2.6Theoretical Framework and Propositions for this Study24
3.METHODOLOGY33
3.1Objective of the Survey33
3.2Unit of Analysis33
3.3Methods of Data Collection34
3.4Methods of Analysis39
4.RESULTS45
4.1Findings of Univariate Analysis45
4.2Findings of Bivariate Analysis46
4.3Findings of Multivariate Analysis51
5.DISCUSSION57
5.1Position of the Sample57
5.2Factors of the Governance Choice57
5.3The Explanatory Power of an Integrated Approach63
5.4Contributions and Implications66
6.CONCLUSIONS70
7.REFERENCES72
8.APPENDICES83

Leseprobe

Inhaltsverzeichnis

ID 7026

Sascha Walter

The Structurering of Strategic

Alliances in the ICT-Industry

A Modelling Approach Using Selected Organisational

Theories

MA-Thesis / Master

an der Universität Bielefeld

Fachbereich Wirtschaftswissenschaften

Oktober 2002 Abgabe

ID 7026

Walter, Sascha: The Structurering of Strategic Alliances in the ICT-Industry - A Modelling

Approach Using Selected Organisational Theories

Hamburg: Diplomica GmbH, 2003

Zugl.: Fachhochschule Südwestfalen, Universität, MA-Thesis / Master, 2002

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TABLE OF CONTENTS

LIST OF FIGURES ... II

LIST OF TABLES ... II

DECLARATION... III

ACKNOWLEDGEMENTS...IV

ABSTRACT ... V

INTRODUCTION... 1

THEORETICAL BACKGROUND AND PREVIOUS WORK ... 4

2.1.

Approach to Construct the Theoretical Framework ... 4

2.2.

Definitions of Strategic Alliances... 5

2.3.

Classifications of Strategic Alliances ... 6

2.4.

Review of Previous Work... 9

2.5.

Review of Theoretical Approaches ... 13

2.6. Theoretical

Framework

and

Propositions For This Study... 24

METHODOLOGY... 33

3.1.

Objective of the Survey ... 33

3.2.

Unit of Analysis... 33

3.3.

Methods of Data Collection... 34

3.4.

Methods of Analysis... 39

RESULTS... 45

4.1.

Findings of Univariate Analysis ... 45

4.2.

Findings of Bivariate Analysis ... 46

4.3.

Findings of Multivariate Analysis ... 51

DISCUSSION ... 57

5.1.

Position of the Sample... 57

5.2.

Factors of the Governance Choice... 57

5.3.

The Explanatory Power of an Integrated Approach ... 63

5.4.

Contributions and Implications ... 66

CONCLUSIONS... 70

REFERENCES ... 72

APPENDICES ... 83

LIST OF FIGURES

Figure 1: Scope of Definitions of Strategic Alliances... 5

Figure 2: Taxonomies of Strategic Alliances... 6

Figure 3: Selected Classification of Strategic Alliances ... 8

Figure 4: Overview of Reviewed Theories ... 13

Figure 5: Model of Transaction Cost Theory... 14

Figure 6: Classification of Resources by Das (2000)... 16

Figure 7: Contingency Factors ... 18

Figure 8: Adaptation Cycle of the Structural Contingency Approach ... 19

Figure 9: Model of the Strategic Choice Theory... 21

Figure 10: TCT-based Model... 25

Figure 11: RBV-based Model ... 28

Figure 12: SCA-based Model... 30

Figure 13: Scatter Plot of Standardised Residuals for Model 1 ... 53

Figure 14: Scatter Plot of Standardised Residuals for Model 3 ... 55

LIST OF TABLES

Table 1: Summary of Propositions... 32

Table 2: Results of Bivariate Analysis... 50

Table 3: Contingency Coefficients of Candidate Variables... 50

Table 4: Model Ranking... 51

Table 5: Parameter Estimates for Model 1... 52

Table 6: Likelihood Ratio Tests for Model 1... 53

Table 7: Pseudo R-Squares for Model 1 ... 53

Table 8: Classification Table for Model 1 ... 54

Table 9: Parameter Estimates for Model 3... 54

Table 10: Likelihood Ratio Tests for Model 3... 55

Table 11: Pseudo R-Squares for Model 3 ... 55

Table 12: Classification Table for Model 3 ... 56

ACKNOWLEDGEMENTS

The author would like to thank Douglas Bryson, Steffen-James Conn, Morten Furseth, Heli

Hartikainen, Renaud MacGilchrist, Marjaana Räty and Michael Ward for constructive

suggestions, Jörg Walter for his support in collecting data, Elliott Gillespie, Caroline Hillyard,

Till Jacobi, Andreas Pöpping, and Graham Wey for reviewing the final version of this paper,

Mark Edwards (ReCap IT) and Matt Lewis (Archart) for kindly granting access to their

databases, and the Tibet terrier Momo for giving the author company in many hours of work

on this dissertation.

ABSTRACT

This study examines what factors determine the choice of governance structure made by

alliance partners in the ICT-industry. First, the explanatory power of the transaction cost

theory, the resource-based view, the structural contingency approach, strategic choice theory,

resource dependence theory, organisational ecology and principal agent theory to answer this

question is surveyed. A deeper analysis using transaction cost theory, resource-based view

and structural contingency approach is employed to develop three models of alliance

structuring. Propositions related to the models are then tested on a sample of 101 strategic

alliances in the ICT-industry. The findings suggest that there exist five influential factors: (1)

the existence of alliance-specific investment by the partners, (2) the number of functional

areas contained by the alliance, (3) a limited duration of the alliance, (4) the type of resources

contributed by the partners, and (5) uncertainty of the tasks of the alliance. These factors are

then recombined to form one integrated model. The success of this approach and the

usefulness of such a modelling approach in general are discussed alongside future directions

for research.

1. INTRODUCTION

In the struggle for competitiveness, firms have increasingly turned to strategic alliances as a

new competitive weapon. In 1999 alone, approximately 13,000 alliances in the e-commerce

sector were announced internationally (Ernst et al., 2001). The rising popularity of such

partnerships has led to a growing stream of research with theoretical roots in economics,

corporate strategy and sociology. Key issues in the academic literature on alliances include:

their formation, their dynamic evolution and performance, the performance consequences of

partners entering alliances, and the choice of governance structures for alliances (Gulati,

1998).

Of late, more calls for in-depth research on alliance structuring have been made. On the one

hand, a relative neglect towards this field has been pointed out by academics: "...little

empirical work has been done relating circumstance to choice of appropriate alliance form"

(Child and Faulkner, 1998:34) and "...mainstream economics has paid little attention to new

forms of cooperative competition." (Osborn and Hagedoorn, 1997:262). On the other hand,

practitioners have underlined the importance of governance choices: "Make the tough calls on

governance: A deal stands a greater chance of success if it establishes the right governance

model." (Ernst et al., 2001:99). A suitable governance structure is a necessary condition for

the overall success of an alliance for several reasons. It creates a framework for the day-to-

day management. It prescribes mechanisms to handle conflicts, contingencies and unforeseen

events, and establishes property rights of assets and outcomes (Chan and Heide, 1993). It can

give behavioural incentives to the involved parties e.g. by shared ownership, and determines

the degree of interaction between the partners. It also impacts the external face of the alliance

and can reflect the partners' desire to create a representative body or to avert public disclosure

of the co-operation. These considerations illustrate the importance of in-depth studies on the

rationales behind the choice of alliance governance modes.

Prior research in this field initially drew on Williamson's (1975) transaction cost theory

(Gulati, 1998). Despite some valuable contributions of this approach, it could not cover the

full complexity of alliance structuring due to several shortcomings (cf. Granovetter, 1985;

Zajac and Olsen, 1993). Consequently, sources of explanations were sought starting from

alternative theoretical bases. For instance, Osborn and Baughn (1990) employed the logic of

transaction cost theory and corporate strategy to examine the influence of technological

factors and the parent organisations' size on the governance structure. Other combinations of

approaches were applied e.g. to research the influence of the partners' embeddedness in a

social network (Gulati, 1993) or to determine the relationship between the governance choice

and the anticipated costs of co-ordination (Gulati and Singh, 1998). After all, there are still

theoretical approaches or combinations of approaches that are unapplied despite their

potential to provide additional insights into the rationale of alliance structuring (Osborn and

Hagedoorn, 1997).

The primary research problem addressed in this thesis is:

What determines the choice of governance structure made by alliance partners in the ICT-

industry? Why do partner companies from the ICT-industry select certain governance

structures to organise their alliance?

Essentially, this research question is answered with several little used approaches from the

field of organisational theory. On this foundation, three models of governance choice are

constructed and falsifiable propositions are derived from their logic, which are tested on a

sample of 101 alliances from the ICT-industry.

The guiding idea is that the individual

approach has little explanatory power, but the sum of several approaches has higher

explanatory power, as illustrated by `Mintzberg's Elephant'.

Each can provide a different,

partly complementary, partly competing, explanation of the governance choice. The spectrum

of these explanations ranges from the complexity of the exchange between partners

(transaction cost theory) via the type of resources contributed by partners (resource-based

view) to external factors (structural contingency approach). To move towards a more

synthesised and integrated view, as demanded by Osborn and Hagedoorn (1997), an attempt

is made to form and test a joint model of the various factors proposed by the single theories

(secondary research problem).

The research approach in this study is mostly deductive: a critical review and selection of

organisational theories yields several explanatory factors for the form choice, which are

See Appendix D for definition.

Mintzberg, Ahlstrand and Lampel (1998) used an anecdote by John Godfrey Saxe (1816-1887) to illustrate the interplay of different

theories. In it, blind people touch an elephant at different spots. Though each has a different impression, all refer to the same animal, and the

sum of their impressions creates a more comprehensive picture of the elephant.

ultimately integrated to form one model. This emphasis on a solid theoretical foundation

distinguishes this thesis from other academic work: while elsewhere the underlying

approaches might only mark out the analytical framework for the research (cf. Gulati, 1993),

they are the main source of explanation in this thesis. Thus, the difficulties of the attempted

operationalisation are accepted for the complementarities of the approaches. However, their

reasoning is not blindly believed, but is in a final step contrasted against the realities of the

studied ICT-industry.

With regards to the methodological approach to the research problem, secondary data from

press reports serves as a data source for a sample of 101 alliances that were forged in the

period from 1998 to 2002 and that involved at least one partner from the ICT-industry. The

actual analysis draws on two techniques. Basically, propositions are tested using chi-square

tests in combination with an inspection of the Cramer's V statistic and contingency

coefficients. Afterwards, the selection of a best-fitting joint model takes place by employing

binary logistic regression.

Answering the research issue provides contributions that will be presented in Chapter 5.2. In

summary, this research makes three actual contributions to the body of knowledge of alliance

structuring. First, three models on alliances structuring are derived from classical

organisational theories, including the in this context little used resource-based view and the

structural contingency approach. Second, five factors with a significant effect on governance

choices are identified. Third, an integrated model is generated by fitting these factors together

and the general strengths and risks of such an approach are discussed.

This thesis is organised as follows. In Chapter 2 a brief overview of the variety of different

definitions and classifications of strategic alliances is presented. After a review of several

theoretical approaches with reference to organisational structures in general, a selection of

three approaches is used to develop three models on the structuring of alliances. From these,

eight testable propositions about factors influencing the governance structure choice are

derived. Chapter 3 describes the data collection and analysis methods, whereas the results of

the analysis are reported in Chapter 4. A critical discussion of the findings and the potential of

an integrated approach follows in Chapter 5. Finally, the general conclusions are drawn in

Chapter 6.

2. THEORETICAL BACKGROUND AND PREVIOUS WORK

2.1. Approach to Construct the Theoretical Framework

In the previous chapter, an introduction briefly stated and justified the research issues and

methods pertinent to this study. On this ground, the thesis continues with a review of the body

of knowledge in the field. Due to terminological confusion in the literature (Porter and Fuller,

1986; Osborn and Baughn, 1997) frequently used definitions and classifications of alliances

are reviewed first. A clear terminology and taxonomy for this work is derived from that.

Afterwards, a survey on general academic publications reflects the state-of-the-art in the field.

To construct the theoretical framework of this work, theoretical approaches are reviewed and

selected according to criteria described below. This selection is used to develop three models

of governance choice, from which eight falsifiable propositions are derived.

A theoretical framework for the examination of alliance structuring can address different

levels of analysis depending on the disciplinary base chosen. It can generally refer to the

organisational level (organisational theories), the inter-personal level (sociology) and the

intra-personal level (psychology) as units of analysis. Since this research is supposed to

expand the present body of knowledge rather than producing isolated results, the in the field

prevailing organisational theories are chosen as starting point (Poppo and Zenger, 1998).

However, future research might provide additional insights by starting from alternative

disciplinary bases.

A selection of approaches from the field of organisational theory must take place because an

inclusion of all existing theories would exceed the scope of an MA-thesis and because the

field of organisational theory is not characterised by one central paradigm (Lubritz, 1998). All

selected theories are supposed to explain the governance mode choice. Therefore, two criteria

are used for this selection: (1) the degree, to which the approach addresses alliance

structuring, and (2) its popularity in academic literature as examined by Amalya (1998) in a

network study of theoretical concepts in literature on inter-firm co-operation.

2.2. Definitions of Strategic Alliances

Strategic alliances have been defined in a variety of ways, which poses the danger of

misunderstandings (Porter and Fuller, 1986) and complicates the comparison of research

results (Mowery, 1992). Williamson's (1975) market-hierarchy-dichotomy marks the

boundaries of definitions, i.e. strategic alliances can be placed somewhere within the range

from pure market exchange to internalisation (Figure 1). In a very broad definition, a strategic

alliance can be regarded as "contractual agreement among firms to cooperate to obtain an

objective without regard to the legal or organizational form the alliance takes" (Chan and

Heide, 1993:9). Other authors narrow their definition down to exclude certain forms of co-

operation. For instance, Dussauge and Garrette (1998) exclude mergers and acquisitions by

pointing out that the partner firms have to retain their legal autonomy. Further, the long-term

orientation of the inter-firm relation is used as a criterion to distinguish strategic alliances

from licensing (Narula and Hagedoorn, 1999). Also the degree to which the agreement is

codified makes a difference in definitions. While some authors include handshake

agreements, others understand only codified, i.e. written agreements, as alliances.

Figure 1: Scope of Definitions of Strategic Alliances

MARKET

FIRM

Joint

Venture

Equity

Exchange

Franchising Licensing Joint

- Purchasing

- Production

- Marketing

- R&D

- ...

Equity Arrangements

Non-equity Arrangements

Mergers &

Acquisitions

(HIERARCHY)

Many definitions commonly state that an alliance is understood as an inter-firm linkage in

which two or more firms establish a relationship and contribute or exchange either tangible or

intangible resources (Lu, 1995). For the purpose of this thesis, a strategic alliance will be

defined as a contractual agreement with or without equity commitment, between at least two

economically independent firms that exchange tangible and/or intangible resources over

several distinct transaction periods to pursue common goals. A firm is considered as

economically independent when a formal possible exit from the co-operation would not

endanger its economic existence (Schneider, 1973). Thus, mergers and acquisitions,

subsidiaries and franchises are excluded by this definition of strategic alliances.

2.3. Classifications of Strategic Alliances

Several taxonomies of strategic alliances have been developed in prior work (Figure 2). Some

authors classify alliances according to their level of equity sharing and hierarchical controls.

In a broad view, just two categories, `equity and non-equity arrangement', were developed

(Hagedoorn and Narula, 1996), whereas a finer perspective also integrated intermediate forms

such as agreements involving equity exchanges (Gulati, 1998; Mockler, 2000). In other

studies, the areas of functional concern such as R&D or marketing were used as primary

classification criteria (Ghemawat, Porter and Rawlinson, 1986) or as a secondary criterion

after the equity level (Narula and Hagedoorn, 1999).

Figure 2: Taxonomies of Strategic Alliances

Classification Criteria

of Strategic Alliances

Areas of

Functional

Concern

Type of

Contributed

Capabilities

Type of Joint

Activities

Technological

Inter-

dependence

Level of

Equity

Sharing and

Hierarchical

Control

According to the type of joint activities, alliances can be categorised into `vertical' and

`horizontal' alliances (James and Weidenbaum, 1993). The first involves co-operation within

the same activity such as joint research and development (R&D), while the second refers to

co-operation in complementary activities such as production and marketing. Regarding the

type of contributed capabilities, Dussauge, Garrette and Mitchell (2000) differentiated `link

alliances' and `scale alliances'. In the former the partners provide different capabilities,

whereas similar capabilities are contributed in the latter.

Boris and Jeminson (1989) adjusted Thompson's (1967) technological interdependence

concept to characterise alliances, which they named hybrids. Hybrids with `pooled

interdependence' are those where the partners draw resources from a common pool, whereas

`sequential interdependence' means that one partner hands resources over to the other. In

`reciprocally interdependent' hybrids, the partners exchange outputs and learn from each

other. Furthermore, Child and Faulkner (1998) introduced multiple criteria. They categorised

alliances referring to the number of partners, the scope of the alliance (complex to focused)

and the corporate identity (loose collaboration to joint venture).

In this study four distinct forms of alliances will be distinguished according to the level of

shared equity and the technological inter-dependence: (1) unilateral contracts, (2) bilateral

contracts, (3) minority equity alliances and (4) joint ventures. They can be differentiated

similar to Das (2000) and Gulati and Singh (1998) in the following way (Figure 3):

Bilateral contracts refer to inter-firm collaboration contracts without the sharing or exchange

of equity. The partners put in resources and work together on a continual basis directly from

their own organisational confines. Hierarchical elements are few if any and do not occur on a

systematic basis. New decisions are negotiated by the partners and the contracts are usually

incomplete. In contrast, the key feature of unilateral contracts is that the individual firms

carry out their obligations independently of others, as exemplified by the `technology for

cash' exchange in licenses. Such contracts tend to be complete and specific, and partners are

expected to perform on their own without much co-ordination or collaboration. Thus, the level

of integration is relatively low in alliances based on unilateral contracts.

Figure 3: Selected Classification of Strategic Alliances

Strategic

Alliances

Non-equity

Arrangements

Unilateral

Contracts

Bilateral

Contracts

Equity

Arrangements

Minority Equity

Alliances

Joint Ventures

Minority equity alliances encompass partnerships in which no new entity is created. Instead,

one partner, or a set of partners, takes a minority equity position in another. The degree of

hierarchical control is between that in joint ventures and contracts, and is typically realised by

the investing partner joining the board of directors of the partner that received the investment.

This ensures that the investor has some form of command and authority system through the

participation in the partner's board. A concern for the value of its equity provides appropriate

incentives for the investor. Moreover, disputes are easier to resolve by interaction on board

level, but standard operating procedures are not necessarily given. The board representation

also creates a forum for information exchange and common decision-making by the partners

on a regular basis. Beyond interaction at the board level, day-to-day activities are jointly co-

ordinated and negotiated on an ongoing basis.

The last form, joint ventures, occurs when partners create an autonomous entity in which each

owns a portion of the equity. In such alliances a separate management team is in charge of the

day-to-day business, which provides an independent command structure and authority system

with defined rules and responsibilities for each partner. Concerns about the value of their own

equity serve as incentives for each partner. Furthermore, pricing discussions are internalised

by the joint venture, which controls the in- and outflow of resources to and from the partners.

As part of creating such an entity partner firms also typically put in place standard operating

systems and dispute resolution procedures. Thus, the hierarchical control is high in joint

ventures (Gulati and Singh, 1998).

2.4. Review of Previous Work

The body of academic work on alliances evolved in a similar fashion to their practical use:

steadily growing from the 1980s, and exploding in the last few years. This has led to

increasing fragmentation of the field: "[the field]...has currently entered a period of chaos...

[, which]...reflects the explosion of interest in alliances." (Osborn and Hagedoorn, 1997:261).

Accordingly, studies in the field draw on a variety of theoretical backgrounds and

methodologies. A chronological review of previous work on the governance choice for

alliances is given in the following section to which further argumentation in this thesis will

refer.

One of the first models on alliance structuring was suggested by Anderson and Gatignon

(1986), which was based on transaction cost theory (TCT). In their proposal, the most

efficient governance form was a function of the trade-off between costs of resource

commitment and control. In addition, they ranked governance forms according to the level of

control from non-restrictive and nonexclusive contracts to wholly-owned subsidiaries. The

latter was considered desirable in situations with high transaction-specific investments, high

uncertainty and a high risk of opportunistic behaviour. Going even further, Contractor and

Lorange (1988) proposed a cost-benefit framework for the same question: the optimal

governance structure maximises benefits, i.e. revenue increases and cost savings on the one

hand, and minimises costs, i.e. revenue losses and cost increases on the other.

A systematic application of TCT to joint ventures has been contributed by Hennart (1988) and

Kogut (1988). Kogut viewed joint ventures as efficient solutions in situations characterised by

high degrees of asset specificity

and by high uncertainty over specifying and monitoring

performance. Due to the uncertainty over performance, he argued that it is difficult and costly

to draft ex ante a contract that stipulates all complex conditions, possible contingencies and

See Chapter 2.5 (p.15) for a definition.

especially safeguards against opportunism. A joint venture might reduce the risk of

opportunism, because the mutual dedication of resources and the sharing of profits align the

partners' incentives. Following Hennart's argumentation, a joint venture is the cost-efficient

organisational form for a transaction, when two conditions meet. Firstly, markets for

intermediate goods, e.g. the market for raw materials, components and knowledge, held by

each party are failing, and secondly, acquiring and replicating the assets yielding those goods

is more expensive than obtaining a right to their use through a joint venture agreement.

Osborn and Baughn (1990) have examined the relationship between the R&D intensity of a

partnership and the use of contracts or joint ventures as governance form. Their findings

confirmed that alliances in research intensive industries such as the ICT-industry were mainly

governed by contracts, while for alliances with the actual intention to conduct R&D rather

joint ventures were chosen.

In an empirical test of TCT logic, Hennart (1991) found that the degree of ownership of

Japanese companies operating in the U.S. was driven by transaction cost logic. He discovered

a tendency for Japanese firms to form joint ventures, when the operation took place outside

their main industry and the US market was entered for the first time. Contrary to the logic of

TCT, no significant relationship between the tendency to use joint ventures and the intensity

of expenditures for marketing and R&D could be observed.

Parkhe (1993) analysed alliance structures with a mixture of TCT and game theoretic

constructs, particularly the patterns of payoffs and the `shadow of the future'.

The findings

weakly supported his proposition that higher levels of contractual safeguards are likely in

cases of perceived opportunistic behaviour. Moreover, the level of non-recoverable

investment, i.e. transaction-specific investment, was negatively related to perceived

opportunistic behaviour and positively related to the time horizon of the partnership as well as

to the perceived performance of the alliance.

A survey of technology partnerships by Hagedoorn and Narula (1996) suggested a link

between industry characteristics and choice of a particular governance mode. Their findings

were consistent with a prior study by Osborn and Baughn (1990). While in relatively mature

Since game theory is not further considered in this thesis, see Parkhe (1993:799) for a definition.

and stable sectors there was a tendency towards the use of joint ventures, contracts were more

common in instable sectors such as the ICT-industry. They further observed that the level of a

country's technological sophistication did not affect this.

Gulati and Singh (1998) provided empirical evidence for the role of appropriation concerns

and anticipated co-ordination costs in governance choice. In their study alliances with higher

co-ordination costs, i.e. the costs for managing the interdependence of the partners, were

governed by more hierarchical structures, whereas the influence of expected technological

components in the alliance differed across industries. Moreover, repeated alliances were more

likely to be formalised more loosely, from which they concluded an important role of inter-

partner trust for the governance form choice. In contrast, the national origin of the partner

firms had no significant effect.

A survey on technology partnerships by Narula and Hagedoorn (1999) unearthed an upwards-

trend in the use of non-equity arrangements over time. Their share increased steadily from

53.1% in the period from 1980 to 1984 up to 73.3% from 1990 to 1994. Furthermore, regional

differences were observed: contracts seemed to be more popular in the US (77.8%) than in

Japan (74.2%) and Europe (66.9%) in the period from 1990 to 1994. They suggest the

enhanced enforceability of international contracts and the strategic flexibility provided by

contracts as explanations for this trend.

Steensma et al. (2000) studied the impact of national culture on alliance structuring. Their

proposition that contracts are used more frequently in individualistic than collectivistic

cultures was weakly supported. More significant were the findings that individualism

intensified the perception of technological uncertainty in a partnership, which fostered the use

of equity ties between the partners. A project's technological uncertainty or the level of

uncertainty avoidance in a country's culture was found not to impact the governance form.

An application of the resource-based view (RBV) to analyse governance choices was

presented by Das (2000). He suggested that the structural preferences of a partner are driven

by the trade-off between his objective to learn and the desire to shield his own resources from

appropriation. If his resources are protected by property rights he might prefer closer forms of

co-operation for learning purposes. Otherwise, he might seek a more distant relation to protect

resources without legal protection such as knowledge.

Tsang (2000) attempted to explain alliance structuring by combining RBV and TCT. In his

conception, the governance form with the highest net benefit, i.e. the gross value minus the

costs caused by the form, will be chosen. Essentially, his work projected Contractor and

Lorange's (1988) suggestions of a benefit-cost framework onto a theoretical background.

In summary, previous research has surveyed two types of factors influencing the governance

choice: features of the partnership itself (alliance-internal factors) and outside influences

(alliance-external factors). Alliance-internal factors were:

(1) benefits and costs from the alliance structure,

(2) the level of control desired by the partners,

(3) transaction-specific factors such as uncertainty, opportunism and frequency,

(4) the partners' objectives referring to the alliance, and

(5) inter-partner trust.

Alliance-external factors were:

(1) culture, and

(2) industry settings.

Furthermore, this review also showed the predominant position of transaction cost theory

(TCT) in the field (Poppo and Zenger, 1998; Argyres, 1999).

However, high failure rates of alliances have proven that there remain shortcomings in the

theoretical understanding and the practical implementation of alliances' structuring.

Thus,

some authors still demand deeper research on alliance structuring (Child and Faulkner, 1998;

Gulati, 1998). Several approaches from organisational theory are seldom or not applied at all

to the structuring problem although they could provide new insights. Hence, the theoretical

framework in this study will be anchored in two relative `newcomers': the resource-based

view and the structural contingency approach. Additionally, transaction cost theory will be

included due to its central position in the research field (Poppo and Zenger, 1998). All three

approaches are outlined in the following section.

An estimated 60% of strategic alliances fail (Ellis, 1996).

2.5. Review of Theoretical Approaches

Figure 4 gives an overview of all reviewed theories that are subdivided into the groups (1)

suitable and included, (2) suitable, but not included and (3) omitted. Since the approaches of

the last group were of less value in analysing the problem at the centre of this dissertation,

they are reviewed very briefly for reasons of time and space.

Figure 4: Overview of Reviewed Theories

Reviewed

Theories

Transaction

Cost Theory

Resource-

based View

Structural

Contingency

Approach

Strategic

Choice Theory

Resource

Dependence

Theory

Organisational

Ecology

Principal-

Agent Theory

(1) Suitable and Included

(2) Suitable, but Not Included

(3) Omitted

Transaction Cost Theory

Transaction cost theory (TCT) holds that transactions with particular characteristics are

governed efficiently by certain types of organisational arrangements and not by others. The

most influential work has been provided by Williamson (1975, 1985, 1991), while among

others Hennart (1988, 1991) and Kogut (1988) applied TCT to the structuring of alliances as

described above.

Williamson (1975) assumes `bounded rationality' and `opportunism' in his work. The first

refers to human behaviour that is "intendedly rational, but only limitedly so" (Williamson,

1975:21) and involves cognitive and language limitations. The latter means self-interest

seeking with guile and includes lying, stealing, cheating and especially incomplete or

distorted disclosure of information for ones own benefit (Williamson, 1985). Such cheating

can take at least three forms: adverse selection, moral hazard and hold-up (Barney and

Hesterly, 1996). Adverse selection takes place, when one partner misrepresents the resources

and capabilities he can contribute to a co-operation, whereas moral hazard occurs when he

really possesses such resources and capabilities but holds them back. Hold-up exists when co-

operation is characterised by high levels of transaction-specific investments and where the

non-investing side exploits those that have made these investments.

In earlier work, Williamson (1975) distinguished only two institutional arrangements,

`market' and `hierarchy' (firms), but added `hybrid' as an intermediate form later

(Williamson, 1991), when alliances were becoming more popular. The selection between

these forms is driven by two interlinked objectives: cost-minimisation and safeguarding

against opportunistic behaviour by the partners (Figure 5). Cost-minimisation refers to the

partners' objective of minimising the anticipated sum of the actual production and transaction

costs. Production costs on the one hand include both the costs for production and the costs for

the institutional arrangement. Transaction costs on the other hand arise from arranging,

managing and monitoring transactions across markets and include costs for locating an

adequate partner, for negotiating and for altering a contract (Child and Faulkner, 1998).

Figure 5: Model of Transaction Cost Theory

Transaction Partner

behavioural assumptions

bounded rationality-opportunism-risk aversion

Transaction

transfer of property rights of a

good or service

Cost-specific Characteristics

of Transaction

·asset specificity

·frequency

·uncertainty

·connectedness

·difficulties in performance measurement

Institutional Arrangement

· market

· hybrid

· hierarchy

Cost-specific Characteristics of

Institutional Arrangement

· intensity of incentives

· degree of hierarchical control

· adaptability

Production Costs

· costs of institutional arrangement

· production costs

Transaction Costs

· ex ante transaction costs

· ex post transaction costs

Efficiency Criteria

Several characteristics of the transaction influence transaction costs. One is asset specificity,

which refers to the degree to which an asset can be redeployed to alternative uses and by

alternative users without sacrifice of productive value (Williamson, 1985) and involves

specific investments to conduct a transaction, e.g. the purchase of special machines to supply

a customer. High transaction specific investments lock the partners into a given transaction

and increase the threat of opportunism. The greater such investment and therefore the threat of

opportunism, the more desirable is the choice of hierarchical structures (Williamson, 1985).

Other characteristics are the frequency and uncertainty of a transaction, the connectedness to

transaction and the difficulties in performance measurement.

TCT has attracted numerous critiques. Ghosal and Moran (1996) criticised the concept of

opportunism and pointed out TCT's negative influence on practice, while in Hill's (1990)

argumentation, opportunistic behaviour does not pay out in the long run because it will be

penalised and finally deleted by the `invisible hand' of the market. Other shortcomings were

also discussed. Granovetter (1985) denounced its asocial and static character, because the

social relations between firms are neglected. Gulati and Singh (1998) argued that anticipated

co-ordination costs also play an important role, whereas Zajac and Olsen (1993) remarked

that TCT over-emphasises cost-minimisation and neglects the value-creation aspect of co-

operation. Child and Faulkner (1998) added that TCT ignores economic modes of

organisation, which are governed by implicit understanding rather than by contracts such as

tacit collusion.

Using TCT logic, alliances as hybrid forms will be chosen, when the e.g. asset specificity of

the transaction is of an intermediate degree while extreme degrees of asset specificity are

handled by markets or hierarchies (Tsang, 2000). While Williamson did not distinguish

different forms of alliances in his theory, the analysis of several alliance forms becomes

possible when those hybrids are viewed as a continuum of forms combining the features of

hierarchy and market (Bradach and Eccles, 1989; Hennart, 1993).

TCT is included in the further analysis for three reasons. Firstly, it directly addresses the form

choice of alliances. Secondly, by focussing on cost-minimisation it has potential

complementarities with value-centred approaches such as the resource-based view

(Williamson, 1991). Thirdly, though frequently tested and still not falsified, it is a relatively

solid approach to apply alongside approaches that have been used less often in the context of

alliance structuring (Poppo and Zenger, 1998; Argyres, 1999).

The Resource-based View

The resource-based view (RBV) asserts that firms try to maximise long-term profits through

exploiting and developing their resources (Penrose, 1959) and thus stresses the value-creation

aspect of co-operation. It focuses on the question of how firms can create competitive

advantage by combining their resources internally or with external partners. Initial work in

this field by Penrose (1959), who regarded the firm as a bundle of resources, was later revived

by Wernerfeld (1984) and Barney (1991).

Resources as the unit of analysis in this approach can be defined as "those (tangible and

intangible) assets, which are tied semi-permanently to the firm" (Wernerfelt, 1984:172).

Barney (1991) grouped resources into three categories, physical resources, human resources

and organisational resources. Das (2000), on the other hand, classified only two broad

categories: property-based resources, e.g. patents, contracts, copyrights, trademarks, and

registered designs, which enjoy near-perfect legal protection by property rights, and

knowledge-based resources, e.g. managerial and technological systems, that are more

vulnerable to unintended transfers due to lacking property rights (Figure 6).

Figure 6: Classification of Resources by Das (2000)

Tangible Resources

Property-Based

Resources

Knowledge-Based

Resources

Intangible Resources

Details

Seiten
Erscheinungsform: Originalausgabe
Erscheinungsjahr: 2002
ISBN (eBook): 9783832470265
ISBN (Paperback): 9783838670263
DOI: 10.3239/9783832470265
Dateigröße: 902 KB
Sprache: Englisch
Institution / Hochschule: Universität Bielefeld – Wirtschaftswissenschaften
Erscheinungsdatum: 2003 (Juli)
Note: 1,0
Schlagworte: strategische allianz organisationstheorie rechtsform it-industrie
Produktsicherheit: Diplom.de

Autor

Sascha Walter (Autor:in)