The Structuring of Strategic Alliances in the ICT-Industry
A Modelling Approach Using Selected Organisational Theories
©2002
Masterarbeit
111 Seiten
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
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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I
TABLE OF CONTENTS
LIST OF FIGURES ... II
LIST OF TABLES ... II
DECLARATION... III
ACKNOWLEDGEMENTS...IV
ABSTRACT ... V
1.
INTRODUCTION... 1
2.
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
3.
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
4.
RESULTS... 45
4.1.
Findings of Univariate Analysis ... 45
4.2.
Findings of Bivariate Analysis ... 46
4.3.
Findings of Multivariate Analysis ... 51
5.
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
6.
CONCLUSIONS... 70
7.
REFERENCES ... 72
8.
APPENDICES ... 83
II
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
IV
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.
V
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
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
2
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.
1
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'.
2
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
1
See Appendix D for definition.
2
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.
3
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.
4
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.
5
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
6
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
7
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.
8
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
9
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
3
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
3
See Chapter 2.5 (p.15) for a definition.
10
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'.
4
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
4
Since game theory is not further considered in this thesis, see Parkhe (1993:799) for a definition.
11
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.
12
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.
5
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.
5
An estimated 60% of strategic alliances fail (Ellis, 1996).
13
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
14
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
15
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
16
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