Introduction

• One way of achieving collaboration is through the formation of strategic alliances

  • i.e. inter-firm cooperative arrangements

    • 1) Horizontal alliances between competitors

    • 2) Vertical alliances between buyers and suppliers

    • 3) Diagonal alliances between firms in different industries

• Growing evidence of high failure rates (Gerwin 2004; de Rond 2003)

  • High level of relationship risk

    • Different objectives and orientations

  • Opportunistic exploitation of the relationship (Dekker 2004)

• Appropriate governance structures, MCS and trust can help reduce alliance risk (Das and Teng 2001)

• Case studies:

  • Outsourcing and strategic supplier relationships (Seal and Vincent-Jones 1997, Das and Teng 2001, Dekker 2004, Cooper and Slagmulder 2004)

  • Joint ventures (Yan and Gray 1994, Groot and Merchant 2000)

  • Few empirical studies consider how managers’ perceptions of trust and risk may influence the choice of governance structure and other aspects of control

Theoretical Framework

• TCE is the most common theoretical framework used to study strategic alliances (Anderson and Sedatole 2003)

• Under TCE, governance structures can take 3 forms:

  • 1) Markets

  • 2) Hybrids (inc. most strategic alliances)

  • 3) Hierarchies

• 3 characteristics of transactions determine appropriate mode of governance (Williamson 1979,1991):

  • 1) Asset specificity

    • e.g. Site of location specificity

      • Physical asset specificity

      • Human assets specificity (training, knowledge)

      • Brand name or reputational capital

      • Dedicated capacity

    • High level of asset specificity creates (speklé 2001):

      • Dependencies between parties

        • Increases switching costs

        • Lead to focus on hierarchical governance structures

        • Formal control mechanisms

  • 2) Uncertainty of transactions

    • behavioural uncertainty May pursue own self-interest (Williamson 1979)

  • 3) Frequency of transactions

    • May lead to high transaction costs

    • May encourage hierarchical forms of governance (Geyskens, Steenkamp and Kumar 2006)

• Two forms of risk (Das and Teng 1996):

  • 1) Relational risk

  • 2) Performance risk

• Two forms of governance structure (Das and Teng 2001):

  • 1) Equity

    • Legally-separate entity owned by two or more partners...

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