Choice and performance of governance mechanisms: matching alliance governance to asset type

Formal and relational governance mechanisms are used in strategic alliances to coordinate resources and mitigate the risk of opportunistic behavior. While recent work has shown that these approaches are not mutually exclusive, we understand little about when one approach is superior to the other. Using data on the governance choices and subsequent performance of alliances in the German telecommunications industry, we find that the optimal configuration of formal and relational governance mechanisms depends on the assets involved in an alliance, with formal mechanisms best suited to property‐based assets and relational governance best suited to knowledge‐based assets. Furthermore, a mismatch between governance mechanisms and asset type can harm the performance of the alliance. Our findings contribute to transaction cost economics, the literature on relational governance, and recent work studying their interaction. Copyright © 2009 John Wiley & Sons, Ltd.     

Convergence and unbundling of corporate R&D in telecommunications: is software taking the helm?

This paper presents a view of the changing structure of corporate R&D in telecommunications – one that is close to Adam Smith’s insightful and enduring idea of division of labor – that perhaps we are witnessing the beginnings of vertical disintegration and unbundling of important segments of the industry’s R&D activity. The paper maintains that the emergence of an independent software industry – aided by the convergence of computer, telecommunications and imaging technologies – and the rapid growth of technology-based alliances are at the heart of this trend. So extensive is the vertical disintegration of R&D that, in 1997, the top 10 independent software vendors in the US spent more on R&D than the combined spending by AT&T and Lucent whose sales were well over three times as large. It appears that the source of future innovation in the telecommunications industry lies not in its services segment but rather in telecommunications and Internet equipment firms and independent software firms. Increasingly, the fortunes of large service providers like AT&T will depend less on innovation and more on their ability to configure and market complete one-stop-shopping solutions to customers by combining internal resources with outsourced technologies, products and services.     

Internationalisation in the telecommunications services industry: Literature review and research agenda

A review of 356 publications addressing internationalisation aspects of the telecommunications services industry (TSI) shows a growing body of contributions, mainly covering research themes like settlement and regulation policy, strategic alliances and incumbents’ reactions to deregulation as well as opening of markets in-depth until recently. Wireline telephony TSI has been the dominant segment in most contributions, while the mobile or broadband Internet segments only featured in more recent work. Segment characteristics like non-uniform barriers to entry, different reasons for alliances and non-uniform levels of internationalisation differentiate these TSI segments pose a number of additional questions concerning telecom firms’ internationalisation strategy and success promising for future research.     

Exploration and exploitation alliances in biotechnology: a system of new product development

We link the exploration–exploitation framework of organizational learning to a technology venture's strategic alliances and argue that the causal relationship between the venture's alliances and its new product development depends on the type of the alliance. In particular, we propose a product development path beginning with exploration alliances predicting products in development, which in turn predict exploitation alliances, and that concludes with exploitation alliances leading to products on the market. Moreover, we argue that this integrated product development path is moderated negatively by firm size. As a technology venture grows, it tends to withdraw from this product development path to discover, develop, and commercialize promising projects through vertical integration. We test our model on a sample of 325 biotechnology firms that entered 2565 alliances over a 25‐year period. We find broad support for the hypothesized product development system and the moderating effect of firm size. Copyright © 2004 John Wiley & Sons, Ltd.     

The evolution of cooperation in strategic alliances: Initial conditions or learning processes?

We examine how the learning, along several dimensions (environment, task, process, skills, goals), that takes place in strategic alliances between firms mediates between the initial conditions and the outcomes of these alliances. Through a longitudinal case study of two projects in one alliance, replicated and extended in another four projects in two alliances, a framework was developed to analyze the evolution of cooperation in strategic alliances. Successful alliance projects were highly evolutionary and went through a sequence of interactive cycles of learning, reevaluation and readjustment. Failing projects, conversely, were highly inertial, with little learning, or divergent learning between cognitive understanding and behavioral adjustment, or frustrated expectations. Although strategic alliances may be a special case of organizational learning, we believe analyzing the evolution of strategic alliances helps transcend too simple depictions of inertia and adaptation, in particular by suggesting that initial conditions may lead to a stable ‘imprinting’ of fixed processes that make alliances highly inertial or to generative and evolutionary processes that make them highly adaptive, depending on how they are set.     

Industry cognitive distance in alliances and firm innovation performance

This paper focuses on the role of industry cognitive distance in innovation alliances on firm innovation performance. Drawing from the literature on technological cognitive distance in alliances, we elaborate on the role of industry cognitive distance between partners and its impact on managerial attention to investigate the role of numbers of alliances of low (intra-industry) and high (inter-industry) industry cognitive distance on firm innovation performance. Intra-industry alliances offer lower opportunities for innovation compared to inter-industry alliances and are less demanding on firm management due to higher cognitive similarity between partners from the same industry. We propose that trade-offs between innovation opportunities and management efforts result in an inverted U and a U-shaped relationship between the number of intra- and inter-industry alliances and innovation performance, respectively. We find support for both hypotheses in the context of the UK bio-pharmaceutical sector.     

Exploration or exploitation? Small firms' alliance strategies with large firms

How do small firms manage their alliance strategies with large firms? This study compares the relative impacts of exploration and exploitation alliances with large firms on small firms' valuation. Integrating the literatures on the exploration/exploitation paradigm and alliance governance, we argue that exploitation alliances with large firms will on average generate higher values for small firms than exploration alliances with large firms due to a heightened risk of appropriation in exploration alliances. However, if small firms can manage their alliances with large firms via proper alliance governance, they will increase their valuations from exploration alliances with large firms. Analyses of the U.S. biopharmaceutical industry from 1984 to 2006 largely support our hypotheses. Copyright © 2013 John Wiley & Sons, Ltd.     

Household telecommunications expenditure in Australia

Using a mix of survey data from the Household Income and Labour Dynamics in Australia survey and the Household Expenditure Survey, we examine the changing nature of telecommunications expenditure in Australia in the period 2006–2015. We show that it behaves like a core necessity such as food. Households with youth or young adults spend more on telecommunications than other households. The elderly and disadvantaged groups spend less. We propose measures to identify low-income households with relatively high or relatively low expenditure on telecommunications. These measures can be used to identify households that potentially have “telecommunications inadequacy” or “unsustainable telecommunications expenditure”.     

Partner-based opportunism,interface structure,and performance efficiency in upstream and downstream alliance activities contexts

Few alliance studies have theorized that opportunisms effect on performance efficiency is contingent on other factors. Our study posits that alliance partner size and no end-point serve as interface structure mechanisms that condition the efficiency outcomes of partner-based opportunism in alliances. We argue that the direct effect of partner-based opportunism, and the moderation effects of alliance partner size and no end-point, differ according to the alliance activities context (i.e., upstream vs. downstream). Our hypotheses were tested using a survey of 361 alliances. We observe that partner-based opportunism is indeed associated with performance inefficiencies. Further, while alliance partner size has a nonsignificant moderating effect, no end-point has a positive moderating effect, on the relationship between partner-based opportunism and efficiency; that is, the negative link becomes less negative for no end-point alliances. We find that the negative performance relevance of partner-based opportunism remains significant among upstream alliances, but drops to nonsignificance for downstream ones. We show that alliance partner size has a negative moderating effect on the link partner-based opportunism to performance efficiency among downstream, but not upstream, alliances. Lastly, we find that the positive moderating effect of no end-point is significant among upstream, but not downstream, alliances. Our results generate important implications for managers' efforts to design and govern alliances.     

Effects of alliances,time, and network cohesion on the initiation of foreign sales by new ventures

In this study, we seek to advance the network perspective on new venture internationalization by examining the role of networks in accelerating new venture sales into foreign markets. We propose that knowledge derived from ventures' technology and marketing alliances increases the likelihood that new ventures begin exploiting opportunities in international markets. We also argue that the extent to which the networks open the venture to new knowledge or constrain it to knowledge already shared among the partners will influence the initiation of foreign sales by a venture. Using a longitudinal dataset of 118 ventures in the U.S. biotechnology industry, we confirm that different types of alliances (and, therefore, different types of knowledge—technology and marketing knowledge) differentially impact the likelihood of new venture internationalization. Moreover, network cohesion among venture alliances increases the likelihood that marketing alliances will promote initial foreign market sales, but decreases the likelihood that technology alliances will do so. Our research is a timely response to a call for the study of interactive effects among network structure, complex tasks, and time, and it provides a possible explanation for certain unexpected findings in studies that did not consider the effects of time. Copyright © 2010 John Wiley & Sons, Ltd.     

Context effects in the evaluation of business-to-business brand alliances

Brand alliances in the business-to-business domain are becoming increasingly popular. This study investigates the impact of context-related effects on the formation of evaluation perceptions in B2B brand alliances. Assimilation and contrast effects represent the conceptual framework. Employing an experimental design we test the influence of two contextual factors on a range of product attributes: quality perceptions of the known brand ally (valence), and amount of information provided for the brand alliance. Using data collected from a cross section sample of large B2B UK companies we report assimilation effects across different product attributes of the alliance. Positive valence of the known brand ally results in higher evaluations of the brand alliance. In terms of provision of information, we find that, (a) unlike consumer markets, in the B2B domain higher evaluations are the result of detailed information, and (b) the impact of detailed information is significant only for tangible product attributes. Further, we find that valence of the known brand ally and amount of information provided are independent factors. The results add significantly to the knowledge on context effects in B2B brand alliances and lead to a number of managerial recommendations on partner selection and marketing communication of new brand alliances.     

Learning: The interface of quality management and strategic alliances

In this paper, we investigate the practice of quality management in strategic alliances. By employing a relational view of inter-organizational competitive advantage, the paper addresses the concept of quality management in strategic alliances and networks. We argue that institutional/network relationships influence the practice of quality within a network. In that regard, firms that have adopted quality management practices are more effective in managing and coordinating their interactions with other firms in the network, which results in their enhanced learning capability within the alliance.The proposed framework recognizes the role of trust and cooperative learning as critical factors that affect the success of strategic alliances. It has been argued that firms within an alliance need to achieve the paradox of control and learning. We examine the role of trust as a control mechanism in strategic alliances and address the importance of cooperative learning within alliances. Several hypotheses have been proposed and future research has been outlined.     

The Effects of Knowledge Depth and Scope on the Relationship between R&D Alliances and New Product Development

In this study, we extend the new product development (NPD) literature that proposes that firms' knowledge depth, defined as the reuse of well understood technical knowledge, and scope, defined as the use of newly acquired technical knowledge, and new knowledge accessed from R&D alliances all positively impact NPD. Building on the knowledge‐based view of the firm, we posit that the impact of firms' R&D alliances is limited when their internal knowledge depth and scope are adequate for NPD needs. We suggest that although firms form R&D alliances to gain the right to access external knowledge of R&D alliance partners, they are not obligated to invest in resources to integrate external knowledge from R&D alliances. We propose that they wait to see if their internal knowledge depth and scope prove sufficient for NPD. If the external knowledge proves to be unnecessary, firms choose not to invest the resources required to integrate this knowledge with their internal knowledge. Alternatively, we suggest an increased impact of R&D alliances on NPD when firms are more limited in their internal knowledge depth and scope. We propose that when knowledge depth and scope prove insufficient, firms make the additional investments required to integrate external knowledge from R&D alliances with their internal knowledge stock. This reasoning is consistent with real options theory as it has been applied in alliance research, where strategic alliances are characterized as real options. We find support for our hypotheses using panel data of 738 firm year observations for 143 U.S. biopharmaceutical firms operating in 2007. Our study contributes to the NPD literature and suggests new directions for future research.     

The transformation of the mobile telecommunications industry in Pakistan: A developing country perspective

This paper offers a rare insight into the reality of the mobile telecommunications market transformation in Pakistan. Our analytical framework treats the mobile telecommunications market as a complex socio-technical system. Specifically, we define the telecommunications market as being composed of technology standards and three sets of social actors that include government institutions, network and service providers, and users. In the case of Pakistan, these social actors together determine the adoption of standards and services, and thus shape the trajectory of the market change. Our case study provides evidence that a pro-competition policy is imperative for mobile telecommunications development in developing countries, and an independent regulator is critical in promoting technological innovation.     

Alliance portfolio reconfiguration following a technological discontinuity

Research summary : We study how technological discontinuities generate first‐ and second‐order effects on alliance formation and termination, leading to reconfiguration of firms' alliance portfolios. Following technological shocks, we argue that firms often seek alliances that provide new resources while also having incentives to form alliances for reinforced and challenged resources that complement the new resources. In parallel, alliance terminations, even involving resources otherwise unaffected by the discontinuity, increase due to limits in firms' alliance carrying capacity. We study biopharmaceutical firms between 1990 and 2000, which faced a technological discontinuity in 1995 in the form of combinatorial chemistry and high‐throughput screening. We improve understanding of how technological discontinuities affect the value of resources and how firms reconfigure alliance portfolios in response. Managerial summary : When firms form alliances to gain new resources during technological discontinuities that disrupt their industry, they cannot consider only the focal new partnerships. Instead, new alliances create complementarity and substitution pressures that lead to broader reconfiguration of the firms' alliance portfolios: (1) complementarity creates incentives to also form alliances for resources that the technological discontinuity reinforces or challenges in order to improve the collective value of co‐specialized assets; (2) substitution creates incentives to terminate existing alliances, even if their value is otherwise unaffected by the discontinuity, in order to create carrying capacity for new alliances. Thus, one new alliance can generate a cascade of reconfiguration that challenges the balance between the benefits of stability and the need for change in an alliance portfolio. Copyright © 2016 John Wiley & Sons, Ltd.     

Resource allocation for open and hidden learning in learning alliances

A satisfying relationship between alliance members is important for the success of learning alliances, especially those in the Asia Pacific region. While learning alliances create conditions for firms to leverage each other’s knowledge, firms may be opportunistic and appropriate each other’s knowledge, and firms face a tradeoff because appropriation affects the relationship between alliance members. After reviewing previous studies on knowledge sharing in learning alliances, we differentiate firms’ learning into open and hidden learning, and argue that open learning contributes to competence trust, while hidden learning reduces goodwill trust, which consequently affects open learning. Learning uncertainty, introduced in this study, and learning benefits determine expected payoffs of open and hidden learning, which influence firms’ resource investment in them. This study also finds that behavior and output control are important moderators of the relationships between expected payoffs of open and hidden learning and the resources invested in them. Thus, this study advances our understanding of the tension between cooperation and competition and the learning dynamics in learning alliances. The solution to solving the knowledge sharing dilemma in learning alliances is to promote partners’ open learning and to restrain their hidden learning. Therefore, this study argues that, with open and hidden learning, implementing proper control measures and influencing partners’ learning benefits and uncertainties can settle this dilemma. Furthermore, this study classifies the relationships of learning alliances into four types and gives an explanation of why horizontal learning alliances are usually more competitive than vertical ones.     

Conflicting national policies: The creation of the euro and the rebalancing of telecommunications prices

Government departments have diverse interests, and on certain occasions, the need to achieve a priority objective in one department may lead to the adoption of inefficient policies in other areas, with long-lasting consequences. In this paper, we analyze the rebalancing of the telecommunications tariffs that took place in the European Union before and after the liberalization of the market in 1998. We show that the objective of satisfying the Maastricht inflation condition to allow participation in the European Monetary Union from 1999 led some national governments to block the rebalancing of telecommunications tariffs. Specifically, we demonstrate that in the years immediately before the liberalization of the telecommunications market, those countries that faced greater difficulty achieving the inflation objectives of the Maastricht Treaty reduced, rather than increased, the prices of local telephone calls and line rental. Furthermore, these countries did not intensify efforts to rebalance their tariffs after the creation of the euro. Our paper also shows that in this period the countries that diverged most from the inflation condition invested less in their telecommunications infrastructure.     

Development of Novel Products Through Intraorganizational and Interorganizational Networks

The pendulum appears to be swinging away from the merger mania of the 1980s, with many leaner-and meaner organizations refocusing on their core competencies. However, these more focused organizations often lack the breadth of skills and expertise necessary for developing products and services which cut across traditional technological and marketing boundaries. Complex product systems such as those under development in the home automation industry include elements from such disparate sectors as consumer electronics, telecommunications, construction, and energy. A narrow focus may prevent the novel forms of innovation necessary for successful development of such products. Using the home automation industry as an example, Joe Tidd examines the challenges involved in the development of complex product systems. When products and services cut across traditional marketing and technological boundaries, radical innovation is difficult because different firms and industries are typically responsible for developing the various subsystems and components. Successful development efforts may require novel forms of innovation–for example, architectural innovation and technology fusion. Architectural innovation involves changes in the way the components of a product are linked together, but leaves the core design concepts untouched. Technology fusion creates new products and market opportunities through the blending of diverse technologies from various fields. Two organizational factors affect a firm's ability to develop and commercialize new products based on novel forms of innovation: the internal organization of the firm, and the firm's links with other organizations, including suppliers, customers, and networks of collaborating organizations. Within a firm, the development of complex product systems is likely to require managing across traditional product-division boundaries. The breadth of competencies required may necessitate strong interfirm linkages. Comparing organizational approaches and the networks of alliances for home automation in the United States, Europe, and Japan, it appears that European firms tend to be more narrowly focused then American and Japanese firms. A rigid focus on core competencies may cause these European firms to overlook the potential for new products. Because various technologies and industries are involved, open networks are more effective than closed networks or alliances. European and American firms tend to favor closed strategic alliances, while Japanese firms typically participate in open networks and overlapping consortia. This approach gives Japanese firms an edge in the home automation industry.     

How does the partner type in R&D alliances impact technological innovation performance? A study on the Korean biotechnology industry

The number of strategic alliances for R&D activities in the biotechnology industry is sharply increasing. Some studies show that each alliance partner type has different alliance motives, resources and capabilities, organizational structures and cultures, and degrees of competition with partners, which can lead to different performances of strategic alliances. In this regard, this study conducts an empirical analysis of the different impact of each type of alliance partner on technological innovation performance and finds the moderating effect of absorptive capacity and potential competition by categorizing strategic alliances for R&D activities in the biotechnology industry into three types: vertical-downstream alliances, vertical-upstream alliances, and horizontal alliances. This study analyzed 206 Korean biotechnology firms and their strategic alliances for a total of 292 R&D activities. The results of the analysis showed that vertical alliances have a positive impact on technological innovation performance, while horizontal alliances have an inverted U-shaped relationship with technological innovation performance caused by the effect of competition. Additionally, it was confirmed that the R&D intensity of biotechnology firms has a moderating effect of increasing the impact of vertical-upstream alliances on technological innovation performance.