Interpartner differences and governance mode dilemma: The role of alliance scope

Research output: Contribution to journalArticle

Abstract

It is generally recognized that the governance structure of an alliance, equity versus nonequity, is an important strategic choice. Since an alliance teams up companies that are inevitably divergent in upstream resource endowment and/or downstream market coverage, it is necessary to select an appropriate governance form to manage the interpartner differences and thus facilitate cooperation. Nevertheless, prior studies have suggested conflicting governance modes despite their adherence to the rationale of transaction cost economics. To address this gap in extant literature, the current study takes into account the moderation of alliance scope in the interfirm difference-governance choice linkage. In sum, this paper argues that, to determine a suitable governance structure, there is a need to concurrently examine how different the partnering firms are from each other and what range the collective activities cover. Hierarchical logistic regression analysis was used to test hypotheses in a sample of 125 bilateral alliances. The empirical findings indicate that nonequity modes will be preferred for the alliances that have less interfirm resource disparity and narrower alliance scopes, while equity-based forms will be chosen for the alliances that have less interfirm market divergence and narrower alliance scopes.

Original languageEnglish
Article numbere160025
JournalBAR - Brazilian Administration Review
Volume13
Issue number3
DOIs
Publication statusPublished - 2016 Jul 1

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Governance mode
Alliances
Equity
Governance structure
Resources
Endowments
Rationale
Governance form
Bilateral
Divergence
Moderation
Linkage
Adherence
Logistic regression analysis
Hypothesis test
Partnering
Governance
Transaction cost economics
Strategic choice
Market coverage

All Science Journal Classification (ASJC) codes

  • Strategy and Management

Cite this

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Interpartner differences and governance mode dilemma : The role of alliance scope. / Tseng, Chiung Hui.

In: BAR - Brazilian Administration Review, Vol. 13, No. 3, e160025, 01.07.2016.

Research output: Contribution to journalArticle

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