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The scope and governance of international R&D alliances
Abstract
Participants in research and development alliances face a difficult challenge: how to maintain sufficiently open knowledge exchange to achieve alliance objectives while controlling knowledge flows to avoid unintended leakage of valuable technology. Prior research suggests that choosing an appropriate organizational form or governance structure is an important mechanism in achieving a balance between these potentially competing concerns. This does not exhaust the set of possible mechanisms available to alliance partners, however. h? this paper we explore an alternative response to hazards of R&D cooperation: reduction of the 'scope' of the alliance. We argue that when partner firms are direct competitors in end product or strategic resource markets even 'protective' governance structures such as equity joint ventures may provide insufficient protection to induce extensive knowledge sharing among alliance participants. Rather than abandoning potential gains from cooperation altogether in these circumstances, partners choose to limit the scope of alliance activities to those that can be successfully completed with limited (and carefully regulated) knowledge sharing. Our arguments are supported by empirical analysis of a sample of international R&D alliances involving electronics and telecommunications equipment companies. Copyright (C) 2004 John Wiley Sons, Ltd.
... To avoid this scenario and secure their competitive advantage (Grant, 1996;Kogut & Zander, 1992), firms need to actively protect critical knowledge; that is, effectively prevent unintended knowledge leakages and avoid that coopetitors have unprotected access to valuable firm knowledge (Wadhwa, Freitas, & Sarkar, 2017). Scholarly research has addressed this challenge by outlining formal and informal protection mechanisms that firms could use at the firm and alliance levels (e.g., de Faria & Sofka, 2010;Manzini, Lazzarotti, & Pellegrini, 2012;Oxley & Sampson, 2004). Firms could, for example, set up generic structures, regulations, and procedures that managers need to adhere to when deciding which knowledge to share with their competitors (Norman, 2001). ...
... We test our hypotheses by focusing on senior SME managers involved in coopetitive relationships in high-tech and knowledgeintensive industries where the hazards associated with knowledge sharing are particularly salient (Estrada, Faems, & de Faria, 2016;Oxley & Sampson, 2004). We build on a unique dataset with both primary data (senior managers' responses) and secondary, time-lagged data. ...
... At the level of the alliance, a considered partner choice, restricting the alliance's scope, third-party facilitation, and the development of trust and relational capabilities could help manage the risk of opportunistic behavior (Kale et al., 2000;Oxley & Sampson, 2004;Raza-Ullah, 2021;Rouyre & Fernandez, 2019). Further, alliance agreements and secrecy could define, restrict, and monitor access to codified, but not registered, knowledge such as recipes, formulas, software, algorithms, technical procedures, and customer lists (de Faria & Sofka, 2010;Hurmelinna-Laukkanen, 2011). ...
When firms collaborate with their competitors (i.e., engage in coopetition), individual managers play a pivotal role in protecting their firm's sensitive knowledge from potential misuse by partners. But which managers are more successful in performing this role? To better understand the senior-level human resources who help secure a firm's competitive advantage, we build on the Upper Echelons Theory and explore how managers' cognitions and values, as expressed in their demographic characteristics, influence knowledge protection in coopetitive relationships. To test our hypotheses, we use multi-source, time-lagged data on a sample of 176 small and medium-sized firms involved in coopetition. Our results suggest that managers' tenure and female gender relate positively to knowledge protection, which in turn contributes to subsequent firm performance, whereas man-agers' age and higher education impact knowledge protection negatively. On this basis, our study helps develop micro-macro linkages between the Upper Echelons Theory and the Resource-Based View, and reveals how different managerial characteristics influence knowledge protection, thereby threatening or securing sustainable firm performance. We discuss the implications for knowledge protection processes and human resource management.
... The alliance members can be called partners, who contribute to the growth by sharing resources and knowledge. Consistently, these premises were developed based on studies by Heide and John (1990), Varadarajan and Cunningham (1995), Sividas and Dwyer (2000), Lambe et al. (2002), Oxley and Sampson (2004) Kale and Singh (2007), Inkpen and Pien (2006) and Nieto and Santamaría (2007). ...
... In search of a sustainable competitive advantage based on RBV, the alliance resource between enterprises emerges as a way these organizations have to reach common goals, bringing together different capacities, since they alone would face difficulties to reach them (Heide & John, 1990;Hunt & Morgan 1995;Varadarajan & Cunningham, 1995;Sividas & Dwyer 2000;Lambe et al., 2002;Oxley & Sampson, 2004;Kale & Singh, 2007). ...
Purpose of the study: This study aims to analyze the relationship between product innovation and strategic resources used by the furniture enterprises, under the perspective of sustainable competitive advantage, with the intention to identify the resources previous to innovation. Methodology/approach: The method used in this research is a quantitative and descriptive study, through a survey, applied to 1067 companies in Brazilian furniture industry. The data analysis occurred through Structural Equation Modeling. Originality/Relevance: Product innovation and strategic resources are capable of providing great potential for economic transformation. It is strategically acknowledged that there is a relationship between product innovation and the use of resources, however, there are as yet insufficient empirical studies to determine which resources influence product innovation. Another important aspect is to evaluate the influence of Environmental, Social and Governance sustainability precepts in the development of new products. Key findings: In the empirical study, noticed that Product Innovation results from the use of resources, which configures innovation antecedents. Theoretical/methodological contributions: This study contributes the advancement of science, which can be used to analyze the antecedents of Product Innovation, which pointed out that companies with strategic resources can expand the capacity of innovation by generating sustainable Product Innovation, which leads to the success of a new product. Social contributions/to management: This study can contribute to managerial decisions, as the results indicate that the Success in New Product Development proved to be an essential form of competitive advantage, comparing the results of Product Innovation with competitors and relating this performance to the use of Environmental, Social and Governance principles.
... In other words, trust constitutes a boundary condition for the negative effects of proactive motivation on mutual dependence. Indeed, the negative outcomes of coopetition can be conceptually linked to the proactive motivations of one or more partners, such as increased risk of opportunistic behaviour (Brandenburger and Nalebuff 1996), threat of knowledge expropriation (Hamel, 1991;Oxley and Sampson, 2004), and disruption of existing business models (Bonel and Rocco, 2007). These outcomes are commonly anteceded by a notable lack of, or erosion, of trust between partners (Nieto and Santamaría, 2007). ...
... However, scholars studying SME coopetitive phenomena can build from our findings to consider these heterogeneous aspects. Particularly, the majority of extant coopetition research emphasises the relevance and importance of separation strategies between partners to ensure that firms are able to benefit from the collaborative aspects of coopetition while maintaining, and even enhancing, their rivalrous competitive competencies (Bengtsson and Kock, 2000;Oxley and Sampson, 2004;Walley, 2007). While these approaches may be suitable for large firms with expansive business portfolios that operate in multiple industry segments, our findings suggest that SMEs facing resource scarcity and intense market pressures may not have the same incentives and may disproportionately benefit from a greater reliance on the collaborative aspects of coopetition as a vehicle for absorbing constraints owing to their resource limitations. ...
... If the actor collaborates, benefit from important advantages can be reached. As a consequence, the agent is exposed to possible attacks from "allies" (Oxley & Sampson, 2004). It is, therefore, necessary to grasp the strategic analysis made by China, Japan, and South Korea respectively. ...
... While IJVs involve a shared ownership structure and pooling of resources, IAs can encompass a broader spectrum of collaborative arrangements, including strategic alliances, research partnerships, and technology licensing agreements. The common thread among these diverse forms of collaboration is the exchange of knowledge, which inevitably raises KP concerns (Oxley & Sampson, 2004). As such, all these forms of collaboration face similar issues of knowledge protection, as firms need to balance the benefits of externally sharing their strategic knowledge with the risks of knowledge leakage, such as unintentional knowledge leakage, potential misuse by partners, and vulnerability to intellectual property breaches (Contractor, Woodley, & Piepenbrink, 2011). ...
Cross-border transfer and the protection of knowledge are important for multinational enterprises (MNEs) to develop their network partners' capabilities while simultaneously safeguarding competitive advantages. However , they can be challenging for MNEs due to cultural and institutional differences between home and host markets. This poses a dilemma for MNEs, which is how to strike a balance between their knowledge transfer (KT) and knowledge protection (KP) strategies. It is notable that, so far, research has primarily investigated these two areas independently, lacking an integrative view. Therefore, in this article, we reviewed 98 academic articles exploring knowledge transfer/protection in MNEs operating under international joint venture (IJV) arrangements and assessed publications from the last two decades (2000-2022). Drawing from institutional theory and the bargaining power perspective, we developed a conceptual framework highlighting the external and internal factors influencing KT and KP. Subsequently, we contextualized these factors within the specific domain of IJVs, drawing on insights gleaned from the studies in our sample. The interplay of these factors, along with their contextual nuances, provides a holistic and in-depth understanding of how knowledge is managed within the complex dynamics of IJVs. In addition, our review contributes to our understanding of knowledge management in MNEs by identifying novel gaps in the literature and suggesting a number of avenues for future research.
... This literature focuses on the role played by coordination costs and appropriability hazards and the different governance choices and contractual provisions to avoid these costs and risks (Keller et al. 2021). Whereas this literature pays special attention to the incentives firms have to comply with the spirit of the agreement, due to the governance structure (Oxley and Sampson 2004), learning opportunities (Kale and Singh 2009), or concurrent projects with the same partner (García-Canal, Valdés-Llaneza, and Sánchez-Lorda 2014), our research suggest that the way in which potential partners frame the decision to enter into costly and risky cooperative agreements needs to be taken into account. In this way, aligned with Walrave, and Gilsing (2023) we call for further research to analyse how managerial cognition can influence firm decisions on their distant search activities. ...
... Are they really equivalent? Chesbrough (2006:1) defined open innovation as "the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively," using ideas that Chesbrough (2003) explored three years earlier, continuing a long tradition centered on the flow of knowledge into and out of firms to facilitate innovation and profitability in research and teaching in the management of technology and innovation (Allen & Cohen, 1969;Carter & Williams, 1959;Dahlander & Gann, 2010;Oxley & Sampson, 2004;Trott & Hartman, 2009;Tushman, 1977). ...
... Therefore, it improves performance and customer values and enables cost reduction. RI is a big challenge for enterprises, as pointed out by Sampson (Oxley and Sampson, 2004). Thus, companies must continuously seek opportunities and adapt to various methods to achieve RI's optimal success (Wang and Xu, 2018). ...
Purpose
This study aims to examine and discuss the importance and benefits of Open Innovation (OI), Transformational Leadership (TL), Innovation Strategy (IS), Creative Climate (CC), Radical Innovation (RI) and Sustainable Competitive Advantage (SCA) for small and medium-sized enterprises (SMEs) in Dubai. This work also examines the mediating impact of future foresight drivers (FFD) on SMEs' SCA. The study provides a theoretical framework for enhancing SMEs' organizational performance and highlights the need for future empirical research.
Design/methodology/approach
The study uses a systematic literature review (SLR) approach and a bibliometric analysis approach to collect, examine and analyze data from previous research on OI, TL, IS, CC, RI and SCA. This work evaluated 110 publications from separate scholarly databases, Scopus and Web of Science (WoS).
Findings
The study finds a positive relationship between OI, TL, IS, CC, RI and SCA and that future empirical research is needed. While there is limited information on the impact of these concepts on SMEs in the Middle East and especially in Dubai, the study presents new concepts to be debated. The study provides a vital tool for businesses to improve their performance by adopting OI, TL and IS and analyzing their present competitive status to develop new strategies and build competitiveness.
Originality/value
The originality of this study lies in its contribution to understanding the relationships among OI, TL, IS, CC and RI and their impact on SMEs' SCA in Dubai. By emphasizing the importance of OI, TL and IS in improving SMEs' performance and competitiveness, this study provides valuable insights for SME managers seeking to enhance their organizations' sustainability and long-term success. The review also identifies a gap in the literature regarding the impact of these concepts on SMEs in the Middle East, emphasizing the need for further research in this area.
... Yet, several studies show that SMEs vary in their potential to build successful alliances, where many SMEs find it risky and difficult to establish alliances (O'Dwyer & Gilmore, 2018;Vahlne, 2020) due to relational uncertainty and competitive tensions between partners related to knowledge misappropriation (Monteiro et al., 2017;Shijaku et al., 2020). Particularly, when international R&D strategic alliances are leveraged for the purpose of achieving rapid post-entry internationalization, SMEs find it challenging to identify international partners with complementary ranges of knowledge (Choi, 2020), comprehend the differences in legal and regulatory systems across countries (Oxley & Sampson, 2004), build relational trust and reliability with international potential partners (Freixanet & Renart, 2020), and enact monitoring and coordination systems to govern geographically distant R&D teams (Su & Moaniba, 2020). One explanation for the varying ability of SMEs to establish successful international R&D alliances is that some may be endowed with superior alliance management capability (AMC). ...
Research Summary
This study delves into the relationship between alliance management capability (AMC) and the post‐entry internationalization speed of small‐sized and medium‐sized enterprises (SMEs). We develop a novel theoretical framework that illuminates the effect of co‐innovation ambidexterity as a mechanism that unlocks AMC value in speeding up SME internationalization following entry into foreign markets. To validate our framework, we conduct an empirical investigation using a sample of 278 UK‐based manufacturing SMEs. Our findings support the proposition that co‐innovation ambidexterity is a crucial mediating mechanism through which AMC boosts the post‐entry internationalization speed of SMEs. Therefore, this research sheds new light on the critical roles of AMC and co‐innovation ambidexterity during the post‐entry stage, which has far‐reaching implications for the fields of international entrepreneurship and international strategic alliances.
Managerial Summary
Internationalizing SMEs are increasingly forming alliances with the aim of accessing and leveraging external knowledge to tackle the challenges they typically encounter during post‐entry phase. However, these alliances are difficult to establish and manage, which results in high failure rates. To address this lacuna, we argue that AMC and co‐innovation ambidexterity facilitate the post‐entry internationalization speed of SMEs. Using data from 278 UK‐based manufacturing SMEs, we show that AMC is an important capability that allows SMEs to leverage and harness the knowledge of their alliances for co‐innovation ambidexterity, which, in turn, increases their post‐entry internationalization speed. Together, these findings provide important insights for those SMEs' managers who aim to develop effective strategies for rapid internationalization via strategic alliances.
While research on inter-organizational collaborations has received significant attention from management scholars, the innovation ecosystem concept presents a relatively new phenomenon. Both concepts are characterized by value creation and value capturing dynamics, yet few attempts have been made to integrate them theoretically. We draw upon the knowledge-based view to theorize on what constitutes an innovation ecosystem and on the role of multi-lateral inter-organizational collaborations within innovation ecosystems. To this end, we present an integrated framework and five key propositions. We explore how the knowledge-based view lends itself towards multi-level theorization at the organizational, inter-organizational, and ecosystem level, and contributes to a more profound understanding of how value creation and value capture through collaborations take place in the wider context of an innovation ecosystem. Our work provides insights to innovation policymakers and managers on the establishment of R&D consortia as a measure to stimulate innovation and to promote the establishment and growth of (regional) innovation ecosystems.
Information economics and transaction cost economics are two prominent theoretical perspectives used by scholars to understand firms’ corporate development choices. Our study highlights the interplay of these two theories by examining how industry-level learning-by-doing (LBD) rates affect firms’ choices related to acquisitions and alliances. An industry LBD rate reflects the extent to which performance is dependent on own production experience. We argue that this rate also reflects the nature of knowledge in an industry: the higher the LBD rate, the more knowledge is created by own production experience and deeply embedded within routines in the industry. We explain how this suggests that while higher LBD rates might aggravate the overpayment risks emphasized by information economics, they might mitigate the misappropriation risks highlighted by transaction cost economics. We examine how these opposing effects can lead to complementary or opposing predictions about the relationship of LBD rates to several transaction decisions, including the likelihood of any transaction regardless of form, whether transactions that occur are more or less likely to be structured as acquisitions or alliances, and whether alliances that occur are more or less likely to be structured as joint ventures and with limited functional scope.
While young firms often benefit from their relationships with established firms, these relationships can be risky. Hence, during their relationship with established firms, young firms must constantly monitor signs of a failing partnership and terminate it before being in a disadvantageous position. However, discontinuing the alliance with an established firm can also be risky, especially if the young firm has limited alternative collaborative opportunities. Our study adopts the young firm’s perspective and dynamically weighs the tradeoffs between the risks of continuing and discontinuing its relationship with established firms, thereby deciding on its termination. We first develop an analytical model to understand how the alliance duration (time from alliance formation to termination) between young and established firms is affected by alliance, firm, and industry characteristics. We then test the resulting hypotheses on a sample of 1,111 alliances with licensing deals formed between 159 established pharmaceutical firms and 448 young biotechnology firms during the 1986 to 2000 period, which straddles the technological discontinuity of combinatorial chemistry. Our empirical results provide partial support for the hypotheses derived from the analytical model, informing us of firms’ rational alliance duration decisions as well as their deviations from rationality. In presenting both optimal alliance duration decisions and suboptimal alliance duration practices, our mixed-method approach offers important implications for theory and practice.
Much research has taken a structural perspective to examine how the R&D alliance network affects innovation. However, little is known about how the quality of the relationship affects firms’ innovation. In this study, I examine the interaction of network structure and the quality of the relationship and explore the impact on innovation. Using a combination of propensity score weighting and difference‐in‐difference estimation strategies to address endogeneity, I find that the quality of the relationship moderates the inverted U‐shaped relationship between network structure and innovation performance. In addition, I present evidence consistent with possible underlying mechanisms: both network structure and the quality of the relationship affect firms’ access to novel information and firms’ recombination capacity to influence innovation performance.
Notwithstanding their popularity, veto rights are inadequately understood features of international agreements, particularly interfirm exchanges such as international joint ventures (IJVs). As an interesting feature of an IJV’s governance design, they shape decision-making of the most powerful administrative mechanism of an IJV – the IJV board. IJVs’ boards play a crucial part in supporting adaptation to contingencies, but their adaptive capacity can also give rise to a different set of concerns, however: their opportunistic use by a partner in control of the board. Such behavior, we argue, can be reined in by veto rights. Building on transaction cost economics, we posit that goal conflicts owing to partner competition and environmental uncertainty contribute to the allocation of veto rights to partners. Concerns surrounding the maladaptive use of board control weaken when institutional safeguards are strong, reducing the need for veto rights. Findings from a survey of IJVs furnish evidence in support of the core proposition that veto rights can help parent firms address maladaptation. We conclude that veto rights can be an important element of partners’ arsenal when designing and governing IJVs based on comparative efficiency considerations.
Organizations rely on globally distributed work (GDW) to take advantage of complementary objectives. In typical arrangements, highly skilled onshore teams focus on strategy and customer interactions, while offshore teams focus on repetitive back-office activities, reducing costs and improving efficiencies. Individually, each side can operate within the scope of their own tasks, priorities and values. However, when they are required to collaborate.
Does a firm that successfully absorbs knowledge from an alliance partner learn to protect its own knowledge in subsequent alliances? Our analysis of 529 alliances of East Asian firms during 1999–2015 suggests that as firms more skillfully overcome their partners’ knowledge protection, they learn to better protect their own knowledge in subsequent alliances. However, such vicarious learning increases at a diminishing rate and is further weakened by the firm’s relative absorptive capacity and the value chain scope of the previous alliance. Our study extends research on learning in alliances by demonstrating cross-alliance dynamics and by revealing conditions under which absorbing knowledge from previous partners helps a firm protect its own knowledge in subsequent alliances.
Firms can derive insights not only from their own failures but also from the innovation failures of counterparts in the same industry. This study investigates how 109 Chinese A‐share listed high‐tech firms (2013–2022) learn from counterparts' innovation failures to improve their success rate of innovation and emphasizes the crucial role of venture capital (VC) syndication networks in facilitating knowledge transfer. Central VCs within the network notably enhance vicarious learning from others' failures. Further empirical analysis shows a significant increase in the success rate of exploitative innovations, while the impact on exploratory innovations is minimal.
Multiparty alliances (MPAs) are increasingly used to deliver large utilities infrastructure projects on‐time, on‐budget, and to specified quality. In theory, MPAs should help buyers to coordinate suppliers, enable concurrent scheduling, and create process innovations. On the other hand, these governance structures are inherently less stable than dyadic relationships due to their additional complexity and greater opportunities for free riding. We conduct a multi‐source, longitudinal study, investigating how a buyer actively manages the dynamics between competition and cooperation during the formation of an MPA consisting of a lead organization and directional relationships between all partners. We contribute to MPA and coopetition literature by exploring cooperation and competition dynamics that are associated with the MPA structure that would largely be absent in dyads, and unpack the process by which a buyer orchestrates these dynamics by sequentially introducing new initiatives that seek to balance coopetition. MPAs have been recommended by governments and industry bodies as one solution for time and cost overruns in the utilities infrastructure sector, our study also provides guidance to buyers on the management of the alliance during the critical formation stage of the relationship lifecycle.
We examine how CEOs’ facial width‐to‐height ratio relates to their firm's alliance partner choice. Using a sample of 2627 alliances of 184 US firms in high‐technology industries between 1993 and 2020, we find that firms led by CEOs with a greater facial width‐to‐height ratio are more likely to ally with new and unfamiliar partners. This tendency is more pronounced when the partner firm is larger or more central in the alliance network than the focal firm. We also find that this tendency is strengthened when the focal firm's performance is below aspirations. Our findings suggest that wider‐faced CEOs are more inclined to take risks and seek status in their alliance partner choice. Our paper bridges upper echelons theory and strategic alliance literature by examining the role of an important but understudied physical attribute of executives in the context of strategic alliances.
Transaction cost theory (TCT) is one of the most commonly used theories to explain how firms govern their economic activities. In the context of cross-border collaborations, TCT proposes that dissimilarities between the partners’ home countries, which constitute a key source of behavioral uncertainty, affect how collaborations are governed (i.e., whether firms opt for equity joint ventures or non-equity alliances). Although many firms are likely to face more than one dimension of dissimilarity – for example in terms language and religion, as well as culture – studies in TCT typically focus on how each source of dissimilarity impacts governance choices independently, in isolation. We integrate insights from research on decision-making and social psychology into the logic of TCT to theorize about how multiple dimensions of dissimilarity interactively impact governance choices in collaborative agreements, such that the influence of a given level of dissimilarity is not independent of the level of dissimilarity in other dimensions. Specifically, we propose that the impact of dissimilarity on a given dimension on these governance choices will be lower, i.e. negatively moderated, when dissimilarities on other dimensions are higher. For example, a given level of cultural distance will have a greater impact on governance choice when linguistic distance is low (because cultural distance becomes more distinctive) as compared to a case when linguistic distance is not low. Our analysis of 21,951 cross-border non-equity alliances and equity joint ventures yields support for our predictions.
Termination provisions establish vital governance mechanisms in alliances, offering essential safeguards and incentives by providing the flexibility to exit (underperforming) partnerships. However, they can also foster distrust and instability by potentially undermining commitment and continuity. We argue that the motivation behind termination provisions lies in the need to address safeguarding and flexibility concerns arising from increases in alliance scope, upfront payments, and technological uncertainty. Conversely, alliances with strong relational commitment and social embeddedness stemming from prior and indirect ties tend to omit termination provisions. Drawing on an analysis of 1,576 biopharmaceutical alliance contracts, we scrutinize various conditional and unconditional termination rights, along with their partner-specific allocations. Among other findings, we observe a positive association between broad alliance scope and termination rights for patent challenge, for lack of reasonable effort, and for specific countries assigned to the research and development (R&D) firm contributing technological expertise and, furthermore, termination rights for convenience for the client firm sponsoring the alliance. Larger unilateral upfront payments increase the likelihood that the client firm receives termination rights for lack of reasonable effort and for convenience. Higher technological uncertainty is associated with termination rights for convenience for the client or R&D firm. In contrast, prior ties negatively correlate with termination rights for convenience for the client firm, while indirect ties show a negative association with termination rights for convenience and specific countries for the R&D firm. Conceptually, our study highlights the relevance of termination provisions as elastic governance mechanisms that enable partners to accommodate postcontractual disturbances.
The presence of independent directors on corporate boards is often seen as an important means of monitoring to address principal-agent problems and of providing external resources and advice to management. In joint ventures (JVs), however, shareholder-management frictions can be lessened by appointing insiders to management and board positions, whereas access to valuable expertise, resources, and networks are provided by the partners themselves. A natural question, then, is why and when do partners appoint independent directors to JV boards? We argue that the appointment of independent directors to joint venture boards is primarily driven by principal-principal conflict considerations, which are unique in the joint venture context compared with conventional widely held corporations. Consistent with this argument, we find that the likelihood of appointing independent directors increases when JVs face more exchange hazards due to the competitive overlap between partners and the broader functional scope of the JV. However, given that JVs also have alternative governance mechanisms to mitigate shareholder conflicts, we also find that more complex contractual agreements can potentially substitute for independent directors on JV boards. Although relational governance is often highlighted as a key facet of JV governance, we do not find such a substitution effect for this supporting governance mechanism. Overall, our research therefore highlights several interesting domain translation issues when applying existing corporate governance insights to the joint venture setting. Our paper concludes with a call for future research on independent directors serving on JV boards, as JVs represent an organizational form that has been neglected in corporate governance research.
Research Summary
The impact of multimarket contact (MMC) between partners on strategic alliance survival is unclear, even though recent studies have suggested that MMC increases the likelihood of alliance formation. Our study investigates this issue by integrating two mechanisms occurring between multimarket firms: mutual forbearance and technological resource imitation. We argue that MMC between partners deters opportunism in alliances via mutual forbearance, resulting in a positive effect on the likelihood of strategic alliance survival. We also suggest that the positive effect is weakened in two settings with higher risks of technological resource imitation: technological overlap between partners and the presence of R&D activities in an alliance. Evidence from strategic alliances in the global semiconductor industry supports these conclusions.
Managerial Summary
Recent research has shown that firms encountering each other in multiple markets are more likely to form strategic alliances, but it is unclear whether these firms are likely to stick together. Our theory suggests that the threat of broad retaliation limits opportunism and increases the likelihood of alliance survival when partners encounter each other in multiple markets. Nonetheless, in settings where partners have similar technologies, or in alliances involving R&D activities, their ability and incentives to copy each other's technological resources offsets the positive effect of multimarket contact on alliance survival. We study strategic alliances in the global semiconductor industry and find evidence consistent with these arguments.
Recent research on innovation management and knowledge transfer has demonstrated that industry knowledge collaboration and knowledge spillovers matter for innovation, but so does a firm's Research and Development (R&D). Conditional to a firm's R&D investment, this study makes a theoretical investigation into the role of two knowledge transfer strategies—industry coopetition and industry knowledge spillovers for a firm's innovation. Based on an analysis of a sample of 17,859 UK firms from 2002 to 2014, we demonstrated why and under what conditions firms will (a) invest in internal R&D, (b) engage in coopetition, and (c) access knowledge spillovers to introduce new to firm (incremental innovation) and new to market products (radical innovation). The results of this study demonstrate that firm managers who choose knowledge spillovers versus coopetition are likely to achieve radical vis-à-vis incremental innovation. Benefits from the coopetition can be achieved with low investment in R&D, while R&D is essential in recognizing the knowledge spillover for radical innovation. By deciding whether to deploy its costly R&D and access external knowledge via industry coopetition or spillovers, the firm is also making a concomitant decision about the type of innovative activity it will generate. Thus, a firm strategy for knowledge transfer and investing in knowledge internally is inextricably linked to a firm strategy involving the type of innovative output.
En raison de leur manque de ressources internes, les PME sont les entreprises qui ont le plus à gagner en s’engageant dans un processus d’innovation ouverte (IO). Cependant, et en particulier en raison de leur vulnérabilité aux comportements opportunistes, ces entreprises éprouvent également les plus grandes difficultés à mettre en œuvre l’IO. À cet égard, la technologie Blockchain présente des propriétés intéressantes qui pourraient aider les PME à se protéger de l’opportunisme et des dangers liés à l’IO. Cet article vise à comprendre l’impact possible de la blockchain sur les PME dans le contexte de l’IO. Notre analyse théorique indique que la Blockchain a un impact positif sur les processus d’IO basés sur le marché et sur les processus d’IO collaboratives impliquant des ensembles de tâches bien définies et des connaissances codifiées. Cependant, la blockchain semble moins adaptée aux processus d’IO impliquant des connaissances tacites et des résultats de recherche ambigus ou incertains. Nous mettons également en avant des résultats concernant le rôle de la confiance et des intermédiaires de l’IO. Enfin, nous proposons un modèle de décision pour les PME concernant leur mise en œuvre de la blockchain dans un contexte d’IO.
When a firm collaborates with its suppliers, it expands its access to external know-how and thus can enhance its innovation performance. Such collaborations are common and argued to have significant impact on the firm's market outcomes. However, such collaborations also expose the firm to various transactional hazards, including knowledge spillovers and opportunism. This trade-off looms over the firm's commitment to a market positioning strategy and the functional capabilities it draws on to generate its strategy dividend. Recent accounts suggest that the verdict on supplier collaborations is noisy and that partner perceptions of these collaborations do not align on key issues of governance, strategy, and value generation. To investigate this, the authors study 202 formal codevelopment contracts of high-tech original equipment manufacturers that collaborated with suppliers from 1985 to 2016. Drawing on the governance value analysis framework, the authors show how misalignment between the firm's codevelopment contracts, capabilities, and market positioning strategy significantly erodes its innovation performance. Thus, blanket prescriptions for one type of contract or the other are misdirected, their effectiveness being a contingent outcome dependent on the firm's market positioning strategy and functional capabilities. This research presents one of the most complete tests of the governance value analysis framework to date.
Translation of geoscience research into tangible changes, such as modified decisions, processes, or policy, in the wider world is an important yet notably difficult process. Illustratively, university-based scientists and professionals work on different timescales, seek different insights, and may have a substantial cognitive distance between them. The work on Co-RISK reported in this paper is motivated by an ongoing need for mechanisms to aid this translation process. Co-RISK is an accessible (i.e. open access, paper based, zero cost) toolkit for use by stakeholder groups within workshops. Co-RISK has been developed to aid the co-creation of collaborative inter-organisational projects to translate risk-related science into modified actions. It is shaped to avoid adding to a proliferation in increasingly complex frameworks for assessing natural hazard risk and is given a robust basis by incorporating paradox theory from organisation studies, which deal with navigating the genuine tensions between industry and research organisations that stem from their differing roles. Specifically designed to ameliorate the organisational paradox, a Co-RISK workshop draws up “maps” including key stakeholders (e.g. regulator, insurer, university) and their positionality (e.g. barriers, concerns, motivations) and identifies exactly the points where science might modify actions. Ultimately a Co-RISK workshop drafts simple and tailored project-specific frameworks that span from climate to hazard, to risk, to implications of that risk (e.g. solvency). The action research approach used to design Co-RISK, its implementation in a trial session for the insurance sector, and its intellectual contribution are described and evaluated. The initial Co-RISK workshop was well received so it is envisaged to be applicable to other sectors (i.e. transport infrastructure, utilities, government). Joint endeavours enabled by Co-RISK could fulfil the genuine need to quickly convert the latest insights from environmental research into real-world climate change adaptation strategies.
While the positive influence of external knowledge on firm innovation is widely recognized, our understanding of the interplay between the quest for external knowledge and internally conducted research and development (R&D) remains incomplete. Previous research has identified certain conditions that shape the synergy between internal and external knowledge, such as the institutional origin of the external knowledge and the overall scale of the firm's internal R&D activities. In this study, we focus on an important but not yet considered dimension and analyze whether the returns from external knowledge sourcing are contingent upon a firm's internal involvement in basic or applied research as opposed to development . We argue that engaging in research, while supporting a firm's absorptive capacity, leads overall to lower benefits from seeking external knowledge because of knowledge crowding out and spillover effects. We test our predictions using a representative panel dataset from Spain (Panel de Innovación Tecnológica [PITEC]) and show that the benefits of external knowledge decrease for higher shares of internal research investment. This substitution effect is particularly pronounced in settings where sector‐level appropriability is limited and in nonhigh‐tech sectors. We contribute to the innovation literature by underscoring the important role of the nature of internal R&D efforts in shaping firms' capacity to benefit from external knowledge sources.
One important question in public‐private (PP) projects is how to manage coopetition—simultaneous cooperation and competition among project members. Prior studies on the governance of PP projects showed the importance of governance mechanisms to deal with major events such as technical or organizational disruptions but paid limited attention to the management of coopetition. At the same time, research on the management of coopetition mostly focused on industrial coopetition, whereas PP projects also entail public‐private coopetition. Seeking to better understand how governance mechanisms may help manage coopetition in PP projects, we conducted an in‐depth study of Galileo—a large PP project aimed at delivering Europe's own satellite‐based navigation system. The findings show how three core aspects of project governance—(i) mechanisms (joint vs. separate use of contractual and relational mechanisms), (ii) form (lead organization vs. shared governance), and (iii) goals (to promote cooperation and/or prevent competition)—jointly explained the emergence and (mis)management of knowledge‐ and value‐related coopetitive tensions. In turn, these tensions prompted a series of adaptations in the governance of the project. Our study contributes to a co‐evolutionary understanding of the governance of PP projects and offers implications for practitioners seeking to (re)design PP project governance.
The effective management of knowledge sharing and protection poses a critical challenge for enterprises engaged in interorganizational collaboration. Prior research has indicated that knowledge sharing and protection are often viewed as incompatible or even contradictory organizational behaviors. This study presents a more comprehensive theoretical framework that takes into account both knowledge sharing and protection. To investigate the relationships between influential antecedent factors and collaborative performance outcomes, we conducted a survey involving 247 knowledge‐intensive manufacturing companies in China. The study contributes to the field by developing a conceptual model for understanding knowledge sharing and protection, and it also provides practical value through the introduction of “Knowledge Sharing and Protection Guidelines.” These guidelines are designed to assist enterprises in enhancing their individual performance, expanding their market share, and bolstering their competitiveness. Simultaneously, they aim to foster innovation and create market advantages for all stakeholders engaged in interorganizational collaboration, ultimately leading to improvement in overall performance.
Alliance partners must address goal conflicts to improve performance. Structural solutions to conflict emphasize alliance governance mechanisms like contracts, authority, and control structures, overlooking the role of individual actors and thus limiting our understanding of how alliance participants manage conflict. To address this, we introduce the concept of routine regulation and use the Fiat–Tata alliance to illustrate our insights and explore the microfoundations of organizational conflict through a process perspective, focusing on what participants actually do to balance goal conflicts.
Steering committees are pivotal for governing complex collaborations by consensus to facilitate coordination and knowledge sharing. Although consensus-based governance promotes mutuality, it can also cause deadlocks, stalling expeditious decision making. We examine the conditions under which alliance partners delegate decision-making authority to steering committees as well as the conditions under which authority over discordant matters can be relocated to one of the alliance partners. We argue that joint coordination concerns increase the likelihood of authority delegation, whereas the higher costs and stakes associated with decision stalemates provide grounds for authority reversion. Empirical analyses of strategic alliances in the biopharmaceutical industry support our arguments. Our paper demonstrates the versatility of contractually defined administrative interfaces in alliance governance, allowing partners to coordinate bilaterally and adapt hierarchically as and when required.
Purpose
Multinational enterprises (MNEs) establish a wide range of alliances to access the critical resources that they may need at any one time. Although inter-organizational relationships (IORs) constitute the channels through which social capital flows, MNEs should consider which mechanisms or characteristics of the relations facilitate their actual mobilization.
Design/methodology/approach
A definition of alliance types yielded the parameters for an ordinary least squares regression of a sample from top global-reach MNEs from the airline industry.
Findings
The results showed that certain kind of alliances favored the actual mobilization of social capital.
Practical implications
Managers of MNEs must select the type of IOR taking into account the objective they pursue and the type of activity they will include.
Originality/value
Analyzing the factors that influence the degree of mobilization of social capital and how MNEs actually use the resources of the partners require the establishment of a theoretical framework and the development of empirical evidence.
Both academics and practitioners frequently argue that ‘excessive’ firm cash reserves are likely to be squandered and thus may actually be detrimental to firm performance. Contrary to this narrative, we show that large cash reserves can have strong benefits for firms. Specifically, being cash‐rich helps firms form more strategic partnerships because cash helps assure potential partners that the focal firm will be able to adapt to unfolding contingencies. This assurance is particularly relevant in industry conditions that make disruptions either more likely or more costly. We explain how such disruptions arise due to uncertainty about partners' behaviours and thereby extend the literature in the area of transaction cost economics by shifting the focus from intentional opportunism to encompass unintentional factors that can impede a firm's ability to honour partnership agreements. This shift highlights a beneficial role of excess cash that is often overshadowed by the popular narrative on its wastefulness.
Purpose
The research is aimed at investigating how relational mechanisms and formal contracts affect alliance success under constructive and destructive conflict.
Design/methodology/approach
While relational mechanisms and formal contracts are widely used in strategic alliances to manage a variety of issues among partners, recent research has indicated that effects of these governance mechanisms may change in distinct contexts. Adopting the lens of new institutional economics, this study provides insights on the comparative and interactive effects of relational mechanisms and formal contracts on alliance success, and the differential contingency effects of two types of inter-partner conflict, i.e. constructive and destructive conflict, on the above relationships. The authors use hierarchical multivariate regression analyses through a survey dataset of 392 alliance firms in China with the approach of two key informants.
Findings
The empirical results confirm that relational mechanisms have a stronger positive effect on alliance success than formal contracts and these two governance mechanisms complement each other in driving alliance success. When facing a high level of constructive conflict, partner firms rely to a greater extent on relational mechanisms than on formal contracts to achieve alliance success. When a high level of destructive conflict exists, partner firms depend more heavily on formal contracts than on relational mechanisms to achieve alliance success. Moreover, the complementary effect of the two governance mechanisms is much stronger when partner firms face high constructive conflict than when they face high destructive conflict.
Originality/value
This study discloses the comparative and interactive effects of relational mechanisms and formal contracts on alliance success in distinct contexts by identifying the moderating roles of constructive and destructive conflict.
We examine how nationalism influences governance choice in cross- border collaborations. While nationalism has historically been within the purview of political scientists, we demonstrate its relevance to management scholars by theorizing how nationalist attitudes and behaviors among decision-makers might shape strategic decisions about collaborations with foreign partners. Drawing on insights from the social psychology literature, we theorize how two attitudes commonly associated with nationalism, i.e., lower levels of trust and an unwillingness to work with foreigners, may increase decision-makers’ concerns about opportunistic behavior and invasiveness in cross-border collaborations. Integrating these insights into two key theories of governance choice, i.e., transaction cost economics (TCE) and resource dependence theory (RDT), we derive two competing effects of nationalism: TCE suggests that a heightened concern about opportunistic behavior will make equity alliances more preferable, whereas RDT predicts that a greater sensitivity to invasiveness would prioritize non- equity alliances. Examining 11,469 cross-border collaborations over a 25-year period, we find, in line with the RDT-based prediction, that firms from countries with stronger nationalist sentiments prefer non-equity alliances. We also find that cross-country dissimilarities and prior conflict between the firms’ home countries strengthen this negative association. Our findings advance research on cross-border collaborations by demonstrating why and when nationalism may influence governance mode choice. We also contribute to efforts to establish nationalism, specifically in the form of nationalist sentiments, as an important theoretical concept within the management literature.
Although theory points to the relevance of dynamic capabilities in firms that seek to drive new markets, we lack a clear understanding of how firms can develop and apply such capabilities. In this paper, we draw on a seven-step quasi-Delphi study to discuss how market-driving companies should conduct market-sensing, − seizing, and-transforming activities. We identify important research gaps related to determining needs in market sensing, making "big bets" versus taking small, incremental steps in market seizing, and individual versus collective market-driving activities in transforming markets, and on the role of agility and resources in market-driving activities. We propose an integrated research agenda to address these gaps and advance exploration of the market-driving phenomenon.
Previous research suggests that firms tend to form alliances with counterparts of similar status. However, it remains unclear whether the principle of status homophily helps or hinders the alliance process. In this study, we contend that status differentials, rather than status similarity, can reduce the likelihood of the unplanned dissolution of an alliance, as a clearer order of status helps to resolve interfirm discrepancies and conflicts during collaborative processes. The results based on a sample of joint ventures in the US computer and telecommunications industries support our arguments. Further, we find that the effect of status differentials on the unplanned dissolution of alliances is strengthened when the high‐status firm performs better than the low‐status firm and when the two firms are from more related industries. Our findings call into question the emphasis on status homophily in the management of alliances following their formation.
Intra-industry alliance networks provide a firm with both collaborative opportunities and competitive challenges. When forming alliance networks within a particular industry, firms need to consider to which extent they compete in the same markets with their alliance network partners, who are also their industry peers. However, previous literature has not exhaustively addressed the antecedents of a firm's competitive behavior with their alliance network peers – i.e., a phenomenon we label ego-network competitiveness. This study draws on extensive panel data from the top global pharmaceuticals to examine this question. Combining behavioral and network perspectives, we test two competing hypotheses on how ego-network competitiveness varies relative to performance feedback and whether structural prominence moderates this relationship. Our results show that performance above and below aspirations increases ego-network competitiveness through high-intensity responses (i.e., problemistic and slack search). We also find that performance above aspirations increases ego-network competitiveness for firms with high structural prominence.
Much of the prior research on interorganizational learning has focused on the role of absorptive capacity, a firm's ability to value, assimilate, and utilize new external knowledge. However, this definition of the construct suggests that a firm has an equal capacity to learn from all other organizations. We reconceptualize the Jinn-level construct absorptive capacity as a learning dyad-level construct, relative absorptive capacity. One firm's ability to learn from another firm is argued to depend on the similarity of both firms' (1) knowledge bases, (2) organizational structures and compensation policies, and (3) dominant logics. We then test the model using a sample of pharmaceutical-biotechnology RED alliances. As predicted, the similarity of the partners' basic knowledge, lower management formalization, research centralization, compensation practices, and research communities were positively related to interorganizational learning. The relative absorptive capacity measures are also shown to have greater explanatory power than the established measure of absorptive capacity, R&D spending. (C) 1998 John Wiley & Sons, Ltd.
This study examined the effects of partner nationality, organizational dissimilarity, and economic motivation on the dissolution of joint ventures. Event-history analysis was used to test the hypotheses in a sample of 186 ventures. Cultural distance in general did not have an effect on dissolution, but U.S.-Japanese joint ventures lasted longer than U.S.-U.S. joint ventures. Prior relationships between partners appeared to negate some complexities arising from cultural differences. Opportunistic threat and rivalry appeared to be a stronger indication of the dissolution of joint ventures than organizational variables.
This paper examines interfirm knowledge transfers within strategic alliances. Using a new measure of changes in alliance partners' technological capabilities, based on the citation patterns of their patent portfolios, we analyze changes in the extent to which partner firms' technological resources ‘overlap’ as a result of alliance participation. This measure allows us to test hypotheses from the literature on interfirm knowledge transfer in alliances, with interesting results: we find support for some elements of this ‘received wisdom’—equity arrangements promote greater knowledge transfer, and ‘absorptive capacity’ helps explain the extent of technological capability transfer, at least in some alliances. But the results also suggest limits to the ‘capabilities acquisition’ view of strategic alliances. Consistent with the argument that alliance activity can promote increased specialization, we find that the capabilities of partner firms become more divergent in a substantial subset of alliances.
Joint ventures generate information and lead to substantial information exchanges between the partner firms stemming from their interactions. Therefore, joint ventures are expected to have a feedback effect on their parent firms. We propose to test jointly the following hypotheses. First, there are two interaction scenarios between the joint venture partners: the parent firms become more alike in their competitive capabilities or their competitive capabilities become more dissimilar but complementary. Second, long-lasting joint ventures are those in which partner firms' competitive capabilities have become dissimilar but complementary. Using the partial least squares (PLS) technique and cross-sectional data on U.S.-Japan joint ventures in Japan we obtain supportive empirical evidence.
This paper investigates interrelationships of product design, organization design, processes for learning and managing knowledge, and competitive strategy. This paper uses the principles of nearly decomposable systems to investigate the ability of standardized interfaces between components in a product design to embed coordination of product development processes. Embedded coordination creates ‘hierarchical coordination’ without the need to continually exercise authority—enabling effective coordination of processes without the tight coupling of organizational structures. We develop concepts of modularity in product and organization designs based on standardized component and organization interfaces. Modular product architectures create information structures that provide the ‘glue’ that holds together the loosely coupled parts of a modular organization design. By facilitating loose coupling, modularity can also reduce the cost and difficulty of adaptive coordination, thereby increasing the strategic flexibility of firms to respond to environmental change. Modularity in product and organization designs therefore enables a new strategic approach to the management of knowledge based on an intentional, carefully managed loose coupling of a firm's learning processes at architectural and component levels of product creation processes.
How should we understand why firms exist? A prevailing view has been that they serve to keep in check the transaction costs arising from the self-interested motivations of individuals. We develop in this article the argument that what firms do better than markets is the sharing and transfer of the knowledge of individuals and groups within an organization. This knowledge consists of information (e.g., who knows what) and of know-how (e.g., how to organize a research team). What is central to our argument is that knowledge is held by individuals, but is also expressed in regularities by which members cooperate in a social community (i.e., group, organization, or network). If knowledge is only held at the individual level, then firms could change simply by employee turnover. Because we know that hiring new workers is not equivalent to changing the skills of a firm, an analysis of what firms can do must understand knowledge as embedded in the organizing principles by which people cooperate within organizations.
Based on this discussion, a paradox is identified: efforts by a firm to grow by the replication of its technology enhances the potential for imitation. By considering how firms can deter imitation by innovation, we develop a more dynamic view of how firms create new knowledge. We build up this dynamic perspective by suggesting that firms learn new skills by recombining their current capabilities. Because new ways of cooperating cannot be easily acquired, growth occurs by building on the social relationships that currently exist in a firm. What a firm has done before tends to predict what it can do in the future. In this sense, the cumulative knowledge of the firm provides options to expand in new but uncertain markets in the future.
We discuss at length the example of the make/buy decision and propose several testable hypotheses regarding the boundaries of the firm, without appealing to the notion of “opportunism.”
Interfirm strategic alliances appear to have become more important as a part of (international) business. In this contribution an attempt is made to clarify our understanding of the motives that lead firms to cooperate in their innovative efforts. Going beyond general theoretical statements and case studies, attention is paid to both sectoral differences in the motivation for partnerships as well as to contrasts in interorganizational features of technology cooperation. Based on a large sample of alliances the analysis reveals some major differences regarding the research orientation of contractual arrangements and organizationally complex alliances.
Overlapping development activities is widely used to reduce project completion times in product development. However, research on the applicability of the concept in different technological environments remains scarce. So far, very few industry-specific studies have statistically confirmed an accelerating effect of overlap. In the present article we statistically measure the effectiveness of overlapping development activities in reducing project completion time. Building on analytical research in operations management, we argue that this effectiveness differs with the organization's capability to resolve uncertainty early in the process. Projects benefit more from overlap if they are able to resolve uncertainty early. This contingency view to overlapping development activities is tested based on data from 140 completed development projects across several global electronics industries.
This paper analyzes the performance implications of interorganizational relationships in the development of technological innovations, focusing on the characteristics of the tasks partitioned between a manufacturer and its suppliers in the development of new products. We identify two critical dimensions: (1) the design scope and (2) the level of task interdependency. The design scope dimension characterizes the type of problem-solving activities outsourced by the manufacturer. The level of task interdependency dimension characterizes the influence of any given supplier-manufacturer interaction on other activities within an overall innovation process. Data analyses on 50 supplier-manufacturer relationships drawn from three new product development projects show that the type of problem-solving activities being partitioned and their level of interdependency with the rest of the project are important predictors of performance outcomes of the relationship, controlling for contractual differences. Further, the analyses demonstrate a clear trade-off between short-term efficiency-increasing and longer-term learning-enhancing outcomes.
The resource-based view of the firm, with its focus on firm-specific `capabilities', has attracted considerable attention in recent work by management scholars, but has not sparked much empirical analysis. This paper relies on the resource-based view to examine partner choice in interfirm collaborations, emphasizing the role of partners' technological capabilities. Patent citation data are used to measure `technological overlap' between firms before and after alliance formation. Our results provide support for the resource-based view of the firm. Partner selection can be predicted by measures of technological overlap and, once formed, alliances appear to affect firms' technological portfolios in ways predicted by the resource-based view.
Strategic alliances are becoming ever more popular, particularly to undertake technological development activities. Their rapid growth since the 1980s is regarded as further evidence of globalization. In this paper we analyse the trends in strategic technology partnering (STP). In particular, the use of international STP has grown, although less so in US firms than European and Japanese ones. In addition, there has been a growing use of non-equity agreements, which seem to be a superior means to undertake technological development in high-technology and fast-evolving sectors. Among other things, our analysis suggests that as far as STP is concerned, firms appear to do whatever firms in the same industry do, regardless of nationality.
In this paper, we argue that the ability of a firm to recognize the value of new, external information, assimilate it, and apply it to commercial ends is critical to its innovative capabilities. We label this capability a firm's absorptive capacity and suggest that it is largely a function of the firm's level of prior related knowledge. The discussion focuses first on the cognitive basis for an individual's absorptive capacity including, in particular, prior related knowledge and diversity of background. We then characterize the factors that influence absorptive capacity at the organizational level, how an organization's absorptive capacity differs from that of its individual members, and the role of diversity of expertise within an organization. We argue that the development of absorptive capacity, and, in turn, innovative performance are history- or path-dependent and argue how lack of investment in an area of expertise early on may foreclose the future development of a technical capability in that area. We formulate a model of firm investment in research and development (R&D), in which R&D contributes to a firm's absorptive capacity, and test predictions relating a firm's investment in R&D to the knowledge underlying technical change within an industry. Discussion focuses on the implications of absorptive capacity for the analysis of other related innovative activities, including basic research, the adoption and diffusion of innovations, and decisions to participate in cooperative R&D ventures.
This paper demonstrates that the traditional categorization of innovation as either incremental or radical is incomplete and potentially misleading and does not account for the sometimes disastrous effects on industry incumbents of seemingly minor improvements in technological products. We examine such innovations more closely and, distinguishing between the components of a product and the ways they are integrated into the system that is the product "architecture," define them as innovations that change the architecture of a product without changing its components. We show that architectural innovations destroy the usefulness of the architectural knowledge of established firms, and that since architectural knowledge tends to become embedded in the structure and information-processing procedures of established organizations, this destruction is difficult for firms to recognize and hard to correct. Architectural innovation therefore presents established organizations with subtle challenges that may have significant competitive implications. We illustrate the concept's explanatory force through an empirical study of the semiconductor photolithographic alignment equipment industry, which has experienced a number of architectural innovations.
The author investigates the links between trade policy and economic growth using data from a panel of 57 countries from 1970-89. This is the first attempt to empirically evaluate, in a cross-country context, the respective roles of various theories of dynamic gains from trade in explaining the observed positive impact of trade openness on economic growth. The author uses a new measure of trade openness, based on the effective policy component of trade shares, in a simultaneous equations system aimed at identifying the effect of trade policy on several determinants of growth. The results suggest that a policy of trade openness has a strong positive impact on economic growth. The accelerated accumulation of physical capital accounts for more than half this effect. Enhanced technological transmissions and improvements in the quality of macroeconomic policy each account for about 20 percent of the impact of trade openness on growth. This decomposition is robust to alternative specifications and time periods. The author also successfully tests whether the empirical methodology captures all or most of the effects of trade policy on growth. The lack of statistically significant results concerning several other channels may be due to measurement problems. The black market premium may be a weak proxy for the efficiency of the price system. Moreover, international technological transmissions are very hard to measure, so there may be a downward bias in the estimates based on the manufactured exports channel, and a corresponding overstatement of other channels.
This paper investigates the relationship between intercorporate technology alliances and firm performance. It argues that alliances are access relationships, and therefore that the advantages which a focal firm derives from a portfolio of strategic coalitions depend upon the resource profiles of its alliance partners. In particular, large firms and those that possess leading‐edge technological resources are posited to be the most valuable associates. The paper also argues that alliances are both pathways for the exchange of resources and signals that convey social status and recognition. Particularly when one of the firms in an alliance is a young or small organization or, more generally, an organization of equivocal quality, alliances can act as endorsements: they build public confidence in the value of an organization's products and services and thereby facilitate the firm's efforts to attract customers and other corporate partners. The findings from models of sales growth and innovation rates in a large sample of semiconductor producers confirm that organizations with large and innovative alliance partners perform better than otherwise comparable firms that lack such partners. Consistent with the status‐transfer arguments, the findings also demonstrate that young and small firms benefit more from large and innovative strategic alliance partners than do old and large organizations. Copyright © 2000 John Wiley & Sons, Ltd.
We show how the tension between cooperation and competition affects the dynamics of learning alliances. ‘Private benefits’ and ‘common benefits’ differ in the incentives that they create for investment in learning. The competitive aspects of alliances are most severe when a firm's ratio of private to common benefits is high. We introduce a measure, ‘relative scope’ of a firm in an alliance, to show that the opportunity set of each firm outside an alliance crucially impacts its behavior within the alliance. Finally, we suggest why firms might deviate from the theoretically optimal behavior patterns. © 1998 John Wiley & Sons, Ltd.
One of the main reasons that firms participate in alliances is to learn know‐how and capabilities from their alliance partners. At the same time firms want to protect themselves from the opportunistic behavior of their partner to retain their own core proprietary assets. Most research has generally viewed the achievement of these objectives as mutually exclusive. In contrast, we provide empirical evidence using large‐sample survey data to show that when firms build relational capital in conjunction with an integrative approach to managing conflict, they are able to achieve both objectives simultaneously. Relational capital based on mutual trust and interaction at the individual level between alliance partners creates a basis for learning and know‐how transfer across the exchange interface. At the same time, it curbs opportunistic behavior of alliance partners, thus preventing the leakage of critical know‐how between them. Copyright © 2000 John Wiley & Sons, Ltd.
This paper investigates the outcomes and durations of strategic alliances among competing firms, using alliance outcomes as indicators of learning by partner firms. We show that alliance outcomes vary systematically across link and scale alliances. Link alliances are interfirm partnerships to which partners contribute different capabilities, while scale alliances are partnerships to which partners contribute similar capabilities. We find that partners are more likely to reorganize or take over link alliances than scale alliances. By contrast, scale alliances are more likely to continue without material changes. The two types of alliances are equally likely to shut down, at similar ages. These results support the view that link alliances lead to greater levels of learning and capability acquisition between the partners than do scale alliances. Copyright © 2000 John Wiley & Sons, Ltd.
We show how the tension between cooperation and competition affects the dynamics of learning alliances. 'Private benefits' and 'common benefits' differ in the incentives that they create for investment in learning. The competitive aspects of alliances are most severe when a firm's ratio of private to common benefits is high. We introduce a measure, 'relative scope' of a firm in an alliance, to show that the opportunity set of each firm outside an alliance crucially impacts its behavior within the alliance. Finally, we suggest why firms might deviate from the theoretically optimal behavior patterns. (C) 1998 John Wiley & Sons, Ltd.
Authors with many theoretical and managerial perspectives argue that businesses commercializing technologically complex goods benefit when they collaborate closely with other businesses. Collaboration is viewed as a means for businesses to overcome competency limitations and to achieve the close configuration of components required for complex goods. We predict that collaborative relationships often assist businesses to produce complex goods, but that the relationships might also cause problems for the collaborating businesses. We find that firms using development-oriented and marketing-oriented collaborative relationships in the hospital software systems industry are less likely to shut down than businesses that follow independent approaches when the environment changes gradually, but businesses using collaborative relationships are sometimes susceptible to being acquired by other firms. Following a sudden environmental shock, businesses with collaborative relationships for activities central to the shock became more likely to shut down, while businesses with collaborative relationships for activities outside the focus of the shock became more likely to survive. The study critically evaluates and tests the widely stated but little-tested argument that interfirm collaboration is usually beneficial. The results address the issue of whether organizational choices affect comparative business performance.
Defining social capital in terms of the information benefits available to a firm due to its strategic alliances tie present a theory, of social capital that conceptualizes it as a multidimensional construct. We draw from the literature to argue that social capital yields three distinctly different kinds of information benefits in the form of information volume, information diversity, and information richness. This extends current theoretical and empirical research by specifying and empirically demonstrating three interrelated vet distinct dimensions of social capital. Firms vary in their levels of social capital not just on their structural position in an alliance network but also in the dynamics that underlie alliance formation and maintenance. More importantly, the different dimensions of social capital theoretically provide differential benefits. We establish the construct validity of our proposed three-dimensional conceptualization of social capital using longitudinal data on tire population of strategic alliances formed during the period 1980-94 by firms in the global steel industry. In addition, rose establish predictive vadility by demonstrating drat the information dimensions have differential effects oil firm performance, using fire: nationality as a contingency. Copyright (C) 2002 John Wiley Sons, Ltd.
We develop the notion that the choice of alliance scope materially affects the character of benefits that alliance participants receive, and thereby affects a range of issues having to do with the initiation, evolution, and termination of the alliance. Indeed, while under-emphasized by academics, determining alliance scope ranks among the most important tasks undertaken by practitioners of alliances.
Restricting ourselves to alliances where mutual learning is the primary raison d'être, we first define private benefits as those that accrue to subsets of participants in an alliance, and common benefits as those that accrue collectively to all participants. We demonstrate how the choice of alliance scope affects the mix of private and common benefits, and draw on earlier work to show how this, in turn, affects alliance partners' incentives to invest in learning.
As illustrations of the utility of the framework of private and common benefits, we consider two applications. A simple model illustrates the relationship between the choice of alliance scope, the realization of private and common benefits, and the stability, or lack thereof, of the alliance. A second application sheds light on alliance evolution. It examines factors affecting both (a) how a particular alliance evolves, and (b) how firms manage sequences of alliances.
Two broader theoretical points also emerge from this discussion of alliance scope. First, we argue that an analytical focus solely on the individual alliance may be inappropriate for studying a wide range of issues. Of the multiple sources of benefits that accrue to alliance participants, there are some whose realization depends on activities in which the firm is engaged, but that may have little to do with the alliance in question. Second, in contrast to much of the literature on alliances, our analysis is based upon the primitives of benefit streams, rather than on transaction cost reasoning. This complementary perspective is better suited to the task of highlighting how activities not governed by an alliance might nonetheless affect multiple aspects of the alliance.
Why do firms form strategic alliances? The traditional theoretical answer has been transaction cost explanations. Yet, these explanations which center on transaction characteristics, static efficiency, and routine situations do not capture the strategic and social factors which propel many firms into alliance formation. In this study, however, we combine these alternative social and strategic explanations for alliance formation. Consistent with these explanations, we find that alliances form when firms are in vulnerable strategic positions either because they are competing in emergent or highly competitive industries or because they are attempting pioneering technical strategies. We also find that alliances form when firms are in strong social positions such that they are led by large, experienced, and well-connected top management teams. The underlying logic of alliance formation is, thus, strategic needs and social opportunities.
We develop these findings by extending the resource-based view of the firm to alliance formation and then examining the resulting hypotheses using product development alliances. The study is longitudinal and focuses on entrepreneurial semiconductor firms. Overall, strategic and social explanations of organizational phenomena as well as industry, firm, and top management team factors emerge as central in the paper. This suggests that these factors are relevant for predicting alliance formation, especially in high-velocity industries such as semiconductors. We conclude that failure to include social and strategic explanations creates an impoverished view of alliance formation.
This paper investigates the relationship between intercorporate technology alliances and firm performance. It argues that alliances are access relationships, and therefore that the advantages which a focal firm derives from a portfolio of strategic coalitions depend upon the resource profiles of its alliance partners. In particular, large firms and those that possess leading-edge technological resources are posited to be the most valuable associates. The paper also argues that alliances are both pathways for the exchange of resources and signals that convey social status and recognition. Particularly when one of the firms in an alliance is a young or small organization or, more generally, an organization of equivocal quality, alliances can act as endorsements: they build public confidence in the value of an organization's products and services and thereby facilitate the firm's efforts to attract customers and other corporate partners. The findings from models of sales growth and innovation rates in a large sample of semiconductor producers confirm that organizations with large and innovative alliance partners perform better than otherwise comparable firms that lack such partners. Consistent with the status-transfer arguments, the findings also demonstrate that young and small firms benefit more from large and innovative strategic alliance partners than do old and large organizations.
This study examines why firms choose different governance structures across their alliances. We focus on the coordination costs in alliances that arise from interdependence of tasks across organizational boundaries and the related complexity of ongoing activities to be completed jointly or individually. We use a typology of alliance governance structures that differentiates structures by the magnitude of hierarchical controls to test hypotheses predicting alternative contractual choices. We use empirical data on alliance announcements in three worldwide industries over a 20-year period to assess which factors explain the choice of alliance types. The findings suggest that the magnitude of hierarchical controls in contractual relationships such as alliances is influenced by the anticipated coordination costs and by expected appropriation concerns.(. )
Exploring the factors that explain the choice of governance structures in interfirm alliances, this study challenges the use of a singular emphasis on transaction costs. Such an approach erroneously treats each transaction as independent and ignores the role of interfirm trust that emerges from repeated alliances between the same partners. Comprehensive multiindustry data on alliances made between 1970 and 1989 support the importance of such trust. Although support emerged for the transaction cost claim that alliances that encompass shared research and development are likely to be equity based, there is also strong evidence that repeated alliances between two partners are less likely than other alliances to be organized using equity.
This paper investigates the occurrence and determinants of post-formation governance changes in strategic alliances, including alterations in alliances' contracts, boards or oversight committees, and monitoring mechanisms. We examine alliances in the biotechnology industry and find that firms' unique alliance experience trajectories affect the likelihood of such ex post adjustments in these partnerships. Transactional features such as the alliance's scope, its division of labor, and the relevance of the collaboration to the parent firm also bear upon alliances' dynamics. We discuss the implications of these findings and how they complement prior research focusing on alliance design or termination at opposite ends of the alliance life cycle. Copyright © 2002 John Wiley & Sons, Ltd.
Much of the prior research on interorganizational learning has focused on the role of absorptive capacity, a firm's ability to value, assimilate, and utilize new external knowledge. However, this definition of the construct suggests that a firm has an equal capacity to learn from all other organizations. We reconceptualize the firm-level construct absorptive capacity as a learning dyad-level construct, relative absorptive capacity. One firm's ability to learn from another firm is argued to depend on the similarity of both firms' (1) knowledge bases, (2) organizational structures and compensation policies, and (3) dominant logics. We then test the model using a sample of pharmaceutical–biotechnology R&D alliances. As predicted, the similarity of the partners' basic knowledge, lower management formalization, research centralization, compensation practices, and research communities were positively related to interorganizational learning. The relative absorptive capacity measures are also shown to have greater explanatory power than the established measure of absorptive capacity, R&D spending. © 1998 John Wiley & Sons, Ltd.
An overlooked aspect of agglomeration economies, which are positive externalities that stem from the geographic clustering of industry, is that firms contribute to the externality in addition to benefiting from the externality. This insight suggests that if firms are heterogeneous they will differ in the net benefits they receive from agglomerating. We argue that firms with the best technologies, human capital, training programs, suppliers, or distributors will gain little, yet competitively suffer when their technologies, employees, and access to supporting industries spill over to competitors. Therefore, these firms have little motivation to geographically cluster despite the existence of agglomeration economies. Conversely, firms with the weakest technologies, human capital, training programs, suppliers, or distributors have little to lose and a lot to gain; therefore, these firms are motivated to geographically cluster. As a result, when firms are heterogeneous we expect agglomeration to be characterized by adverse selection. We find supportive evidence of these arguments by examining the location choice and survival of foreign greenfield investments in U.S. manufacturing industries. Copyright © 2000 John Wiley & Sons, Ltd.
Two economic theories that have had an immense impact on modern strategic management research are Porter's strategic positioning framework (SPF) and Williamson's transaction cost economics (TCE). While both theories have contributed to our understanding of strategic management and to the choice of strategy and structure, each theory offers managerial prescriptions that are incomplete at best. We contend that if followed in isolation, each theory can lead to inferior performance. This paper, which studies the international courier and small package (IC&SP) services in Japan, improves upon prescriptions from both theories by linking Porter's and Williamson's approaches. Our main proposition is contained in three relationships that predict a fit among three strategic choices: market position, resource profile, and organizational structure. We test our predictions with a three-stage, reduced-form, endogenous self-selection model. While our empirical methodology is complicated and relies on a multilevel analysis, the methodology is necessary both for analyzing a constellation of activities in the vertical chain and for assessing strategy, structure, and performance when data can be drawn from only a limited number of firms. Our results suggest that a firm's market position, resource profile, and organizational choice are related in ways predicted by a positioning-economizing perspective. To be sure, our study is ambitious and suffers from a number of limitations; nevertheless, it provides one of the first attempts to theoretically and empirically link Porter's SPF and Williamson's TCE. Copyright © 2001 John Wiley & Sons, Ltd.
This paper compares the perspectives of transaction costs and strategic behavior in explaining the motivation to joint venture. In addition, a theory of joint ventures as an instrument of organizational learning is proposed and developed. Existing studies of joint ventures are examined in light of these theories. Data on the sectoral distribution and stability of joint ventures are presented.
Defining social capital in terms of the information benefits available to a firm due to its strategic alliances we present a theory of social capital that conceptualizes it as a multidimensional construct. We draw from the literature to argue that social capital yields three distinctly different kinds of information benefits in the form of information volume, information diversity, and information richness. This extends current theoretical and empirical research by specifying and empirically demonstrating three interrelated yet distinct dimensions of social capital. Firms vary in their levels of social capital not just on their structural position in an alliance network but also in the dynamics that underlie alliance formation and maintenance. More importantly, the different dimensions of social capital theoretically provide differential benefits. We establish the construct validity of our proposed three-dimensional conceptualization of social capital using longitudinal data on the population of strategic alliances formed during the period 1980–94 by firms in the global steel industry. In addition, we establish predictive validity by demonstrating that the information dimensions have differential effects on firm performance, using firm nationality as a contingency. Copyright © 2002 John Wiley & Sons, Ltd.
Firms choose strategies based on their attributes and industry conditions; therefore, strategy choice is endogenous and self-selected. Empirical models that do not account for this and regress performance measures on strategy choice variables are potentially misspecified and their conclusions incorrect. I highlight how self-selection on hard-to-measure or unobservable characteristics can bias strategy performance estimates and recommend an econometric technique that has been developed to account for this effect. Although this concern applies to a wide range of strategy questions, to demonstrate its effect I empirically examine if entry mode choice (acquisition versus greenfield) influences foreign direct investment survival. In specifications that do not account for self-selection, I find that greenfield entries have survival advantages compared to acquisitions. This confirms previous findings. However, the significance of this effect disappears once I account for self-selection of entry mode in the empirical estimates. The results confirm that estimates from models that do not account for self-selection of strategy choice can lead to incorrect or misleading conclusions.
Intense competition in many industries forces manufacturing firms to develop new, higher quality products at an increasingly rapid pace. Overlapping product development activities is an important component of concurrent product development that can help firms develop products faster. However, since product development activities may be coupled in complex ways, overlapping interrelated activities can present many difficulties. Without careful management of the overlapped product development process, the development effort and cost may increase, and product quality may worsen. This paper goes beyond the common recommendation to simply overlap activities as much as possible. We present a model-based framework to manage the overlapping of coupled product development activities. The model and framework identify conditions under which various types of overlapping are appropriate for a pair of coupled activities. We illustrate the model and framework with industrial applications involving the development of electronic pagers and automobile doors.
Given incomplete factor markets, appropriate time paths of flow variables must be chosen to build required stocks of assets. That is, critical resources are accumulated rather than acquired in "strategic factor markets" (Barney [Barney, J. 1986. Strategic factor markets: Expectations, luck, and business strategy. Management Sci. (October) 1231--1241.]). Sustainability of a firm's asset position hinges on how easily assets can be substituted or imitated. Imitability is linked to the characteristics of the asset accumulation process: time compression diseconomies, asset mass efficiencies, inter-connectedness, asset erosion and causal ambiguity.
Much of the current thinking about competitive strategy focuses on ways that firms can create imperfectly competitive product markets in order to obtain greater than normal economic performance. However, the economic performance of firms does not depend simply on whether or not its strategies create such markets, but also on the cost of implementing those strategies. Clearly, if the cost of strategy implementation is greater than returns obtained from creating an imperfectly competitive product market, then firms will not obtain above normal economic performance from their strategizing efforts. To help analyze the cost of implementing strategies, we introduce the concept of a strategic factor market, i.e., a market where the resources necessary to implement a strategy are acquired. If strategic factor markets are perfect, then the cost of acquiring strategic resources will approximately equal the economic value of those resources once they are used to implement product market strategies. Even if such strategies create imperfectly competitive product markets, they will not generate above normal economic performance for a firm, for their full value would have been anticipated when the resources necessary for implementation were acquired. However, strategic factor markets will be imperfectly competitive when different firms have different expectations about the future value of a strategic resource. In these settings, firms may obtain above normal economic performance from acquiring strategic resources and implementing strategies. We show that other apparent strategic factor market imperfections, including when a firm already controls all the resources needed to implement a strategy, when a firm controls unique resources, when only a small number of firms attempt to implement a strategy, and when some firms have access to lower cost capital than others, and so on, are all special cases of differences in expectations held by firms about the future value of a strategic resource. Firms can attempt to develop better expectations about the future value of strategic resources by analyzing their competitive environments or by analyzing skills and capabilities they already control. Environmental analysis cannot be expected to improve the expectations of some firms better than others, and thus cannot be a source of more accurate expectations about the future value of a strategic resource. However, analyzing a firm's skills and capabilities can be a source of more accurate expectations. Thus, from the point of view of firms seeking greater than normal economic performance, our analysis suggests that strategic choices should flow mainly from the analysis of its unique skills and capabilities, rather than from the analysis of its competitive environment.
This study builds on developments in transaction cost economics to examine how institutional environment and transaction (project) characteristics affect governance of inter-firm alliances. The focus is on the choice between equity and contractual alliance forms under differing regimes of intellectual property protection and other national institutional features. Empirical results identify transaction-level characteristics as primary drivers of governance choice in alliances, but intellectual property protection is also a significant factor: firms adopt more hierarchical governance modes when protection is weak. Complete understanding of the structure of inter-firm alliances thus requires a combined focus on the institutional environment and mechanisms of governance.
Discussions of the link between firm size and innovation are outmoded because the boundaries of the firm have become fuzzy in recent decades. Strategic alliances — constellations of bilateral agreements among firms — are increasingly necessary to support innovative activities. Such alliances can facilitate complex coordination beyond what the price system can accomplish, while avoiding the dysfunctional properties sometimes associated with hierarchy. Antitrust law and competition policy need to recognize that these new organizational forms are often the functional antithesis of cartels, though they may have certain structural similarities. A more complete understanding of bilateral contracts and agreements ought to reveal when and how cooperation can support rather than impede innovation and competition.
This paper examines the optimization problem of firm and market organization in which both production cost and transaction cost differences are expressed as a function of asset specificity. In general, markets enjoy advantages by aggregating the demands of many buyers, thereby realizing economies of scale or scope. Such production cost savings need to be assessed in relation to the transaction cost advantages that internal organization sometimes enjoys over markets in adapting to changed circumstances. As it turns out, both production cost economies and the transaction cost differences between firm and market organization vary systematically with the characteristics of the investments. This paper employs a unified framework to assess the choice of organization form. The condition of asset specificity is featured.
This paper explores some trends in the internationalization of corporate R & D efforts, innovation output and strategic technology partnering in the past decade. Inter-firm strategic technology partnering, through which companies share their innovation efforts, supplements the standard indicators of technological competence to broaden the scope from internal innovation processes to a wider range of innovative activities. The international information technology industry is singled out for empirical study. The main conclusion of this contribution is that, even in a ‘global’ industry such as information technology, internationalization of innovation, although by no means insignificant, appears less important than expected.
Firm-specific technological competencies help explain why firms are different, how they change over time, and whether or not they are capable of remaining competitive. Data on more than 400 of the world's largest firms show that their technological competencies have the following characteristics: 1.1. They are typically multi-field, and becoming more so over time, with competencies ranging beyond their product range, in technical fields outside their ‘distinctive core’.2.2. They are highly stable and differentiated, with both the technology profile and the directions of localised search strongly influenced by firms' principal products.3.3. The rate of search is influenced by both the firm's principal products, and the conditions in its home country. However, considerable unexplained variance suggests scope for managerial choice.These findings confirm the importance of complexity and path dependency in the accumulation of firm-specific technological competencies, and show that managers are heavily constrained in the directions of their technological search. They also show the limits of the notion of competition through variety, given that the same specific field of technological competence is often essential to the development of a range of possible product configurations. Technological imperatives still exist.
The concept of embeddedness has general applicability in the study of economic life and can alter theoretical and empirical approaches to the study of economic behaviors. Argues that in modern industrial societies, most economic action is embedded in structures of social relations. The author challenges the traditional economic theories that have both under- and oversocialized views of the conception of economic action and decisions that merge in their conception of economic actors atomized (separated) from their social context. Social relations are assumed to play on frictional and disruptive, not central, roles in market processes. There is, hence, a place and need for sociology in the study of economic life. Productive analysis of human action requires avoiding the atomization in the extremes of the over- and undersocialized concepts. Economic actors are neither atoms outside a social context nor slavish adherents to social scripts. The markets and hierarchies problem of Oliver Williamson (with a focus on the question of trust and malfeasance) is used to illustrate the use of embeddedness in explicating the proximate causes of patterns of macro-level interest. Answers to the problem of how economic life is not riddled with mistrust and malfeasance are linked to over- and undersocialized conceptions of human nature. The embeddedness argument, on the contrary, stresses the role of concrete personal relations and networks (or structures) in generating trust and discouraging malfeasance in economic life. It finds a middle way between the oversocialized (generalized morality) and undersocialized (impersonal institutional arrangements) approaches. The embeddedness approach opens the way for analysis of the influence of social structures on market behavior, specifically showing how business relations are intertwined with social and personal relations and networks. The approach can easily explain what looks otherwise like irrational behavior. (TNM)
This paper contrasts two theoretical models for firms' achieving fast adaptation through product innovation. The compression model assumes a well-known, rational process and relies on squeezing together or compressing the sequential steps of such a process. The experiential model assumes an uncertain process and relies on improvisation, real-time experience, and flexibility. The two models are tested using data from 72 product development projects drawn from European, Asian, and U.S. computer firms. The results indicate that using an experiential strategy of multiple design iterations, extensive testing, frequent project milestones, a powerful project leader, and a multifunctional team accelerates product development. In contrast, the compression strategy of supplier involvement, use of computer-aided design, and overlapping development steps describes fast pace only for mature industry segments. The results also show that planning and rewarding for schedule attainment are ineffective ways of accelerating pace. We conclude with linkages to punctuated equilibrium and selection models of adaptation, fast organizational processes, organic versus improvisational structures, and complexity theory.
Previous studies in organizational economics and international business research have not tested a property rights view on the allocation of decision rights (DR) in joint ventures (JVs). The paper offers a test of the property rights explanation by using data from Hungarian JVs. Our analysis derives the following hypothesis: The more important the JV partner's intangible knowledge assets for the generation of residual surplus, the more residual DR are assigned to him. Copyright � 2009 John Wiley & Sons, Ltd.
