RISK TYPES AND INTER‐FIRM ALLIANCE STRUCTURES*

This paper examines the choice between equity and non-equity forms of inter-firm alliances from an ‘integrated risk’ perspective, which combines relational risk and performance risk in inter-firm alliances. Relational risk relates to co-operation among alliance partners, while performance risk has to do with the hazards of not achieving the performance objectives of an alliance, given co-operation. We suggest that equity alliance is adopted to control relational risk, while non-equity alliance is aimed at minimizing performance risk. Existing studies on the choice of alliance configurations are examined from the proposed risk perspective, and a number of key propositions are advanced for empirical testing and further development of the perspective.

[1]  J. March,et al.  Managerial perspectives on risk and risk taking , 1987 .

[2]  Daniel J. McAllister.  Affect- and Cognition-Based Trust as Foundations for Interpersonal Cooperation in Organizations , 1995 .

[3]  B. Kogut.  The Stability of Joint Ventures: Reciprocity and Competitive Rivalry , 1989 .

[4]  Arvind Parkhe.  Strategic Alliance Structuring: A Game Theoretic and Transaction Cost Examination of Interfirm Cooperation , 1993 .

[5]  B. Gray,et al.  Bargaining Power, Management Control, and Performance in United States-China Joint Ventures: A Compa , 1994 .

[6]  Adams Js.  Towards an understanding of inequity , 1963 .

[7]  O. Williamson.  The Economics of Organization: The Transaction Cost Approach , 1981, American Journal of Sociology.

[8]  O. Williamson.  Opportunism and its critics , 1993 .

[9]  Jung Hoon Sohn.  Social Knowledge as a Control System: A Proposition and Evidence from the Japanese FDI Behavior , 1994 .

[10]  J. Hennart,et al.  A transaction costs theory of equity joint ventures , 1988 .

[11]  Kent D. Miller.  A Framework for Integrated Risk Management in International Business , 1992 .

[12]  P. Ring,et al.  Developmental Processes of Cooperative Interorganizational Relationships , 1994 .

[13]  E. Zajac,et al.  FROM TRANSACTION COST TO TRANSACTIONAL VALUE ANALYSIS: IMPLICATIONS FOR THE STUDY OF INTERORGANIZATIONAL STRATEGIES* , 1993 .

[14]  William G. Ouchi,et al.  Markets, Bureaucracies, and Clans. , 1980 .

[15]  O. Williamson.  Comparative Economic Organization: The Analysis of Discrete Structural Alternatives , 1994 .

[16]  John F. Mahon,et al.  Strategic alliances: Gateway to the new Europe? , 1993 .

[17]  Paul W. Beamish,et al.  Equity Joint Ventures and the Theory of the Multinational Enterprise , 1987 .

[18]  Amy L. Pablo,et al.  Reconceptualizing the Determinants of Risk Behavior , 1992 .

[19]  Harbir Singh,et al.  The Effect of National Culture on the Choice of Entry Mode , 1988 .

[20]  G. Pisano.  The R&D Boundaries of the Firm: An Empirical Analysis , 1990 .

[21]  G. Pisano.  The governance of innovation: Vertical integration and collaborative arrangements in the biotechnology industry☆ , 1991 .

[22]  R. Osborn,et al.  Forms of Interorganizational Governance for Multinational Alliances , 1990 .

[23]  P. Joskow.  Contract duration and relationship-specific investments: Empirical evidence from coal markets , 1987 .

[24]  A. Tversky,et al.  Prospect theory: analysis of decision under risk , 1979 .

[25]  A. V. D. Ven,et al.  Sociologists, Economists, and Opportunism , 1985 .

[26]  D. Teece.  Competition, Cooperation, and Innovation Organizational Arrangements for Regimes of Rapid Technological Progress , 1992 .

[27]  Keith D. Brouthers,et al.  The Influence of International Risk on Entry Mode Strategy in the Computer Software Industry , 1995 .

[28]  P. Ring,et al.  Structuring cooperative relationships between organizations , 1992 .

[29]  R. Gulati.  Does Familiarity Breed Trust? The Implications of Repeated Ties for Contractual Choice in Alliances , 1995 .

[30]  B. Kogut.  Joint Ventures and the Option to Expand and Acquire , 1991 .

[31]  W. Powell.  Hybrid Organizational Arrangements: New Form or Transitional Development? , 1987 .

[32]  W. Shan,et al.  Environmental Risks and Joint Venture Sharing Arrangements , 1991 .

[33]  N. Kay.  Collaborative Strategies of Firms: Theory and Evidence , 1992 .

[34]  J. Hagedoorn.  Understanding the rationale of strategic technology partnering: Nterorganizational modes of cooperation and sectoral differences , 1993 .

[35]  C. Oliver.  Determinants of Interorganizational Relationships: Integration and Future Directions , 1990 .

[36]  Kent D. Miller,et al.  Corporate Risk-Return Relations: Returns Variability Versus Downside Risk , 1996 .

[37]  C. Huxham,et al.  Introducing Collaborative Advantage: Achieving Inter‐organizational Effectiveness through Meta‐strategy , 1992 .

[38]  A. Tversky,et al.  Prospect Theory : An Analysis of Decision under Risk Author ( s ) : , 2007 .

[39]  Peter Hwang,et al.  An eclectic theory of the choice of international entry mode , 1990 .