Session 132

Uncertainty and the Leveraging of Relational Mechanisms in Alliances

Track B

Date: Monday, October 12, 2009


Time: 15:45 – 17:00

Common Ground

Room: Meeting Room 11

Africa Ariño, IESE Business School

Title: Credible Commitments: Safeguards and Dispute Resolution Strategies in Alliance Management


  • Yue Wang, Macquarie University

Abstract: In alliance management studies, credible commitments are an important yet under-developed concept. Credible commitments are both the cause and the solution to alliance opportunism and partnership uncertainty. As a solution, making and seeking credible commitments serve the purpose of safeguarding alliance partnership by creating a mutual holdup situation. But on the other hand, credible commitments often appear in conjunction with relation-specific investments and become a cause of opportunism. Disputes arise in alliance cooperation often because of the opportunistic exploitation of one partner’s credible commitments in relation-specific assets by another. The paper proposes a framework to examine the role of credible commitments in safeguarding alliances and study possible links between the nature of alliance partners’ credible commitments and dispute resolution strategies.

Title: Arbitration in Licensing Agreements


  • Valerie Duplat, Lille Catholic University
  • Régis Coeurderoy, Catholic University-Louvain
  • John Hagedoorn, Maastricht University

Abstract: While the popularity of the arbitration mechanism is rising, our knowledge about the factors motivating firms to rely on arbitration is extremely limited. In this paper, we study the decision jointly made by licensing partners to include an arbitration provision in their contract. In order to develop our theoretical framework, we refer to the Transaction Cost Economics arguments. We argue that an arbitration provision will be included in the licensing contract when the transaction governed by this contract presents high risk of opportunism and imposes important level of contractual incompleteness. In order to test our hypotheses, we conducted a survey and gathered detailed information on 118 licensing contracts negotiated by firms in the Belgian technology industry.

Title: Constraints and Discretion in Relationship Governance: Examining Level of Investment by Corporate Venture Capital Investors


  • Anu Wadhwa, Imperial College London
  • Sandip Basu, City University of New York
  • Suresh Kotha, University of Washington

Abstract: Governance of inter-firm relationships is not a unilateral decision - it is driven by divergent motivations and concerns of both partners. We study equity investments made by established firms in entrepreneurial ventures and examine the determinants of the corporate investor’s level of investment in a venture. The corporate investor and venture negotiate the level of investment to satisfy the expected needs from forming the relationship and minimize the uncertainty that accompany the partnership. We find that ventures with low resource needs or availability of alternative sources to fulfill those needs are more likely to limit a corporate investor’s level of investment. Despite these constraints, corporate investors exercise considerable discretion and their investment-level decisions are driven by their strategic objectives and uncertainty about venture quality.

Title: Asymmetric Outcomes of Strategic Alliances


  • Birgul Arslan, Koc University

Abstract: This paper explores how the benefits of strategic alliances are distributed among partnering firms and identifies factors that lead to asymmetric outcomes of strategic alliances. Asymmetric outcome of a strategic alliance is defined as an unequal distribution of returns that parties of an alliance receive from their investments in that alliance. Alliance partners may derive three types of benefits from an alliance: common benefits, private benefits from defection and private benefits from internalization. Asymmetric outcomes arise when partners earn differential levels of private benefits. The interdependencies among these benefits determine the incentive structure, and in turn, the level of collaboration within the alliance: a higher potential for private benefits from internalization may encourage collaboration among alliance members.

Title: Calculative Versus Identity Based Trust in Inter-Organizational Relationships: An Empirical Examination of Boundary Conditions and Optimal Processes


  • Laura Poppo, University of Kansas
  • Kevin Zhou, University of Hong Kong
  • Julie Li, City University of Hong Kong

Abstract: While trust is a central focus for works that examine inter-organizational exchanges, under-examined are its distinct types, its boundaries, and the best processes to support its use. In this proposal we focus on two widely cited forms of trust: calculative and identity based trust. We review and develop alternative logic to determine which form of trust is more effective in enhancing exchange performance and whether two sources of vulnerability, market and behavioral uncertainty, function as boundary constraints, thereby limiting or augmenting the relationship between calculative or identity based trust and performance. Moreover, we study how calculative and identity based trust interact with two processes, socialization and monitoring, to affect exchange performance. We then empirically test our hypotheses using a unique data set of 211 buyer-supplier relationships.

All Sessions in Track B...

Mon: 12:45 – 14:00
Session 123: The Configuration of Alliance Portfolios: Antecedents and Consequences
Mon: 15:45 – 17:00
Session 131: Managing External Relationships: Perception, Judgement and Action
Session 132: Uncertainty and the Leveraging of Relational Mechanisms in Alliances
Mon: 17:15 – 18:30
Session 126: Getting It Right: Buyer-Supplier Relationships
Tue: 10:00 – 11:15
Session 124: License to Deal: Technology Licensing, Innovation, and Corporate Investment
Tue: 11:30 – 12:45
Session 127: Law and Order: Alliance Governance Decisions
Session 134: Organizational Design and Networking Strategies under Uncertainty
Tue: 14:30 – 15:45
Session 128: Is He The One? Partner Selection and Tie Formation
Session 133: The Dynamics of Interorganizational Networks and Their Performance Implications
Wed: 10:00 – 11:15
Session 129: Putting Things in Context: Competition and Network Dynamics
Wed: 11:30 – 12:45
Session 130: Alliances, Knowledge Transfer, and Performance
Session 135: The Good, the Bad and the Not so Bad: Enhancing Performance by Discerning External Relationships

Strategic Management Society

Washington DC