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Article
Publication date: 1 April 1996

Robert Frankel, Judith Schmitz Whipple and David J. Frayer

Observes that strategic alliances continue to be an important research and business focus. Many firms struggle with how to link alliance theory with actual practice. In…

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Abstract

Observes that strategic alliances continue to be an important research and business focus. Many firms struggle with how to link alliance theory with actual practice. In particular, managers question how long‐term commitment between alliance partners is developed and achieved. Traditional business practice has relied primarily on formal written contracts, but informal social contracts or verbal agreements are also utilized. Examines the role of formal and informal contracts in positioning alliances for long‐term success. Findings indicate that extremely successful alliances exhibited informal social contracts regardless of whether or not formal written contracts were included in the relationship. In other words, while a written contract may initially serve as an agreement to collaborate, the partners’ actions signify long‐term commitment to the alliance. This has important managerial implications for how key contacts in the alliance develop co‐operation, trust and loyalty which illustrates the strength of the informal contract.

Details

International Journal of Physical Distribution & Logistics Management, vol. 26 no. 3
Type: Research Article
ISSN: 0960-0035

Keywords

Article
Publication date: 24 March 2021

Xuan Bai, Shibin Sheng and Julie Juan Li

This paper aims to examine alliance governance at different hierarchical levels.

Abstract

Purpose

This paper aims to examine alliance governance at different hierarchical levels.

Design/methodology/approach

The data is collected from both top-level and operating-level managers in 286 strategic alliances in China (a total of 572 managers). Hierarchical moderated regression models are adopted to test the hypotheses and two-stage regression analyzes are used to correct for endogeneity.

Findings

This paper finds that relational governance has a greater impact on alliance performance than contract utilization at the top level. Furthermore, the simultaneous use of relational governance at the top and operating levels have a detrimental impact on alliance performance. Finally, top-level contract utilization has a negative interaction with operating-level relational governance but a positive interaction with operating-level contract utilization.

Research limitations/implication

First, the cross-sectional nature of the data collection approach provides only a snapshot of how each type of governance mechanism and its interactions affect alliance performance. Second, the sample is limited to firms located in emerging markets.

Practical implications

Managers should realize that the effectiveness of contract and relational governance mechanisms varies across different management levels and they should be cautious about the cross-level governance mechanism alignment.

Originality/value

This study advances the interfirm governance literature in that this paper examined alliance governance at different hierarchical levels and provides new insights into the ongoing debate on whether the contract and relational governance mechanisms function as complements or substitutes by exploring the governance alignment across different alliance hierarchies.

Article
Publication date: 20 July 2020

Longwei Wang, Meige Song, Min Zhang and Li Wang

This study aims to empirically investigate the role of contracts in tacit knowledge acquisition in research and development (R&D) alliances. By combining the perspectives…

Abstract

Purpose

This study aims to empirically investigate the role of contracts in tacit knowledge acquisition in research and development (R&D) alliances. By combining the perspectives of sensemaking and transaction cost economics (TCE), this study proposes a model about the mechanisms through which shared goals and contract completeness jointly affect tacit knowledge acquisition.

Design/methodology/approach

This study adopted a quantitative design and used the questionnaire survey method to collect data. The authors finally collected data on 196 R&D alliance samples in China. Multiple regression analysis was used to test the hypotheses.

Findings

There is strong empirical support that contract completeness has a positive effect on shared goals and that shared goals have a positive effect on tacit knowledge acquisition. Meanwhile, contract completeness weakens the positive effect of shared goals on tacit knowledge acquisition. Therefore, this study reveals that contract completeness has an inverted U-shaped effect on tacit knowledge acquisition.

Practical implications

The findings suggest that managers should consider both the psychological and rational effects of contract governance simultaneously, thus recognizing the importance of a moderate level of contract completeness for tacit knowledge acquisition in R&D alliances.

Originality/value

This study enhances the current understanding of contract governance by integrating the sensemaking and TCE perspectives. The findings provide a possible explanation of how contracts affect tacit knowledge acquisition in R&D alliances. The authors expand the research on contract governance and alliance knowledge acquisition by revealing the inverted U-shaped relationship between contract governance and tacit knowledge acquisition.

Details

Journal of Knowledge Management, vol. 25 no. 5
Type: Research Article
ISSN: 1367-3270

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Article
Publication date: 14 June 2021

Dong Liu, Yongchuan Bao and Guocai Wang

The purpose of this study is to examine how formal contracts affect alliance innovation performance. To understand the mechanism underlying the impact, this study tests…

Abstract

Purpose

The purpose of this study is to examine how formal contracts affect alliance innovation performance. To understand the mechanism underlying the impact, this study tests whether relationship learning mediates the impact of formal contracts on alliance innovation performance and how guanxi moderates the mediating effect.

Design/methodology/approach

This study is conducted with a sample of 225 manufacturers in China. This paper used hierarchical regression analysis to test the hypotheses and used the PROCESS method to test the mediating effect of relationship learning.

Findings

Formal contracts positively affect relationship learning, which facilitates alliance innovation performance. Guanxi positively moderates the effect of formal contracts on alliance innovation performance. Relationship learning mediates the relationship between formal contracts and alliance innovation performance. Moreover, guanxi positively moderates the mediating effect.

Research limitations/implications

Future research could investigate factors moderating the effect of guanxi on alliance innovation performance and moderating the effect of relationship learning on alliance innovation performance. Future research can also use secondary data to measure alliance innovation performance. Future researchers can examine how guanxi as a relational mechanism governance affects relationship learning.

Practical implications

Managers should conduct relationship learning in the process of alliance innovation and realize that reducing opportunism does not mean improving innovation performance. Moreover, managers should know that guanxi could contribute to alliance innovation performance with the help of formal contracts.

Originality/value

Prior studies have mainly focused on the fundamental requirement of governing knowledge exchange in alliances. Little is known about the mediating effect of relationship learning on the relationship between formal contracts and outcomes of innovation alliances. This study contributes to the literature by filling the gap.

Details

Journal of Business & Industrial Marketing, vol. 37 no. 3
Type: Research Article
ISSN: 0885-8624

Keywords

Article
Publication date: 3 October 2016

Frano Barbic, Antonio Hidalgo and Raffaella Cagliano

The purpose of this paper is to examine the dynamics of contractual and relational mechanisms during different phases of multi-partner R&D alliances.

Abstract

Purpose

The purpose of this paper is to examine the dynamics of contractual and relational mechanisms during different phases of multi-partner R&D alliances.

Design/methodology/approach

The paper uses a longitudinal single case study to gain in-depth understanding of which governance mechanisms are best suited for different phases of alliance collaboration. Applying a retrospective strategy for data collection, three rounds of interviews were conducted with representatives of all partner firms. The data were complemented by documentary analysis of both internal documents and publicly available information.

Findings

The findings suggest that the use of governance mechanisms in multi-partner alliances depends on the characteristics of alliance phases. Relational governance is most important in the exploration and development phases, while the importance of contractual governance comes to the fore during the development and finalization phases. Despite the predominance of one type of mechanism, the findings support a complementary perspective of governance mechanisms.

Research limitations/implications

The results of a single case study offer limited generalizability and should thus be treated with caution. More cross-industry, cross-national studies should be conducted to verify the applicability of the findings to other industries, cultures and geographical contexts.

Practical implications

Managers should be aware that different phases of the alliance life cycle have different control and coordination needs, and should rely on different mechanisms during different phases of the alliance.

Originality/value

The authors have synthesized insights from various perspectives (transaction cost economics, organization theory, social exchange theory), and developed a multidisciplinary approach to multi-partner collaborations.

Details

Baltic Journal of Management, vol. 11 no. 4
Type: Research Article
ISSN: 1746-5265

Keywords

Article
Publication date: 13 September 2011

Albertus Laan, Hans Voordijk and Geert Dewulf

The purpose of this paper is to provide insights into how a project alliance contract is conducive to the development of cooperative relationships between client and…

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Abstract

Purpose

The purpose of this paper is to provide insights into how a project alliance contract is conducive to the development of cooperative relationships between client and contractor organizations involved in a complex project.

Design/methodology/approach

A longitudinal case study of a complex construction project was conducted in which the contract was changed at the end of the negotiation period from a design‐build into a project alliance form.

Findings

Data show that opportunistic behaviour is reduced when there is an incentive structure, as is to be found in project alliances, for client and contractor organizations to cooperatively realize the project. However, it is not sufficient for project partners to agree upon an appropriate incentive structure. For cooperative relationships to develop, they also have to put substantial efforts into reducing their remaining inclinations to make use of opportunities that arise to deviate from the alliance contract.

Practical implications

It is shown that both principals and contractors not only need to carefully select staff for such projects; they also have to work with the people employed such that appropriate attitudes are reinforced and rewarded. Developing cooperative relationships in project alliances needs the surrounding working methods to offer support.

Originality/value

The longitudinal character of the case study offers exceptional opportunities for studying the dynamics in preventing and overcoming the deteriorating patterns of opportunistic behaviour that organizations regularly face in many traditional and design‐build projects.

Details

International Journal of Managing Projects in Business, vol. 4 no. 4
Type: Research Article
ISSN: 1753-8378

Keywords

Book part
Publication date: 22 September 2009

Joanne E. Oxley

A key argument in transaction cost economics (TCE) is that transactions are aligned with governance structures so as to effect a discriminating – mainly transaction cost…

Abstract

A key argument in transaction cost economics (TCE) is that transactions are aligned with governance structures so as to effect a discriminating – mainly transaction cost economizing – match (Williamson, 1991). The archetypical problem in TCE is the vertical integration or “make-versus-buy” decision, and the focus of transaction cost economizing in this context is on mitigation of “holdup” problems associated with investments in specific assets (Klein, Crawford, & Alchian, 1978; Williamson, 1985). However, this asset specificity condition in only one example (albeit a significant one) of a more general class of contractual hazards. Indeed, in his most recent discussion of the TCE agenda, Williamson (1996, p. 3) suggests that “identification, explication, and mitigation of contractual hazards – which take many forms, many of which long went unremarked – are central to the exercise.”

Details

Economic Institutions of Strategy
Type: Book
ISBN: 978-1-84855-487-0

Article
Publication date: 9 September 2014

Marcus Jefferies, Graham John Brewer and Thayaparan Gajendran

There has been a significant increase in the use of relationship contracting in the global construction industry, with strategies such as Partnering, Alliancing and…

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Abstract

Purpose

There has been a significant increase in the use of relationship contracting in the global construction industry, with strategies such as Partnering, Alliancing and Public-Private Partnerships all used. These approaches were introduced to the Australian construction industry in the 1990s in an attempt to overcome the adversarial nature of traditional contracting methods. The purpose of this paper is to investigate factors that influence the successful implementation of Project Alliancing by means of a case study approach focusing on the procurement of a large water treatment plant. The research findings identify critical success factors (CSFs) both from literature and the case study project.

Design/methodology/approach

The research traces the origins of Alliancing and identifies CSFs by reviewing literature and analysing a current case study project. The paper first identifies CSFs on a global scale by establishing a theoretical framework of CSFs and then compares this to the case study project. A case study of an Australian Alliance project is investigated whereby a semi-structured interview process, involving senior managers from the six partners from the Alliance, was used in conjunction with a review of project documentation. The findings of the case study project are compared to the literature and any new CSFs are identified.

Findings

Alliancing helps to establish and manage the relationships between all parties, remove barriers and encourage maximum contribution to achieve success. Alliancing provides a project delivery method that promotes open communication, equality and a systematic problem resolution process. Team culture focusing on an “open book/no blame” approach is vital to the success of an Alliance. Five CSFs were identified as specifically influencing the success of the case study project: the use of an integrated Alliance office; the staging of project and stretch targets; establishing project specific key performance indicators; facilitating on-going workshops; and the integration of a web-based management programme.

Originality/value

The research findings assist both public and private sectors by identifying factors that are critical for success in Alliancing. Five additional factors were identified as specifically influencing the success of the case study project. Since this research was conducted, Australia has seen a further increase in relationship contracting where the likes of Alliancing is often used as the default approach for certain Public Sector projects. Ongoing research into Alliancing is vital to ensure the development of sustainable procurement models, successful operational viability, fair risk distribution and value for money.

Details

Engineering, Construction and Architectural Management, vol. 21 no. 5
Type: Research Article
ISSN: 0969-9988

Keywords

Book part
Publication date: 22 September 2009

Joanne E. Oxley

This chapter provides a retrospective analysis of Oxley (1997), placing the article in context, highlighting its main contributions, describing its impact on the strategy…

Abstract

This chapter provides a retrospective analysis of Oxley (1997), placing the article in context, highlighting its main contributions, describing its impact on the strategy literature, and critiquing the research from the viewpoint of today. Recent advances in the analysis of alliance governance are surveyed, and opportunities for future research are suggested.

Details

Economic Institutions of Strategy
Type: Book
ISBN: 978-1-84855-487-0

Article
Publication date: 1 March 2015

Michael Regan, Peter E.D. Love and Jim Jim

Adversarial contracting methods are used for most public infrastructure procurement and timely delivery on budget remains a problem. In the past 20 years, OECD countries…

Abstract

Adversarial contracting methods are used for most public infrastructure procurement and timely delivery on budget remains a problem. In the past 20 years, OECD countries have adopted a number of alternative procurement methods that are based on collaborative principles including public private partnerships, long-term outsourcing arrangements and relationship/alliance contracts. We review the theoretical principles that operate for both adversarial and collaborative contracting methods. We identify the characteristics of non-adversarial contracting methods such as the output specification, qualitative selection criteria, the alignment of incentives, discrete allocation of residual control rights, life cycle costing, and risk-weighted value for money measurement that are delivering better procurement outcomes for government.

Details

Journal of Public Procurement, vol. 15 no. 4
Type: Research Article
ISSN: 1535-0118

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