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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.”

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.

While earlier research discussed networking and alliance strategies of born globals on a strategic level, this paper investigates and analyses the specific organizational skills that enable the firms to successfully initiate, manage and finish their R&D alliances with Multinational Enterprises (MNEs). It is discussed how the specific aspects of the alliance capability can help born globals to counteract the challenges and risks of collaborating with MNEs. A longitudinal process study of a Danish technology born global with three embedded cases of its R&D and marketing alliances with Asian MNEs is discussed. The organizational skills comprising the alliance capability are defined to be internal and external assessment skills, need detection and coupling skills, asset protection skills, project management skills, termination skills and the learning processes to build the alliance capability further. A set of propositions is developed to tie these organizational skills to alliance performance.

To function effectively in both the near and distant future, leaders in global organizations must understand, develop and exercise trust and social capital. The competitive landscape in the new millennium necessitates that firms develop strategic flexibility. To do so, they must continuously renew their knowledge stock and produce innovations. To implement these strategies, leaders must build effective relationships among members and units in the organization. This relational capital is based on trust and eventually leads to the development of internal social capital. Leaders must also build effective relationships with external constituencies. This is often accomplished through strategic alliances. Similarly, leaders must build mutual trust among alliance partners that over time leads to the development of external social capital. When employees trust leaders, they are more likely to be committed to the organization’s goals, willing to develop firm-specific knowledge and likely to exercise creativity. Likewise, partners in trusting alliances are more likely to transfer knowledge, and contribute to a firm’s innovation. These actions are important in global organizations, but difficult to achieve.

Assuming that information about the participants in the network circulates over the ties comprising it, firms’ structural positions – defined in this chapter by their location in the network of past strategic collaborations – should affect their general reputations as collaborators and the knowledge that structurally proximate organizations possess about their past behavior. In turn, the information benefits associated with different network positions should influence the types of governance structures and contractual features that appear in new alliances. This chapter examines how the positions of biotechnology firms in the established network of strategic alliances influences one of the important contractual terms of new partnerships: whether or not one partner finances the activities of its counterparty as part of the deal.

While it has long been established that social factors, such as housing, transportation, and income, influence health and health care outcomes, over the last decade, attention to this topic has grown dramatically. Reforms that promote high-quality care as well as responsibility for total cost of care have shifted focus among health care providers toward upstream determinants of health care outcomes. As a result, there has been a proliferation of activity focused on integrating and aligning social and medical care, many of which depend critically on cross-sector alliances. Despite considerable activity in this area, cross-sector alliances in health care remain largely undertheorized. Both literatures stand to gain from more attention to carefully knitting together the theoretical and management literature on alliances with the empirical, health policy and health services literature on cross-sector alliances in health care. In this chapter, we lay out what exists in the current scientific literature as well as a framework for considering much needed work in this area. We organize the literature and our commentary around the lifecycle of alliances: alliance formation, including factors prompting alliance formation, partner selection, and alliance goals; alliance maturity, including the work of these cross-sector alliances, governance, finance and contracts, staffing structure, and rewards; and critical crossroads, including alliance timelines, definitions of success, and dissolution. We also lay out critical areas for future inquiry, including better theorizing on cross-sector alliances, developing typologies of these cross-sector health care alliances, and the role of policy in cross-sector alliances.

Over the last few decades, management has witnessed a proliferation of research on mergers and acquisitions (M&As) and strategic alliances (SAs). Although both fields have been widely studied, the relationship between the two bodies of literature has not been sufficiently explored. Despite the enormous commonality between both phenomena in terms of the drivers behind them and of the critical success factors associated with the M&A and alliance process management, scholars from the two fields have rarely exchanged findings and insights, even though they may be highly relevant to each other. M&A and SA research remain mostly separated from each other, thus minimizing the ability for more mutually beneficial complementary and synergetic knowledge sharing effects.

This chapter synthesizes and compares existing theoretical perspectives from the M&A and SA literatures and identifies opportunities for future research and knowledge cross fertilization between the two fields. Building upon previous review studies about M&A and SA literatures, the authors develop a comparative longitudinal review of both literatures published in top management journals over a 27-year period. For that purpose, the authors resort to machine learning algorithms to discover thematic patterns that may have gone unnoticed by using traditional review methods.

By highlighting some of the shortcomings that limit the authors’ theoretical and practical understandings, they challenge scholars from both fields (M&A and SA) to go beyond what they think they know from compartmentalized received theory, and draw upon novel and meaningful ideas, concepts, and theoretical approaches from “the other side of the fence.” The authors believe that such a dialog will facilitate further theoretical exploration and empirical investigation of both phenomena and produce insights that will influence the practical management of M&A and SAs.

Purpose – The cost of new drug development is increasing every year. Pharmaceutical companies use R&D joint ventures, mergers, and outsource different stages of pharmaceutical R&D activities for a faster and cost minimizing method of innovation. Pharmaceutical companies outsource R&D activities to independent small biotech or pharmaceutical companies that specialize in different stages of pharmaceutical R&D. This chapter examines the determinants of the payment structure of research contracts between large bio/pharmaceutical companies and specialized research firms.

Methods – Determinants of R&D contracts are analyzed using detailed R&D contract data between bio/pharmaceutical companies and independent research firms for 10 years. A multinomial logit model is used in order to understand the determinants of three different types of contracts; royalty contracts, fixed payment contracts, and the mixed contracts.

Findings – Under uncertainty, the likelihood of a royalty contract rises for the early stages of the research and with the patent stock of the research firm. It is more likely to observe both royalty and fixed payment if the pharmaceutical client has past contracts with the same research firm. The results also suggest that if Food and Drug Administration (FDA) is more stringent in any disease area in reviewing the new drug application, then the likelihood of signing pure royalty contract decreases.

Implications – Understanding the nature of R&D contracts and the effects of FDA's behavior on the pharmaceutical R&D contract is important because these contracts not only affect the cost of new drug invention but also the quality and the rate of invention.

Value – Results are useful for both the pharmaceutical companies and the economic/business researchers.

The goal of interfirm contract research is to examine how formal contracts impact transaction success, firm relationships, and ultimately individual and collaborative firm performance when two or more firms interact. Most contract literature uses an economic lens to examine contracts: the property rights perspective, agency theory, and TCE. Property rights-based contract research (Coase, 1960; Demsetz, 1967; Alchian & Demsetz, 1973; Cheung, 1969) examines how efficient property rights assignment mitigates ex ante hazards. Similarly, agency theory-based contract research (e.g., Ross, 1973; Jensen & Meckling, 1976; Harris & Raviv, 1979) investigates how incentive alignment between the principal and agent leads to the mitigation of ex ante hazards. In contrast, TCE-based research (Williamson, 1975, 1985) examines contractual safeguards to mitigate both ex ante and ex post hazards (e.g., Joskow, 1985, 1987, 1990; Crocker & Reynolds, 1993). Because the three economic perspectives dominate, most research addresses how contracts are used to mitigate ex ante or ex post hazards. Therefore, many topics still need to be investigated to enhance our understanding of interfirm contracting.

Intent refers to a firm's initial propensity to view collaboration as an opportunity to learn (Hamel, 1991, p. 90). Comparing the intent to form alliances between Western and Japanese firms, Hamel indicates that most Western firms possess substitution intent to substitute their competitiveness in a specific area for their own lack of skills, whereas the Japanese partners seem to have explicit learning intent to actually internalize their partners’ skills. When the internalization intent is strong in a company, the skills and knowledge acquired from the partner are important to the growth of the whole company (Hamel, 1991). However, if both partners possess equal intent to internalize the other's skill, distrust and conflict may occur to threaten the stability of alliances (Hamel, Doz, & Prahalad, 1989; Madhok, 2006).