We explain how the alliance contexts determines the structuring of governance

What is it about?

The alliance governance – whether equity or non-equity based – through which an alliance is governed serves as a mechanism to protect a firm from partner’s opportunistic behavior, manage resource dependence and facilitate knowledge sharing. Alliance governance structure also reflects the risk, reward and control that partners perceive in a relationship. In light of the conflicts and instabilities reported in strategic alliances, the purpose of this paper is to examine the interorganizational domain that affects the endurance and continuity of collaboration and explain how the alliance interface contexts determines the structuring of alliance governance.

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Why is it important?

This study makes a significant contribution to the understanding of the relationships between the contextual factors such as the alliance task, power dynamics, and competitive scope that shape the collaboration and structuring of appropriate alliance governance mode. Results of the study provide strong evidence for the hypotheses that the greater the task complexity, and greater the balance of power and scope of competition between partners, the alliance governance tends to be equity or joint venture based. Consistent with recommendations of several organizational scholars that the theory of alliance governance and performance must shift from individual partner firm to interaction domain and interface contexts (Luo, 2002; Gray and Wood, 1991; Oxley and Sampson, 2004), this study integrally examined the dyadic issues such as balance of power, task complexity, and the competitive scope and the dynamic role they play in decisions pertaining to alliance governance.While many extant studies on the choice of alliance governance structure have employed secondary data sources, the study employed data from survey measures enhancing the validity of the results.

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