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Choosing between safeguards : scope and governance decisions in R&D alliances
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Lioukas, Constantinos S. and Reuer, J. J. (2020) Choosing between safeguards : scope and governance decisions in R&D alliances. Journal of Management, 46 (3). pp. 359-384. doi:10.1177/0149206318795240 ISSN 1557-1211.
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Official URL: https://doi.org/10.1177/0149206318795240
Abstract
Research on transaction cost economics has emphasized the choice of an appropriate governance structure as an important mechanism in alleviating exchange hazards in interfirm transactions, yet firms may also manipulate the characteristics of a transaction so as to make it less hazardous in the first place by carefully selecting the activities or assets involved in the transaction. In this paper, we explore this theoretical issue in transaction cost economics by examining how firms design R&D alliances to mitigate appropriation hazards in these interfirm transactions. In particular, we investigate when firms will prefer to limit the scope of functional activities involved in an R&D alliance, thus addressing appropriation hazards directly by manipulating the alliance’s characteristics, versus when they will opt for an equity-based governance structure in order to mitigate appropriation hazards ex post. We argue that firms are more likely to limit the scope of alliance activities rather than choose an equity-based governance structure when there are multiple partners in an alliance and when the partners are from different nations, because monitoring and other control mechanisms become more cumbersome and problematic in these circumstances. In contrast, firms that are direct competitors are more likely to choose an equity-based governance structure in order to mitigate exchange hazards such as knowledge misappropriation through carefully monitored knowledge sharing. Empirical analysis of data on R&D alliances in a variety of industries provides support for our arguments regarding alliances involving multiple partners and alliances between competitors. We discuss the implications of our study for research on transaction cost economics.
Item Type: | Journal Article | ||||||||
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Subjects: | H Social Sciences > HB Economic Theory T Technology > T Technology (General) |
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Divisions: | Faculty of Social Sciences > Warwick Business School > Strategy & International Business Faculty of Social Sciences > Warwick Business School |
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Library of Congress Subject Headings (LCSH): | Research and development partnership, Transaction costs | ||||||||
Journal or Publication Title: | Journal of Management | ||||||||
Publisher: | Sage Publications Ltd. | ||||||||
ISSN: | 1557-1211 | ||||||||
Official Date: | 1 March 2020 | ||||||||
Dates: |
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Volume: | 46 | ||||||||
Number: | 3 | ||||||||
Page Range: | pp. 359-384 | ||||||||
DOI: | 10.1177/0149206318795240 | ||||||||
Status: | Peer Reviewed | ||||||||
Publication Status: | Published | ||||||||
Access rights to Published version: | Open Access (Creative Commons) | ||||||||
Description: | Free access |
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Date of first compliant deposit: | 31 May 2018 | ||||||||
Date of first compliant Open Access: | 14 June 2018 | ||||||||
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