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We hypothesize that trust is a moderator of the direct relationship between control and coordination concerns and contractual complexity. Our results suggest that high trust weakens the positive relationship between control concerns and contractual complexity and reinforces the positive relationship between coordination concerns and contractual complexity. By highlighting the dual role of contracts (i.e. a controlling and coordinating function) and the moderating role of trust in this regard, our paper provides a new focus to the current discussion on the relationship between trust and contracts (i.e. substitutes or complements) that may help reconcile some divergent perspectives in the literature.

Advancing upon taxonomical research on interfirm alliances, we investigate the design of entrepreneurial firms' alliances in more fine-grained terms by focusing on the specific contractual provisions that firms negotiate into their alliance contracts. Drawing upon transaction cost arguments, we examine the determinants of the contractual complexity of collaborative agreements in the German telecommunications industry. The findings reveal that alliance contracts vary greatly in their complexity, yet contracts for non-equity alliances tend to be no more or less complex than those for equity alliances on average, which challenges the view that the latter unambiguously afford firms greater control than the former. Furthermore, multivariate findings on the roles of transaction-specific investment, relational capital, search costs, and so forth demonstrate that firms' contractual and governance choices have distinct antecedents. 3 Entrepreneurial Alliances as Contractual Forms Executive SummaryInter-firm alliances offer benefits as well as pose challenges for entrepreneurial firms. For the potential benefits to be achieved, entrepreneurs have to pay attention both to the initial conditions that surround the exchange and to the processes by which they manage the alliance.Beyond contingencies such as partners' demographic and institutional characteristics or their prior experiences with each other, initial conditions include the way the alliance is structured, including alliance design characteristics such as the content of the contract or the alliance governance form. Alliance management processes involve pre-agreement activities such as partner selection and alliance negotiation, as well as post-agreement practices such as alliance evaluation and re-negotiation processes.Despite the importance of initial conditions and managerial processes, not all of them have received enough research attention. Substantial research has been devoted to issues related to the partners' identities and prior relations, and on the decision to structure the alliance as an equity or non-equity agreement. However, very little is known about the contents of alliance contracts, particularly in the entrepreneurship area. Further, it is often assumed that alliance contract design goes hand in hand with the choice of alliance governance structure, and that equity alliances necessarily involve greater complexity than non-equity agreements. However, entrepreneurial firms have greater degrees of freedom than depicted in prior studies of alliance governance. 4This study examines the contractual design of alliances of entrepreneurial firms. After exploring the incidence of particular contractual provisions in alliances, we draw from transaction cost theory to examine some of the determinants of contractual complexity. In addition, we investigate whether or not these antecedents determine the choice of alliance governance form in a similar fashion. The study investigates a sample of alliances of entrepreneurial firms in the German telecommunica...

Formal and relational governance mechanisms are used in strategic alliances to coordinate resources and mitigate the risk of opportunistic behavior. While recent work has shown that these approaches are not mutually exclusive, we understand little about when one approach is superior to the other. Using data on the governance choices and subsequent performance of alliances in the German telecommunications industry, we find that the optimal configuration of formal and relational governance mechanisms depends on the assets involved in an alliance, with formal mechanisms best suited to property-based assets and relational governance best suited to knowledge-based assets. Furthermore, a mismatch between governance mechanisms and asset type can harm the performance of the alliance. Our findings contribute to transaction cost economics, the literature on relational governance, and recent work studying their interaction.

Firms often procure the same input via multiple means, e.g., making and buying. Recent papers have yielded rich, but inconsistent, theoretical and empirical insights. Resolving these inconsistencies requires reconceptualizing two aspects of plural sourcing: what and how. We reconceptualize plural sourcing as a set of combined governance modes—make‐and‐buy, make‐and‐ally, and buy‐and‐ally—which differ in their capabilities and limitations. We demonstrate our reconceptualization's potential with propositions predicting the choice of specific plural sourcing modes. Copyright © 2013 John Wiley & Sons, Ltd.