Entrepreneurial alliances as contractual forms

Abstract

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...

Consumer perceptions of co-branding alliances: Organizational dissimilarity signals and brand fit

“…International cobranding alliances represent a widely adopted strategy in today's increasingly global business environment (Li and He, 2013). Firms ally with foreign brands, headquartered in different countries (Bluemelhuber et al, 2007) in order to avoid market entry barriers (Glaister and Buckley, 1996;Reuer et al, 2011), to reduce costs of doing business abroad (Hymer, 1960(Hymer, /1976, and to decrease the liability of foreignness (Zaheer, 1995). Forming partnerships with local firms can help overcome consumer animosity towards foreign brands (Fong et al, 2014;Li and He, 2013;Voss and Tansuhaj, 1999).…”

“…Our finding that there is a negative relationship between the co-branding partners' combined organizational characteristics of firm size, industry scope, and country-of-origin image dissimilarity and consumer brand fit perception suggests that, in addition to brand-related factors, organizational characteristics affect consumer assessments of co-brands. Organizational dissimilarity results from strategic alliance formation motives, such as access to complementary resources (Chung et al, 2000;Wernerfelt, 1984), new customer segments (Harrigan and Newman, 1990;O'Dwyer et al, 2011) and new geographical markets (Glaister and Buckley, 1996;Reuer et al, 2011). Co-branding alliance formation between firms with a heterogeneous organizational structure make sense from a strategic perspective.…”

“…From a firm's perspective, these organizational characteristics reflect strategic motives for the formation of co-branding alliances and partner selection (Oeppen and Jamal, 2014), such as the access to complementary resources (Chung et al, 2000;Wernerfelt, 1984), the development of new customer segments (Harrigan and Newman, 1990;O'Dwyer et al, 2011), and the entry into new geographical markets (Glaister and Buckley, 1996;Reuer et al, 2011). As many studies use signaling theory 'to explain the effectiveness of brand alliances with respect to consumers (…), it seems logical to investigate the sender side of the signaling phenomenon' (Gammoh and Voss, 2011, p. 83).…”

Network Capitalism and the Role of Strategy, Contracts and Performance Expectations for Asia-Pacific Innovation Partnerships

“…Ariño, Ragozzino, & Reuer, 2006;Ariño & Reuer, 2006a;Reuer & Ariño, 2002Reuer et al, 2006), our conceptualization further expands this research by discussing the implication of contractual complexity for partnership innovation culture. In the same way, we begin to fill an important gap in the partnership culture literature by examining a specific aspect, that is, network capitalism, and its implications for emerging partnership cultures and structures in Asia-Pacific.…”

“…Reuer & Ariño, 2003;Reuer, Ariño, & Mellewigt, 2006;Sampson, 2004), that is, partners use contracts to define mutual rights and obligations by specifying resource allocations, practices of interaction and problem solving, as well as expected outputs (e.g. Argyres, Bercovitz, & Mayer, 2007;Ariño & Reuer, 2006a;Lerner & Merges, 1998;Luo, 2002).…”