2 research outputs found
How risk influences the choice of governance mode in biopharmaceutical inter-firm relationships
This paper proposes a new theoretical framework for assessing the influence of risk in
shaping the governance form in biopharmaceutical inter-firm relationships. In particular,
we propose a multidimensional operationalization of relational and performance risk and,
by following Transaction Cost Economics (TCE) and Real Options (RO) theory constructs,
we hypothesize a relation between the aforementioned risk components and the choice of
governance form. Specifically, following TCE reasoning, we hypothesize that a high level of
relational risk leads towards more hierarchical governance forms, while, following RO
theory, we hypothesize that a high level of performance risk leads toward market-oriented
governance forms; finally, we hypothesize a moderating effect of each risk component on
the other. We empirically test our framework through the analysis of 353 inter-firm
relationships signed worldwide between pharmaceutical and biotech companies from
2007 to 2010. The results show substantive support for our theoretical framework.
Furthermore, we find a significant moderating effect of the performance risk on the TCE
relation between relational risk and governance forms