Bringing tasks back in: an organizational theory of resource complementarity and partner selection

To progress beyond the idea that the value of inter-firm collaboration is largely determined by the complementarity of the resources held by partners, we build a theoretical framework that explains under which conditions a set of resources or capabilities can be considered as complementary and resulting in superior value creation. Specifically, we argue that the tasks that an inter-firm collaboration has to perform determine complementarities, and that complementarities arise from similar and dissimilar resources alike. We capture this relationship in the concept of task resource complementarity. Further, we examine factors that impact on the relevance of this construct as a predictor of partner selection. Finally, we discuss which implications arise for a theory of the firm when tasks are explicitly incorporated into the conceptualization of resource complementarity

The devil is in the details: the contractual governance of joint R&D biotechnology alliances

This study aims at deepening our understanding of the contractual governance of technology alliances. For this purpose we carry out an in depth analysis of four contracts of pharmaceutical biotechnology alliances. The application of the framework contrasting transactional and relational contracts proves not sufficiently discriminating: all the contracts investigated are relational latu sensu, and considerable heterogeneity remains unexplained. A competing framework contrasting action-based and resource-based contracts provides a useful focusing device to analyze the texture of the different types of relations observes. Through resources the interpretation of alliance contracts is connected to fundamental sociological research on human sociality. This allows us to develop a framework that explains the configuration of contractual governance in terms of the relational model adopted by the parties. Our framework also proposes that the distribution of core competences among the parties is an important predictor of the relational model. Finally, testable propositions deriving from the study are offered as guidelines for further research

Knowledge distribution, coordination requirements and contractual choice in technology collaborations

The choice of efficient contractual form is often framed as the selection of a degree of hierarchical intensity suitably matching the level of contractual hazards. We posit that technology collaboration contracts are also responsive to the configuration of resources and to coordination concerns and that contractual solutions may be multidimensional and differ 'in kind'. A sample of joint R&D biotechnology agreements provides broad support for propositions concerning the antecedents. Moreover, we find that the way certain contracts are chosen in response to various contingencies, challenges the idea that they can be usefully characterized as 'intermediate' between polar forms of governance

An empirical taxonomy of technology alliance contracts

Although contracts are characterized by a certain logical and artifactual unity, the typical approach of economic and organizational studies focuses on particular contract clauses. Another common perspective, that addresses contracts as unitary entities, directs the attention to the choice between axiomatically defined alternative governance forms, with little or no investigation of empirical types. This state of things reflects the lack of an accepted framework for the development and testing of hypotheses about contract design. This study tries to redress this situation by analyzing actual contracts as configurations of a wide array of elements. In developing an analytical framework, this study develops a perspective that considers contracts as an organizational phenomenon, expands the set of mechanisms considered beyond incentive provisions and pricing structures, and includes procedural elements inspired both by organizational theory and by the empirical literature on contracting. The constructs so identified are applied to the analysis of a set of pharmaceutical biotechnology agreements. We employed categorical principal component analysis to determine underlying dimensions that differentiate among different contracts. Cluster analysis then produced an empirical taxonomy of these technology agreements

There is more to contracts than incompleteness: a review and assessment of empirical research on inter-firm contract design

This paper aims at achieving a greater understanding of how contracts operate in practice through a review of recent empirical literature on inter-firm contract design. Our focus on the structure of contractual agreements differentiates this review from others that dedicated ample coverage also to the antecedents of the decision to contract and of the choice of contracting versus integration. Our framework develops Stinchcombe’s (1985) hypothesis that contracts are an organizational phenomenon. This allows us to uncover considerable but unevenly distributed evidence on a number of organizational processes formalized in relational contracts, which partially overlap with the processes that are observed in integrated organizations. It also enables us to describe contracts in terms of a larger number of dimensions than is commonly appreciated. The paper summarizes the evidence by proposing a general and tentative framework to guide the design of relational contracts, discusses a number of lingering issues, and outlines directions for further research on contracts as an organizational phenomenon

The bearable lightness of inter-firm strategic alliances: resource-based and procedural contracting

This paper inquires into how contracts can regulate the complex and uncertain matters on which strategic alliances get formed. It highlights that contracts can be 'light' without being mistakenly incomplete. It is argued that the contracts constituting and regulating strategic alliances are composed by an associational core, focused on resource commitments and on the specification of property rights, broadly intended; and of a belt of contractual clauses incorporating a variety of coordination mechanisms (including, and actually privileging, joint decision making procedures). The interpretive power of the framework is illustrated through the analys is of three alliance contracts

Facio ut facias

This exploratory study takes a look at the puzzle of what type of contracts are suitable for governing innovation, with particular atte ntion to inter-firm networks. It employs a conceptual framework that integrates organizational theory of formal coordination with economic perspectives on contracting, and innovate previous analyses in two ways: developing an assessment of alternative contractual forms in terms of knowledge governance and not only in terms of conflict resolution; analyzing contracts according to the intensity at which they incorporate not only market-like mechanisms, but also hierarchical and bureaucratic mechanisms, and a usually neglected array of associational and democratic mechanisms, as related to the level of uncertainty and innovation. A new type of 'associational' and 'constitutional' contract, resource based rather than action-based, is singled out as particularly fit to the governance of innovation. The framework is empirically applied to content analyze the written agreements regulating inter firm alliances for innovation in a comparative case study approach

The co-design of contractual and extra-contractual governance: lessons from the project-based economy

Organizational economics tends to express a pessimistic view on the effectiveness of inter-firm contracts under uncertainty, and sees the use of authority and of relational governance as possible remedies. Organization theory inspires some skepticism on the effectiveness of these therapies. In particular, it identifies also reasons to expect a sustained level of formalization in strategic alliances and, conversely, to expect a moderate use of centralization. To help filling this gap, this study empirically assesses the relationship between uncertainty and complexity in the context of strategic alliances, and the use of formalization and centralization for their governance. The assessment extends to the intensity of use and the relationships of three modes of governance: contractual, formal extra-contractual, and informal and social. This exercise is carried out on a new database that collects in formation on 540 project-based alliances. We find that inter-organizational projects employ a mix of contractual and extra-contractual governance mechanisms. Different from usual conceptualization, these agreements are not characterized by high informality. Extra contractual governance seems to be employed to respond to additional factors, rather than to substitute or complement formal agreements. Finally, the pattern of allocation of property rights also interestingly deviates from standard property right theory predictions, to conform to a more pluralist, negotiation based view

Planning for risk or planning for performance? Managing resource requirements and coordination concerns in technology alliance agreements

The choice of efficient contractual form is often framed as the selection of a degree of hierarchical intensity suitably matching the level of contractual hazards. We posit that technology collaboration contracts are also responsive to the configuration of resources and to coordination concerns and that contractual solutions may be multidimensional and differ 'in kind'. A sample of joint R&D biotechnology agreements provides broad support for propositions concerning the antecedents. Moreover, we find that the way certain contracts are chosen in response to various contingencies, challenges the idea that they can be usefully characterized as 'intermediate' between polar forms of governance

Fit for the task: complementarity, asymmetry, and partner selection in alliances

Most existing theories of relationship formation imply that organizations establish ties to procure complementary resources, and that doing so adroitly generates relational rents. While this entails a responsibility for organizations to recognize and harness complementarity, most theories struggle with ambiguity around the concept of resource complementarity, neglect its power implications, and rely on rules-of-thumb that assign no role to managers' intentions. To explain the formation of ties that successfully combine critical resources, we propose that a positive interplay among resources only exists insofar as organizations use task requirements to guide their combination. As such, a well-matched tie is one that manages task resource interdependence while offsetting imbalances in task-related resources. We test our theory on project-based, inter-organizational partnerships for public construction in Italy. We find that: (1) The probability of tie formation increases with the quality of the match between the task and actors' resources; (2) There are two distinct, task-related dimensions along which this happens: depth and scope; (3) The effect of these dimensions dwarfs the effect found by measures that assess complementarity irrespective of task; and (4) The probability of tie formation decreases when a task calls for resources that potential partners possess in unequal amounts