Alliance contractual design

Our purpose in this paper is to provide an overview of what we know about alliance contracts. After a short introduction to the contents of alliance contracts, we start by contrasting alliance contractual form and governance form. Next, we focus on two related constructs: contractual complexity and contractual completeness. We suggest that contractual complexity is a more adequate construct to investigate in the absence of information about the transaction contemplated in the contract. After that, we present the measures of contractual complexity used in past studies. Then, we go over the determinants of contractual complexity by considering their influence on contracting costs and benefits given environmental and behavioral uncertainty. Conclusions and suggestions for research are offered at the end.alliance contracts; collaborative relationships; contractual complexity; strategic alliances; cooperation; joint ventures;

Experience Spillovers across Corporate Development Activities

This study develops a theoretical explanation for the existence of positive, as well as negative, experience spillovers across corporate development activities. We suggest that the similarity in two activities influences both the sign and magnitude of experience spillovers. The argument is used to understand how alliance experience influences the performance of acquisitions in the US commercial banking industry. The empirical evidence indicates that the spillover effect of alliance experience on acquisition performance is a function of the decisions made in the post-acquisition phase regarding the level of integration and the replacement of top management. We also find a U-shaped relationship between alliance experience and acquisition performance, suggesting the presence of negative spillovers across corporate development activities at low experience levels.

Alliance dynamics for entrepreneurial firms

Small firms are thought to encounter various difficulties implementing strategic alliances. Due to these problems, they may be less able to reap the benefits of alliance adaptation, and the changes that occur in alliances over time often will not coincide with the small firm's interests. The evidence we present on contractual renegotiations in alliances suggests that small firms are no more or less likely to experience contractual changes in general. However, small firms tend to bear inefficiencies of two kinds in their collaborations. They are less likely to adapt alliances in the presence of governance misalignments. Furthermore, they are prone to make greater transaction-specific investments without commensurate contractual safeguards, which can lead to ex post hold-up in the form of contractual renegotiations.strategic alliances; entrepreneurial firms; small firms; contractual renegotiation; governance misalignment;

Contractual heterogeneity in strategic alliances.

We investigate firms' alliance design choices by examining alliances as multifaceted contractual forms. The analysis explores the contractual heterogeneity underlying alternative governance structures for alliances, the bundling of different contractual provisions, and the dimensionality of the contractual completeness construct. The empirical evidence indicates that the complexity of collaborative agreements ­in terms of the number and stringency of provisions­ is greater for alliances that are strategically important and that involve high levels of asset specificity. Factor analysis of tetrachoric correlations among eight contractual provisions reveals two distinct dimensions of contractual completeness. Partners with prior collaborative relationships tend to institute fewer contractual provisions for monitoring and control of an alliance. Relative to open-ended contractual agreements, time-bound alliances tend to rely less heavily on such provisions, but more so on safeguards concerning confidential and proprietary information, alliance termination, and the adjudication of disputes by third parties.alliance design; governance structures; collaborative agreements; alliance termination;

Governance changes in strategic alliances: Antecedents of contractual renegotiations

This study provides an empirical investigation of the incidence and antecedents of contractual renegotiations in strategic alliances. We bring together initial conditions based on transaction cost theory and ex post contingencies highlighted by recent conceptual and qualitative research on the evolution of collaborative agreements. The results indicate that firms tend to change the governance of alliances when a misalignment exists between the chosen structure and features of the transaction. Further, we find that asset specificity affects alliance design as well as post-formation governance decisions. Contractual alterations are more likely in the presence of strategic change and when firms employ less extensive ex post deterrents in their alliances. We find no evidence that cross-border ventures are any more or less likely to experience contractual renegotiations than domestic alliances.Strategic alliances; renegotiation

Safeguarding from the sharks : board representation in minority equity partnerships

We study minority equity partnerships and the representation of investing firms on the boards of directors of their partners. In such alliances, an investor firm owns a minority position in the investee partner and may or may not secure a board seat. Prior alliance governance research has largely focused on the choice between equity and nonequity forms of alliances, and it has paid little attention to the particular administrative features of these organizational forms, notably their governing boards. We extend corporate governance research that has emphasized the monitoring and advisory roles of boards by examining how an investee's concerns about knowledge misappropriation can reduce the likelihood that an investor obtains board representation. We suggest that, although there exist opportunities for an investee to benefit from the investor’s advice, the investor's ability to use an investee's knowledge by itself and indirectly with the help of its other partners negatively affects the likelihood of a board seat for the investor. We further argue that this negative effect is amplified when the investee has particularly valuable technologies at risk of appropriation by the investor. Our evidence from minority equity partnerships in the biopharmaceutical industry indicates why and when investors do not obtain board seats, despite the monitoring and advisory benefits that directors can bring to cooperative commercialization agreements

Entrepreneurial alliances as contractual forms

Building 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 put 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. Further, in order to separate contractual form and governance structure and to compare their antecedents, we also examine factors influencing the choices firms make between equity and non-equity arrangements.entrepreneurial alliances; alliance contracts; contract negotiations; telecommunications industry;

On the future of international joint venture research

International joint ventures (IJVs) are an important type of international strategic alliance (ISA) and have been studied by scholars for decades, resulting in a plethora of empirical studies, publications, and reviews, yet an inadequate accumulation of knowledge exists, as a closer look reveals. Much more than providing a summary and critical assessment of past contributions, this paper develops an expansive research agenda based upon a deep understanding of past research and comprehensive frameworks that distill this research. We identify a number of research opportunities that would not only advance IJV research but also closely related literatures and disciplines such as ISAs, theories of the multinational firm, international business research, and strategic management

The impact of firm speed capabilities on the decision to go it alone or partner

This study empirically examines the role of intrinsic speed capabilities, which refer to the ability to execute investment projects faster than competitors, in shaping corporations’ choice of alliances versus autonomous project development. Our basic premise is that firms lacking intrinsic speed capabilities (i.e., slow firms) are more likely to turn to alliances to supplement their capability deficiency. However, we expect that the ability of slow firms to partner with fast firms hinges on the former’s possession of complementary supporting assets. Our empirical analyses furnish evidence supporting these ideas using data from the global liquefied natural gas industry

Asymmetric Corporate Exposures to Foreign Exchange Rates

Research examining firms\u27 economic exposures to exchange rate movements has not differentiated periods of foreign currency appreciation and depreciation when estimating exposure coefficients. Recent theoretical developments regarding real options and pricing-to-market suggest corporate exposures may be asymmetric (i.e., the financial performance impact of a foreign currency appreciation may not be offset by the currency\u27s depreciation). Through an empirical examination of manufacturing firms\u27 economic exposures to exchange rate movements, this paper furnishes evidence on exposure asymmetries