Knowledge Sharing in Alliances and Alliance Portfolios

We develop a model of knowledge sharing in alliances and alliance portfolios. We show that, once the issue of encouraging effective collaboration is put center stage, many standard intuitions of the learning race view and alliance portfolio literature are overturned or qualified. Partners engage in learning races in some cases, but exhibit “altruistic” behaviors in other cases. They may reduce their own absorptive capacity or increase the transparency of their own operations to facilitate their partner’s learning. In alliance portfolios, we show that not all substitutability between alliance portfolio partners is bad. We distinguish between substitutability in implementation and substitutability in rival benefits and show that the latter is conducive to knowledge sharing. Our work contributes toward putting the literature on learning alliances on a more solid foundation by emphasizing the importance of commitments that leading firms can make to encourage collaboration

Vertical integration in the presence of upstream competition

C1 - Refereed Journal ArticleWe analyze vertical integration in the case of upstream competition andcompare outcomes to the case where upstream assets are owned by a single agent(i.e., upstream monopoly). In so doing, we make two contributions to themodelling of strategic vertical integration. First, we base industry structure –namely, the ownership of assets – firmly within the property rights approach tofirm boundaries. Second, we model the potential multilateral negotiations using afully specified, non-cooperative bargaining model designed to easily compareoutcomes achieved under upstream competition and monopoly. Given this, wedemonstrate that vertical integration can alter the joint payoff of integratingparties in ex post bargaining; however, this bargaining effect is stronger for firmsintegrating under upstream competition than upstream monopoly. We alsoconsider the potential for integration to internalize competitive externalities in amanner that cannot be achieved under non-integration; i.e., by favouring internalover external supply. We demonstrate that ex post monopolization is more likelyto occur when there is an upstream monopoly than when there is upstreamcompetition. Our general conclusion is that the simple intuition that the presenceof upstream competition can mitigate and reduce the incentives for sociallyundesirable vertical integration is misplaced and, depending upon the strength ofdownstream competition (i.e., product differentiation), the opposite could easilybe the case

Organizational design and technology choice under intrafirm bargaining: Comment

C1 - Refereed Journal Articl

A bargaining perspective on strategic outsourcing and supply competition

This article considers the outsourcing choice of a downstream firm with its own upstream production resources or assets. The novelty of the approach is to consider the outsourced function as involving resources consistent with the resource-based view of the firm. From a bargaining perspective, we characterize a downstream firm’s decision whether to outsource to an independent or to an established upstream firm. In so doing, the downstream firm faces a trade-off between lower input costs afforded by independent competition, and higher resource value associated with those who can consolidate upstream capabilities. We show that this tradeoff is resolved in favor of outsourcing to an established firm.81