Agent and Task Complexity in Multilateral Alliances: The Safeguarding Role of Equity Governance
Journal of International Management, Forthcoming
Posted: 13 Jun 2017
Date Written: 2017
Multilateral alliances are an inherently complex organizational form; managing these complexities is particularly difficult for alliance partners because alliances are plagued by both internal and external uncertainty. Using insights from transaction cost economics, our study identifies, articulates and tests different forms of alliance complexity and their impacts on alliance governance structure. Specifically, we investigate two forms of alliance complexity: agent and task. We decompose agent complexity into organizational and partner complexity, and decompose task complexity into geographic, transactional and technological complexity. Using a sample of 327 trilateral alliances, the most frequent form of multilateral alliances, we find that three forms of alliance complexity involving internal uncertainty (organizational, partner and technological complexity) favor equity-based governance, whereas external uncertainty in the form of geographic complexity discourages equity-based governance.
Keywords: Multilateral Alliances, Trilateral Alliances, International Alliances, Alliance Complexity, Agent Complexity, Task Complexity, Governance, Internal and External Uncertainty, Asset Specificity, Transaction Cost Economics
JEL Classification: F20, F23, M10, M16
Suggested Citation: Suggested Citation