Agent and Task Complexity in Multilateral Alliances: The Safeguarding Role of Equity Governance

Posted: 13 Jun 2017

See all articles by Dan Li

Dan Li

Indiana University - Kelley School of Business - Management & Entrepreneurship

Lorraine Eden

Texas A&M University - Department of Management

Matthew Josefy

Independent

Date Written: 2017

Abstract

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

Li, Dan and Eden, Lorraine and Josefy, Matthew, Agent and Task Complexity in Multilateral Alliances: The Safeguarding Role of Equity Governance (2017). Journal of International Management, Forthcoming; Kelley School of Business Research Paper No. 17-47; Mays Business School Research Paper No. 2984471. Available at SSRN: https://ssrn.com/abstract=2984471

Dan Li (Contact Author)

Indiana University - Kelley School of Business - Management & Entrepreneurship ( email )

Bloomington, IN 47405
United States

Lorraine Eden

Texas A&M University - Department of Management ( email )

415D Wehner Bldg, TAMU 4221
College Station, TX 77843-4221
United States
979-845-4851 (Phone)
979-845-9641 (Fax)

HOME PAGE: http://mays.tamu.edu/mgmt/

Matthew Josefy

Independent ( email )

No Address Available

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