Contractual Heterogeneity in Strategic Alliances

IESE Working Paper No. D/482

27 Pages Posted: 20 Dec 2003

See all articles by Africa M. Arino

Africa M. Arino

University of Navarra, IESE Business School

Jeffrey J. Reuer

Purdue University - Krannert School of Management

Date Written: November 2002

Abstract

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 greatest for alliances that are strategically important and 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. Compared with open-ended contractual arrangements, time-bound alliances tend to rely less heavily on such provisions, but more on safeguards concerning confidential and proprietary information, alliance termination, and the adjudication of disputes by third parties.

Keywords: alliances design, governance structures, collaborative agreements, alliance termination

Suggested Citation

Ariño, Africa M. and Reuer, Jeffrey J., Contractual Heterogeneity in Strategic Alliances (November 2002). IESE Working Paper No. D/482. Available at SSRN: https://ssrn.com/abstract=462302 or http://dx.doi.org/10.2139/ssrn.462302

Africa M. Ariño (Contact Author)

University of Navarra, IESE Business School ( email )

Avenida Pearson 21
Barcelona, 08034
Spain

Jeffrey J. Reuer

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States

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