learning from failure towards an evolutionary model of collaborative ventures this paper reports on a longitudinal case study of the interaction between two partners to a failed international joint venture we develop a model of the collaboration process in partnership and alliances based on earlier work by ring and van de ven 1994 and by doz 1996 we employ a series of events that occurred in the course of the relationship as the unit of analysis in order to trace the interactions between the partners and to explicate the impact that external shocks have on their perceptions of efficiency and equity the impact of these events as well as the responses they elicit on the quality of the relationship and vice versa are also considered we find that the partners assessments cause them to either engage in renegotiation of the terms of the contract or to modify their behavior unilaterally in an attempt to restore balance to the relationship the process feeds back until a new mutual understanding of equity is restored or else the relationship deteriorates gradually until a point when the venture is dissolved we conclude that positive feedback loops are critical in the evolutionary process that relationship quality is both an outcome and a mediating variable and that procedural issues are critical from the start in fostering a climate for positive reinforcement and the building of mutual trust and confidence in the relationship

the impact of joint venture status on the longevity of japanese stakes in u s manufacturing affiliates a number of well known studies report that between one third and two thirds of international joint ventures eventually break up while many generalizations explanations and prescriptions have been based on these statistics their meaning is unclear first all foreign affiliates are subject to normal business risk and to the risk that they will be divested by parents for strategic or financial reasons are these risks higher for joint ventures than for wholly owned subsidiaries second joint ventures may be shorter lived not because of their joint venture status but because affiliates which are joint ventured have other characteristics that make them more likely to exit to know whether joint ventures are shorter lived one must control for the other factors that affect the longevity of affiliates whether wholly owned or joint ventured third many joint ventures contracts contain clauses that allow partners to sell their stakes to one another at specific intervals because they make exit easier joint ventures should have shorter lives but these shorter lives should only be due to sell offs not to liquidations it is therefore important to see whether the supposedly higher termination rate of joint ventures stakes is due to a higher rate of selloffs or to a higher rate of liquidations in this paper we 1 compare the longevity of stakes in joint ventures versus those in wholly owned subsidiaries 2 while controlling for other factors that affect the longevity of such stakes and 3 while distinguishing between two types of exit those through sale and those through liquidation while past authors have addressed these three issues in piecemeal fashion we believe we are the first to address them simultaneously we analyze the factors that affect the longevity of 355 japanese stakes in u s manufacturing affiliates controlling for all the factors that affect exit rates we find that japanese parents are more likely to terminate their stakes in u s joint ventures than in wholly owned subsidiaries this higher termination rate of joint venture stakes is explained by a higher probability of selling them but not of liquidating them most of the other factors that have been found significant in explaining gross divestment of foreign affiliates do in fact only affect exits through sales but not exits through liquidations hence it is true that joint ventures have shorter lives but dangerous to interpret this finding as necessarily meaning that they are more likely to fail

causality between public expenditure and national income this paper deploys the granger method to determine the directions and patterns of causality between national income and total as well as various components of public expenditure empirical results based on the data for india 1950 81 suggest that while at the disaggregate level the causal process is rather diverse it is essentially feed back type at the aggregate level it neither confirms the wagnerian income public expenditure nor the keynesian public expenditure national income view the paper recommends that two variables be treated as jointly dependent in both the public finance and macroeconometric studies

breaking up a research consortium inter firm r d collaborations through contractual arrangements have become increasingly popular but in many cases they are broken up without any joint discovery we provide a rationale for the breakup date in r d collaboration agreements more specifically we consider a research consortium initiated by a firm a with a firm b b has private information about whether it is committed to the project or a free rider we show that under fairly general conditions a breakup date in the contract is a second best optimal screening device for firm a to screen out free riders with the additional constraint of renegotiation proofness a can only partially screen out free riders entry by some free riders makes sure that a does not have an incentive to renegotiate the contract ex post we also propose empirical strategies for identifying the three likely causes of a breakup date adverse selection moral hazard and project non viability

the economic modeling of strategy process clean models and dirty hands we argue that our model of learning in alliances khanna gulati and nohria 1998 is an economic model of strategy process we discuss implications of this view for the strategy process vs content debate for the appropriate testing of models of strategy process and for the role of economics in helping understand strategy process we propose that the clean models from economics and dirty hands of traditional process inquiries offer research designs that are complementary rather than incompatible hirsch michaels and friedman 1987 copyright 2000 john wiley sons ltd

an analysis of the relationship between various redistributive programs and poverty this paper utilizes multivariate exogeneity causality tests to analyze the relationship between various income policy programs and the poverty rate the framework we develop allows us to make a distinction between intended poverty reduction objectives and automatic stabilizing behavior since we find that the poverty in a given year affects the funding of social programs in later years we conclude that these programs are primarily acting as automatic stabilizers i e the poverty reduction instruments do not appear to have been implemented with a relentless intent to reduce poverty a result consistent with tullock s 1983 1986 theorem

antitrust for high technology industries assessing research joint ventures and mergers the purpose of this paper is to analyze if and how the standard methodology of antitrust analysis should be modified to reflect the importance of r and d and innovation as competitive forces and engines of economic progress focus is on such r and d intensive business combinations as research joint ventures rjvs and horizontal mergers in high technology industries the authors do not propose a complete set of guidelines for the assessment of such combinations they present an economic model of rjvs and high technology mergers that might serve as an analytical underpinning for such guidelines one conclusion of the analysis is that rjvs ought to be accorded special treatment under the antitrust laws this special treatment should entail an explicit recognition that rjvs will be scrutinized under the rule of reason according to guidelines specific to this purpose

resources transactions and rents managing value through interfirm collaborative relationships this paper offers a theoretical explanation for why interfirm collaborations form yet fail and further suggests how firms might manage them for a more positive outcome based on a perspective of value we explain how a more inclusive and integrative perspective one which combines elements from transaction costs and resource based theory provides more robust insight into collaboration formation management and instability in doing so we differentiate rent yielding firm specific assets at the core of the resource based view from the transaction specific assets at the core of transaction cost theory the paper makes a crucial distinction between the potential value attainable through collaborations and its actual realization the crux of our argument is that firms enter into collaborative relationships because these are expected to yield superior value relative to alternate organizational forms in certain situations offering potentially synergistic combinations of complementary resources and capabilities yet such relationships are frequently prone to failure because the partner firms tend not to recognize ex ante the nature and extent of transaction specific investment that is required in the collaborative relationship to attain these synergies in our argument critically the relationship between organizations is seen not simply as a governance structure of a hybrid nature but more importantly as a productive resource for value creation and realization in this light transaction specific investment in what we term relational specificity becomes imperative in the search for value we explain why the transaction costs incurred in the exchange of resources are not independent of the nature of resources to be transacted and similarly why the returns realized from these resources are not independent of the relationship and transaction specific expenditures incurred in effectively combining them and maintaining the combination the interdependence between the two mediated by the quality of the relationship has direct implications for the earning of rents through collaborations these relationship specific expenditures can be of an internally generated nature endogenous to the alliance form itself and need not exceed alternative forms while the associated benefits have the capacity to potentially exceed the alternatives this translates into potentially superior value the paper contributes in three key related ways a the explicit recognition of the relationship as a value bearing asset embedded in a larger and endogenous institutional context namely a system of resource relationships both intraorganizational and inter organizational among partner firms and the collaboration b the recognition of the evolving relationship between production and exchange which at the level of the collaboration is directly dependent on the nature evolution and dynamics of the relationship among the parties to the transaction and c the provision of a nontrust explanation for why firms might knowingly forego opportunities to take advantage of their partners drawing from this the paper occasions a a shift in focus from the form to the process of governance which has direct implications for value creation and realization and b a shift in the primary identity of transaction specific and relationship specific expenditures from cost to investment in future value

competitive consequences of interfirm collaboration how joint ventures shape industry profitability recent international business research on international joint ventures focuses on how firms can use such ventures for knowledge access and learning to enhance their competitiveness thereby increasing competition in the industry by contrast research in industrial organization economics has observed that firms can also use joint ventures in various ways to attenuate competition in this paper we join these two streams of research to investigate the conditions under which joint ventures reduce or enhance competition by empirically testing the effects of different types of joint ventures on industry profitability our results suggest that joint ventures can be pro competitive or anti competitive depending on whether or not they are formed between competing firms represent foreign market entry and operate in relatively concentrated industries our paper shows the importance of adopting a contingent approach to evaluating the competitive implications of joint ventures and it also points to the value of reinvigorating international business research on the competitive context and consequences of interfirm collaboration

do rising tides lift all boats the impact of secular and cyclical changes on poverty discussions about the antipoverty effects of economic growth in the united states have largely been predicated on john kennedy s metaphor that a rising tide lifts all boats but the magnitude of these effects has been a subject of debate since the inception of the war on poverty see lowell gallaway 1965 and henry aaron 1967 this debate has public policy as well as academic implications the greater the antipoverty effectiveness of growth the less the need for special programs or income supplements during economic expansions elsewhere we have shown that increased real income need not be associated with a decline in poverty see our 1984 and 1985 papers in fact poverty rates did not fall from 1982 to 1983 even though real median income increased and in 1984 the official poverty rate was about the same as it was in 1967 while real median family income was 7 1 percent above its 1967 level if a rising tide was lifting all boats the tide was late in many harbors in this paper we examine the relationship between macroeconomic conditions and poverty section i argues that several factors now limit the effectiveness of growth in reducing poverty section ii differentiates the effects of secular economic growth from those of cyclical recoveries the next section presents our interpretation of the data followed by a brief conclusion we show that growth had a large antipoverty effect through the early 1970 s but that the more recent experience has been different because growth rates have slowed and inequality has increased

relational contracts and the theory of the firm relational contracts informal agreements sustained by the value of future relationships are prevalent within and between firms we develop repeated game models showing why and how relational contracts within firms vertical integration differ from those between nonintegration we show that integration affects the parties temptations to renege on a given relational contract and hence affects the best relational contract the parties can sustain in this sense the integration decision can be an instrument in the service of the parties relationship our approach also has implications for joint ventures alliances and networks and for the role of management within and between firms

friends acquaintances or strangers partner selection in r d alliances like governance structure and alliance scope partner selection may serve to safeguard firms intellectual assets in r d alliances we categorize potential alliance partners into friends acquainta

impacts of new entry and horizontal joint ventures on industrial rates of return data resources inc regional load curve models vols 1 and 3 aug sept 1981 engle robert clive w j granger allen mitchem and ramu ramanathan some problems in the estimation of daily load shapes and peaks modelling and analysis ofelectricity demand by time of day electric power research institute epri ea 1304 dec 1979 engle robert f clive w j granger and ramu ramanathan regional load curs e models querj s model long run forecasts and sensitidvity analysis epri ea 1672 vol 4 sept 1981 granger clive w j robert f engle ramu ramanathan and allan andersen residential load curves and time of day pricing an econometric analysis journal ofeconometrics 9 1979 13 32 granger clive w j et al a regional load curve model specification and estimation electric power research institute forthcoming graybill franklin theory and application of the linear model north scituate ma duxbury press 1976 hanushek eric a efficient estimators for regressing regression coefficients the american statistician 28 may 1974 66 67 mitchem allen a regional model of time of day elasticity demand a tiuo stage approach unpublished phd dissertation university of california at san diego 1981 poirier dale economic issues in land forecasting modelling and analysis of electricity demand by time oj day epri ea 1304 dec 1979 ramanathan ramu robert f engle and clive w j granger regional load curlve models querj s model long run forecasts and sensitivity analysis epri ea 1672 vol 2 aug 1981 university of arizona engineering experiment station modelling and analysis of electricity demand by time of day epri ea 1304 dec 1979 proceedings of the epri workshop at san diego u s department of commerce notes on temperaturehumidity index l s 5922 june 1959

endogenous strategic business cycles this paper examines an overlapping generations version of the shapley shubik market game we show existence of equilibria for the simple one commodity model and analyze the dynamics of the equilibrium trajectories generated in the model because of the non linearities generated by strategic interaction of agents in the model we find that complex and chaotic equilibrium dynamics are possible in this model for a much broader range of preferences than those for which grandmont econometrica53 no 5 1995 995 1045 found complicated dynamics in the perfectly competitive version of this model these results then provide an alternative to the usual technology based explanation for the historical fact that business cycles became an important economic phenomenon only with the onset of industrialization journal of economic literatureclassification numbers c72 c73 d51 l16

on the design of stable joint ventures abstract an analytical model is developed to study the problem of designing stable joint ventures aimed at jointly developing and supplying a new technology the analysis focuses on the extent to which traditional motives for joint ventures like cost sharing synergy effects or technological spillovers may shape the incentives for firms to cheat on the arrangement and hence despite larger cooperative benefits endanger the formation of a stable agreement the cheating firm although supplying the contractually specified inputs to the venture manages to keep its knowhow proprietary while benefiting from the loyal partner s know how through spillovers from the venture only if know how can be kept sufficiently proprietary within the venture will synergy effects stimulate the formation of a stable joint venture increasing the profitability of cooperation while at the same time stifling the incentives to cheat but if know how becomes difficult to appropriate synergy effects may increase the incentives to cheat resulting in no agreement at least when both parties have perfect foresight

determinants of governance structure in alliances the role of strategic task and partner uncertainties research in transaction cost economics and structural sociology has emphasized the role of opportunism and trust in the choice between equity and non equity governance forms in alliances this paper suggests that the uncertainty surrounding partner cooperation is not straightforwardly predictive of governance structure in alliances instead task uncertainty and strategic uncertainty associated with the activities performed within alliances induce coordination and adaptation requirements that are important determinants of alliance governance independently of partner uncertainty support for this view is provided based on a 12 year panel of alliances formed in the us telecommunications entertainment and computer industries

organizational debut on the public stage marketing myopia and initial public offerings successful initial public offerings ipos provide firms with access to valuable resources but also put pressure on firms to impress potential investors with evidence of their current well being and prospects for future growth to impress investors ipo firms might curtail their marketing budgets which appears to inflate current earnings and provide evidence of current well being however curtailing marketing budgets unexpectedly during an ipo may be a myopic practice in that the immediate benefits of these budget cuts are offset by their longer term adverse consequences on financial well being the extent of these adverse consequences in turn may be moderated by external firm factors including strategic alliances and key customer relationships and internal firm factors such as the strategic emphasis on value creation versus value appropriation a sample of 1 095 ipos during 2000 2011 reveals evidence of myopic marketing practices in more than 37 of the sample investors seem misled during ipos bu

the stability of joint ventures reciprocity and competitive rivalry the focus of the following empirical analysis is the influence of reciprocity and long term relationships on the stability of joint ventures these cooperative incentives are offset by industry structural conditions which may promote competitive rivalry among the partners to separate these effects on joint venture survival the hypothesized relationships are proxied by variables drawn from industry and questionnaire data and estimated under a hazard model specification a theoretical implication of the findings is to suggest a shift of attention from the transaction to the economic relationship as the unit of analysis copyright 1989 by blackwell publishing ltd

large market games with demand uncertainty abstract we consider a market game with a continuum of consumers where the measure of each type is stochastic nature selects the set of active consumers who make bids and offers on l 1 spot market trading posts existence of type symmetric nash equilibrium is proven when facing price uncertainty best responses are unique and a nash equilibrium to the sell all game is typically not a nash equilibrium to the original game under plausible circumstances consumers strictly prefer to be on one side of the market

pre emptive patenting joint ventures and the persistence of oligopoly abstract gilbert and newbery 1982 have examined pre emptive patenting and the persistence of monopoly the present paper considers pre emptive patenting when there are several incumbent firms rather than just one it is shown why the incumbent oligopolists behaving non cooperatively might fail to deter entry this suggests that a joint venture in r and d might be a useful entry deterring device insofar as it pools the incumbents incentives to prevent entry this is indeed the case for small innovations but for large innovations the formation of a joint venture weakens the incumbents incentive to innovate by removing the competitive stimulus between them

the trap of continual ownership change in international equity joint ventures this article examines how multiple ownership changes unfold in international equity joint venture iejv evolution and how such repeated changes impact short term performance and long term survival by theorizing a new concept the trap of continual change in the iejv context we challenge the adaptive viewpoint assumed in alliance dynamics research we propose that partners sometimes respond to an initial dissatisfaction with the venture result with a dysfunctional repetition of rearranging the ownership control structure this continual change locks the organization into bad choices and sends it into a downward spiral acknowledging the mixed motive nature of inter partner relationships we incorporate cooperative versus competitive dynamics manifested in shared control arrangements we propose that shared ownership control lends stability to the iejv until the initial iejv agreement is renegotiated this stability is a result of the cooperative forces of mutual interdependence and mutual forbearance between the partners however when the power balance breaks down the potential for inter partner conflict increases when the ownership control structure of the iejv is restructured especially multiple times shared control arrangements become increasingly unstable as behavioral cultural and managerial differences are amplified

do firms learn to create value the case of alliances we investigate whether firms learn to manage interfirm alliances as experience accumulates we use contract specific experience measures in a data set of over 2000 joint ventures and licensing agreements and value creation measures derived from the abnormal stock returns surrounding alliance announcements learning effects are identified from the effects of unobserved heterogeneity in alliance capabilities we find evidence of large learning effects in managing joint ventures but no such evidence for licensing contracts the effects of learning on value creation are strongest for research joint ventures and weakest for marketing joint ventures these results are consistent with the view that learning effects are more important in situations characterized by greater contractual ambiguity copyright 2000 john wiley sons ltd

explaining ijv survival in a transitional economy through social exchange and knowledge based perspectives in this study we combine social exchange and knowledge based perspectives to develop a general path model of ijv survival we further refine our expectations by considering the transitional economic context of our study and the somewhat unique managerial values resulting from the legacy of marxist ideology results from structural equation modeling suggest that an imbalance in the management control structure between the parents leads to parental conflict and an increased likelihood of ijv failure an imbalance in the ownership control structure however had no influence on conflict or survival in general support from the foreign parent is positively related to ijv learning and ijv survival however higher levels of technical support provided by the foreign parent to the ijv reduced the level of parental conflict whereas management support had no effect on conflict our results suggest some dilemmas for firms pursuing ijvs in transitional economies although the foreign parent often contributes critical resources to the ijv providing it with bargaining power and a high level of influence an imbalance in management control between the partners may ultimately be detrimental to ijv survival copyright 2000 john wiley sons ltd

market uncertainty correlated and sunspot equilibria in imperfectly competitive economies first version received june 1988 final version accepted november 1990 eds an imperfectly competitive economy is very prone to market uncertainty including uncertainty about the liquidity or thickness of markets we show in particular that there exist stochastic equilibrium outcomes in nonstochastic market games if and only if the endowments are not pareto optimal we also provide a link between extrinsic uncertainty arising in games e g correlated equilibria and extrinsic uncertainty in market economies e g sunspot equilibria a correlated equilibria to the market game is either a sunspot equilibrium or a non sunspot equilibrium to the related securities games but the converse is not true in general

joint venture buy outs under uncertainty this paper provides a theory of joint venture buy outs in the presence of demand uncertainty in an infinite horizon framework with demand uncertainty we consider a foreign firm s decision on whether to form a joint venture or to open a fully owned subsidiary without the possibility of future share adjustment the foreign firm enters the market through a joint venture if the host country firm helps to reduce the uncertainty significantly consequently the firm enters at an earlier point in time compared to the situation in which opening a fully owned subsidiary is the only option to the firm the possibility of future share adjustment in the joint venture further increases the incentive to speed up foreign investment although the possibility of share adjustment results in a joint venture buy out and can reduce the future profits of the host country firm it may increase host country welfare by attracting foreign investment at an earlier point in time we show the implications of learning in the joint venture 2011 the authors the journal of industrial economics

instabilities of strategic alliances an internal tensions perspective the instabilities of strategic alliances have been examined in the literature through a number of theoretical approaches alliance instabilities refer to major changes or dissolutions of alliances that are unplanned from the perspective of one or more partners although the literature identifies certain characteristics of strategic alliances that may lead to their unplanned dissolution the extent of our understanding of this subject appears to be fragmented and incomplete in this article we propose a comprehensive framework for adequately understanding alliance instabilities based on the notion of internal tensions we suggest that strategic alliances are sites in which conflicting forces develop and which can be viewed as being constituted by three key pairs of competing forces namely cooperation versus competition rigidity versus flexibility and short term versus long term orientation this tensions framework helps us in explaining the intrinsic vulnerability of alliances in terms of a wide range of internal contradictions and enables us to examine in an integrated manner the incidence dynamics and eventual dissipation of the inherent instabilities we discuss the interrelationships among the different internal tensions and their impacts on different types of strategic alliances we also examine the termination of alliances through mergers acquisitions and dissolution finally we suggest ways to empirically test the various ideas and propositions developed here and indicate directions for further research

choosing organizational modes of strategic technology partnering international and sectoral differences this paper focuses on international strategic technology partnerships and the choice that companies have in terms of the organizational mode either through complex inter organizational modes involving equity sharing or contractual non equity alliances the empirical results show that the choice of particular mode of cooperation varies with the technological characteristics of sectors of industry joint ventures are disproportionately represented in relatively mature industries contractual alliances dominate strategic technology partnering in so called high tech industries

an analysis of cooperative research and development i analyze the effects of cooperative research whereby member firms agree to share the costs andfruits of a research project before they undertake it in this model industrywide agreements tend to have socially beneficial effects when the degree ofproduct market competition is low when there are r d spillovers in the absence of cooperation when a high degree of sharing is technologically feasible and when the agreement concerns basic research rather than development activities i show that a royalty free cross licensing agreement among any number offirms lowers the equilibrium level of innovation even though it increases the efficiency of r d through sharing

external technology sourcing through alliances or acquisitions an analysis of the application specific integrated circuits industry in today s turbulent business environment innovation is the result of the interplay between two distinct but related factors endogenous r d efforts and quasi external acquisition of technology and know how given the increasing importance of innovation it is vital to understand more about the alternative mechanisms such as alliances and acquisitions that can be used to enhance the innovative performance of companies most of the literature has dealt with these alternatives as isolated issues companies however are constantly challenged to choose between acquisitions and strategic alliances given the limited resources that can be spent on research and development this paper contributes to the literature because it focuses on the choice between innovation related alliances and acquisitions we focus on the question of how the trade off between strategic alliances and acquisitions is influenced by previous direct and indirect ties between firms in an industry network of interfirm alliances we formulate hypotheses pertaining to the number of direct ties between two companies their proximity in the overall alliance network and their centrality in that network in so doing we distinguish between ties that connect firms from the same and from different industry segments and those that connect firms from the same or from different world regions these hypotheses are tested on a sample of strategic alliances and acquisitions in the application specific integrated circuits asic industry the findings show that a series of strategic alliances between two partners increases the probability that one will ultimately acquire the other whereas previous direct contacts tend to lead to an acquisition this is not true of previous indirect contacts which increase the probability that a link between the companies once it is forged takes the form of a strategic alliance in the case of acquisitions firms that are more centrally located in the network of interfirm alliances tend to be acquirers and firms with a less central position tend to become acquired these findings underscore the importance of taking previously formed interfirm linkages into account when explaining the choice between strategic alliances and acquisitions as these existing links influence the transaction costs associated with both alternatives

incumbents use of pre entry alliances before expansion into new technical subfields of an industry industry incumbents frequently delay entry into emerging technical subfields fearing product cannibalization and uncertain investment and enter only after technical and market uncertainties have subsided we predict that many incumbents particularly stronger firms will participate in alliances with other firms before their standalone entry the alliances will be used to realize part of the value of specialized assets and to gain information about the emerging products and markets we support the predictions with evidence from the us market of the medical diagnostic imaging industry

competing globally allying locally alliances between global rivals and host country factors an emerging literature highlights the relationship between competitive intensity and the likelihood that two rival firms will form an alliance placing this argument in an international context we first suggest that the global competitive intensity between two rival multinationals positively affects the likelihood that they will ally in any host country additionally we highlight how a number of host country contextual factors moderate the relationship between global competitive intensity and alliance formation in a given host country we test our hypotheses with a sample of 13 global automobile companies operating in 27 countries and the results largely support our predictions

performance and survival of joint ventures with non conventional ownership structures the international joint venture jv literature has focused on two parent jvs formed between one foreign and one local firm yet other types of jvs exist this paper identifies four distinct forms of jvs based on the jv partners nationality and equity affiliation these are i jvs that are formed between affiliated home country based firms ii jvs that are formed between unaffiliated home country based firmsl iii jvs that are formed between home country based and local firms and iv jvs that are formed between home country and third country based firms our analysis of 737 japanese jvs in asia demonstrates that the conventionally assumed form of jv represented only 30 percent of the total further each of the four jv forms significantly differed in terms of incidence performance and survival likelihood

on designing contracts to guarantee enforceability theory and evidence from east west trade this article suggests how the literature on east west trade and the choice of contracts can be integrated into recent work on the theory of the multinational corporation and contract enforceability by using the properties of foreign direct investment as a benchmark it explains why one type of contract tends to prevail over another the explanation rests on the premise that because of the prohibition on fdi contracts are used which most closely replicate the benefits of intra firm trade while providing managerial and risk shifting services to the eastern partner

the dynamics of learning alliances competition cooperation and relative scope we show how the tension between cooperation and competition affects the dynamics of learning alliances private benefits and common benefits differ in the incentives that they create for investment in learning the competitive aspects of alliances are most severe when a firm s ratio of private to common benefits is high we introduce a measure relative scope of a firm in an alliance to show that the opportunity set of each firm outside an alliance crucially impacts its behavior within the alliance finally we suggest why firms might deviate from the theoretically optimal behavior patterns 1998 john wiley sons ltd

multivariate exogeneity tests and poverty abstract many recent studies presume direction of the relationship between poverty and other economic factors is one way that is they assume that the various economic phenomena cause or affect poverty and that there is no feedback however if feedback is present it is possible that the level of poverty or the perception of poverty may not only impact public policy decisions aimed at eradicating poverty but may have indirect effects on other economic variables as well we test that hypothesis in this paper using multivariate exogeneity tests

determinants of the variance in market shares in canadian manufacturing commonly used measures of industrial concentration can be expressed as functions of the number of firms in an industry and a measure of firm size inequality prior studies of the causes of industrial concentration have emphasized factors affecting the number of firms in an industry we expand the study of causes of concentration by examining factors which affect the variance in market shares as a measure of firm size inequality

strategizing niceness in co opetition the case of knowledge exchange in supply chain innovation projects abstract in this paper we take a novel approach to address the dilemma of innovation sharing versus protection among supply chain partners the paper conducts an exploratory study that introduces factors affecting a firm s optimum supply chain innovation strategy we go beyond the conventional prisoners dilemma with its limiting assumptions of players preferences and symmetry to explore a larger pool of 2 2 games that may effectively model the problem after classifying firm types according to collaboration motive and relative power we use simulation to explore the effects of firm type opponent type and payoff structure on repeated innovation interactions or equivalently long term relations and optimality of niceness surprisingly we find that opponent type is essentially irrelevant in long term innovation interactions and focal firm type is only conditionally relevant the paper contributes further by introducing reciprocation of strategy type nice versus mean showing that reciprocation is recommended while identifying and explaining the exceptions to this conclusion

effective interim collaboration how firms minimize transaction costs and maximise transaction value this study of automotive transaction relationships in the u s a and japan offers abta which indicate that transaction costs do not necessarily increase with an increase in reiation specijk investments we empirically examine the conditions under which transactors can simultaneously achieve the twin benejits of high asset specificity and low transaction costs this is possible because the dtfferent safeguards which can be employed to control opportunism have different set up costs and result in different transaction costs over dl erent time horizons we examine in detail the ractices of javanese firms which result in effective inteq n collaboration 1997 by john wiley sons ltd

on the contractual governance of research collaborations allocating control and intellectual property rights in the shadow of potential termination abstract this paper investigates the governance design problem of a large company that wants to engage a small and cashless firm into a research collaboration this analysis reflects the frequently observed collaborations between pharma companies and biotechs and an actual research contract is assessed to link theory to practice the governance form refers to the allocation of control rights over the research process and property rights over research output s as determined by the initial contract yet this contract is incomplete the parties negotiate at a later stage from bargaining positions that depend on the initial choice of the governance but they also contemplate the possibility that the collaboration will be terminated by means of a simple model that captures the core aspects of the contractual environment i answer a key research question how should governance be designed in the shadow of potential termination to provide the research firm with the incentives to invest in the collaboration first it is in the company s interest to choose a governance form that eliminates the possibility of termination and stabilizes the collaboration whenever possible second if the collaboration cannot be stabilized the company faces a trade off between reducing the probability of termination and providing incentives which is ultimately resolved by making the collaboration highly unstable third property rights and control are substitutes in the governance design if the company collects more property rights it must relinquish more control rights

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

network location and learning the influence of network resources and firm capabilities on alliance formation this paper presents a dynamic firm level study of the role of network resources in determining alliance formation such resources inhere not so much within the firm but reside in the interfirm networks in which firms are placed data from extensive fieldwork show that by influencing the extent to which firms have access to information about potential partners such resources are an important catalyst for new alliances especially because alliances entail considerable hazards this study also assesses the importance of firms capabilities with alliance formation and material resources as determinants of their alliance decisions i test this dynamic framework and its hypotheses about the role of time varying network resources and firm capabilities with comprehensive longitudinal multi industry data on the formation of strategic alliances by a panel of firms between 1970 and 1989 the results confirm field observations that accumulated network resources arising from firm participation in the network of accumulated prior alliances are influential in firms decisions to enter into new alliances this study highlights the importance of network resources that firms derive from their embeddedness in networks for explaining their strategic behavior copyright 1999 john wiley sons ltd

when competition eclipses cooperation an event history analysis of joint venture failure why do so many joint ventures fail despite the fact that their success is the exception rather than the rule the literature on why joint venture performance has been so poor remains fragmentary we address this issue adopting a transaction cost economics perspective and modeling joint ventures as governance structures that blend the advantages and drawbacks of both markets and hierarchies using a data base on electronics industry ventures and event history analysis we identify several predictors of joint venture failure and test for their influences a key finding is that the presence of competition between joint venture partners outside of the agreement significantly impairs chances for the operation s chance of survival we also find clear evidence that the failure rate of joint ventures is nonmonotonic rising to a peak in the middle term and then declining finally we compare and contrast predictors of terminations due to failure to those due to acquisition of the joint venture by one of its partners our overall conclusions highlight implications for strategic choice theory building and the management of joint ventures

cross function and same function alliances how does alliance structure affect the behavior of partnering firms firms collaborate to develop and deliver new products these collaborations vary in terms of the similarity of the competencies that partnering firms bring to the alliance in same function alliances partnering firms have similar competencies whereas in cross function alliances partners have very different competencies on examining managers view of these alliances we find that on average same function alliances are expected to perform better than cross function alliances holding fixed the level of inputs a game theoretic analysis shows that this apprehension about cross function alliances is consistent with a pareto inferior equilibrium a pareto superior equilibrium however suggests that partners in cross function alliances may invest more in their alliances than those in same function alliances it is also often believed that increasing the number of partnering firms is not conducive for collaborative effort our analysis shows that this belief is correct for same function alliances but not for cross function alliances we test these equilibrium predictions in an experiment where we exogenously vary the type of alliance and the number of partnering firms the experimental results lend support for the pareto superior equilibrium partners in cross function alliances invested more than their counterparts in same function alliances and this difference in investment levels increased with the number of partnering firms we extend our model to consider alliances where firms have an opportunity to learn from their partners and later leverage this knowledge outside the scope of their alliance though such learning increases the resources committed by alliance partners in the learning phase it decreases investment in the subsequent competition and also dampens the overall investment across the two stages in addition an increase in interalliance competition decreases investments in the focal alliance but increases investment in the competition outside the scope of the alliance

conversation with secrets we analyze the sustainability of a conversation when one agent might be endowed with a piece of private information that affects the payoff distribution to its benefit such a secret can compromise the sustainability of conversation even without an obligation the secret holder will disclose its secret if it prevents preemptive termination of the conversation the nonsecret holder lacks this possibility and stops the conversation competition and limited effectiveness of the conversation amplify this result of early disclosure and render the conversation process less sustainable we discuss policy and managerial implications for industry standard development and joint ventures

control cooperation interfaces in global strategic alliances a situational typology and strategic responses this article applies the dialectical logic of loose coupling to interpartner exchanges in order to analyze the dynamics of global strategic alliances we develop a typology of control and cooperation that defines alliance states or situations according to their level of cooperation under private and collective control in the private control cooperation interplay contending honeymoon and coopetition situations arise depending on the levels of private control and cooperation in the collective control cooperation interplay the loosely connected the equity hostage the tightly integrated and the trusting states emerge according to the levels of collective control and cooperation we illustrate how an individual partner strategically responds to the control cooperation interplay under each situation or state and develop hypotheses explicating how these strategic responses are influenced by relational characteristics such as goal congruity resource complementarity and bargaining asymmetry between foreign and local partners

built to last or meant to end intertemporal choice in strategic alliance portfolios a salient but rarely explicitly studied characteristic of interfirm relationships is that they can intentionally be formed for finite periods of time what determines firms intertemporal choices between different alliance time horizons shadow of the future theorists suggest that when an alliance has an explicitly set short term time frame there is an increased risk that partners may behave opportunistically this does not readily explain the high incidence of time bound alliances being formed reconciling insights from the shadow of the future perspective with nascent research on the flexibility of temporary organizations and shifting the focus from the level of individual transactions to that of strategic alliance portfolios we argue that firms may be willing to accept a higher risk of opportunism when there are offsetting gains in strategic flexibility in managing their strategic alliance portfolio consequently we hypothesize that environmental factors that increase the need for strategic flexibility namely dynamism and complexity in the environment are likely to increase the relative share of time bound alliances in strategic alliance portfolios our analysis of longitudinal data on the intertemporal alliance choices of a large sample of small and medium sized enterprises provides support for this argument our findings fill an important gap in theory about time horizons in interfirm relationships and temporary organizations and show the importance of separating planned terminations from duration based performance measures

differential gains between partners in joint ventures role of resource appropriation and private benefits i examine why there are differences in wealth gains between firms when they announce a joint venture jv building on transaction cost economics and the resource based view i argue that because jvs often involve incomplete contracts differences in wealth gains arise due to resource appropriation and private benefits as a result two factors become important in understanding whether a firm earns higher lower wealth gains than its partner 1 its potential for earning private benefits and 2 its ability to extract private benefits as a test of the impact of the first factor i propose that when a jv is formed the partner that possesses more valuable resources is likely to earn lower wealth gains whereas the partner that possesses less valuable resources is likely to earn higher wealth gains because its potential for earning private benefits over the course of the venture is also higher i then argue that the partner with less valuable resources is likely to extract higher private benefits and gain more when it has greater bargaining power and absorptive capacity conversely the partner with more valuable resources is likely to protect itself better from appropriation when it has jv capabilities i find support for these arguments in a sample of 344 ventures the implications are that private benefits significantly influence value creation in jvs and that a broad array of contingencies and factors affect these benefits which need to be considered when entering into a cooperation

learning from competing partners outcomes and durations of scale and link alliances in europe north america and asia this paper investigates the outcomes and durations of strategic alliances among competing firms using alliance outcomes as indicators of learning by partner firms we show that alliance outcomes vary systematically across link and scale alliances link alliances are interfirm partnerships to which partners contribute different capabilities while scale alliances are partnerships to which partners contribute similar capabilities we find that partners are more likely to reorganize or take over link alliances than scale alliances by contrast scale alliances are more likely to continue without material changes the two types of alliances are equally likely to shut down at similar ages these results support the view that link alliances lead to greater levels of learning and capability acquisition between the partners than do scale alliances copyright 2000 john wiley sons ltd

the definition and measurement of poverty both poverty research and social policy employ a variety of poverty definitions the choice of one specific definition has major consequences for the resulting poverty population this paper uses eight different definitions of poverty to determine who is poor using a 1983 dutch sample of more than 12 000 households poverty according to each of these definitions is compared over different subgroups the relevance of the choice between definitions for social policy is shown by the presentation of poverty percentages according to the various definitions which vary widely

parent firm performance across international joint venture life cycle stages the benefits that firms obtain from investing in international joint ventures ijvs can be reinforced or reduced by the management of later stages of collaboration this paper presents an analysis of the shareholder wealth effects of ijv formation and five types of ijv termination the empirical findings challenge common assumptions in the ijv literature contrast prior evidence on the performance implications of market entry and exit through acquisitions and divestitures and demonstrate the value of integrating ijv life cycle stages in future research

international joint venture instability a critique of previous research a reconceptualization and directions for future research this paper conducts an in depth critique of previous research on international joint venture instability by pointing out its major limitations lack of clear conceptualizations and consistent operationalizations lack of clarity in the relationship with performance static focus on the eventual destination rather than developmental processes and lack of managerial relevance to overcome these deficiencies we propose a significant reconceptualization in which instability is defined as a neutral dynamic process based and multifaceted phenomenon directions for future research are provided

learning through the international joint venture lessons from the experience of china s automotive sector this study explores why international joint ventures ijvs based on the global south may meet with only partial success in nurturing local technological capability the experience of china s passenger vehicle sector demonstrates that in the existence of a substantial technological capability gap between alliance partners the ijv arrangement is likely to create a passive learning mode and learners using this ijv arrangement may be able to strengthen their production capability but leaving their project execution and innovation capabilities largely undeveloped

structural stability and reconfiguration of international joint ventures previous research suggests that international joint ventures ijvs are inherently unstable and fragile this view has failed however to explain why many ijvs have an extended longevity and stability this paper draws on two contrasting perspectives from organization theory structural instability and structural inertia to trace both the destabilizing and stabilizing forces in ijvs and argues that a complete understanding of an ijv s dynamic evolution requires consideration of both forces

r d cooperation and product market competition abstract i derive equilibria that is self enforcing agreements for firms that cooperate in improving their product and compete in marketing it i am particularly interested in the interaction between rd ii product improvement is a function of the effort by each firm iii firms cannot observe each other s effort iv firms market the product by simultaneously setting prices the analysis reveals some surprising results i find that in some cases although monopoly prices can be sustained in equilibrium optimal equilibria call for firms to set lower than monopoly prices in the short run thus providing the right incentives for investment in r d under a different set of assumptions i find that it is optimal to reduce r d effort below the efficient level as a means to sustain short run collusion in prices even though efficient r d effort could be achieved in equilibrium

closure and divestiture by foreign entrants the impact of entry and post entry strategies we analyze the longevity of foreign entrants explicitly considering two possible ways of exit firm closure and capital divestiture we find that entry and post entry strategies affect the longevity of firms and of foreign equity holdings but in different manners while the ownership arrangements and organizational structure affect the likelihood of divestment they exert no significant effect upon closure the entry mode exerts opposite effects on the two modes of exit greenfield entrants being more likely to shutdown but less likely to be divested only human capital affects closure and divestment in the same manner firms with large endowments of human capital are less likely to exit irrespective of the exit mode considered copyright 2000 john wiley sons ltd

learning dynamics in research alliances a panel data analysis the aim of this paper is to empirically test the determinants of research joint ventures rjvs group dynamics we develop a model based on learning and transaction cost theories which represent the benefits and costs of rjv participation respectively according to our framework firms at each period in time weigh the benefits against the costs of being an rjv member rjv dynamics can then be interpreted as a consequence of this evolving trade off over time we look at entry turbulence and exit in rjvs that have been set up under the us national cooperative research act which allows for certain antitrust exemptions in order to stimulate firms to co operate in r d accounting for unobserved project characteristics and controlling for inter rjv interactions and industry effects the tobit panel regressions show the importance of group and time features for an rjvs evolution we further identify an average rjvs long term equilibrium size and assess its determining factors ours is a first attempt to produce robust stylized facts about co operational short and long term dynamics a neglected dimension in research co operations but an important element in understanding how collaborative learning works

alliance experience and governance flexibility prior work has mapped the transaction at the heart of an alliance to the risks of opportunism inherent in that alliance and ultimately to how the alliance is structured and governed we extend this approach by noting that the parties in an alliance do not necessarily perceive the same hazards as predominant and thus may have different preferences for how the alliance is structured nevertheless it is in each party s best interest to find a structure that protects its interests while also allowing its partner to protect its interests sufficiently drawing from the alliance management capabilities literature we argue that firms with more alliance experience are better able to protect their interests under any given alliance structure making the choice of structure less consequential to them the resulting governance versatility provides a competitive advantage by enabling firms to form advantageous alliances that are less available to inexperienced competitors our study of innovative alliances in biopharmaceutical industry lends support to the hypotheses allowing us to advance the literature on governance choice in alliances the literature on alliance management and their intersection

the determinants of trust in supplier automaker relationships in the us japan and korea we examine the determinants of trust in 453 supplier automaker relationships in the us japan and korea we define trust and derive a model of its determinants drawing upon 1 an embeddedness relationship based perspective 2 a process based perspective and 3 an economic hostage based perspective our findings indicate strong support for the process based perspective in all countries embeddedness was only important in japan and the economic hostage based variable stock ownership was not important in any country

the scope of alliances we develop the notion that the choice of alliance scope materially affects the character of benefits that alliance participants receive and thereby affects a range of issues having to do with the initiation evolution and termination of the alliance indeed while under emphasized by academics determining alliance scope ranks among the most important tasks undert aken by practitioners of alliances restricting ourselves to alliances where mutual learning is the primary raison d etre we first define private benefits as those that accrue to subsets of participants in an alliance and common benefits as those that accrue collectively to all participants we demonstrate how the choice of alliance scope affects the mix of private and common benefits and draw on earlier work to show how this in turn affects alliance partners incentives to invest in learning as illustrations of the utility of the framework of private and common benefits we consider two applications a simple model illustrates the relationship between the choice of alliance scope the realization of private and common benefits and the stability or lack thereof of the alliance a second application sheds light on alliance evolution it examines factors affecting both a how a particular alliance evolves and b how firms manage sequences of alliances two broader theoretical points also emerge from this discussion of alliance scope first we argue that an analytical focus solely on the individual alliance may be inappropriate for studying a wide range of issues of the multiple sources of benefits that accrue to alliance participants there are some whose realization depends on activities in which the firm is engaged but that may have little to do with the alliance in question second in contrast to much of the literature on alliances our analysis is based upon the primitives of benefit streams rather than on transaction cost reasoning this complementary perspective is better suited to the task of highlighting how activities not governed by an alliance might nonetheless affect multiple aspects of the alliance

liquid markets and competition abstract a market is liquid if no individual s actions have a big effect on the prices of goods traded in that market perfectly competitive markets are therefore perfectly liquid it is well known that market liquidity can be achieved by increasing the number of traders so that individual trades are small compared to total trades we show that even when there are only few traders market liquidity can be achieved through large short sales in which net trades are small relative to gross trades in particular for a natural variant of the market game which permits unlimited short sales we show that there is always a nash equilibrium allocation arbitrarily close to a competitive equilibrium allocation of course not all ne are near competitive only the large short sales ne are nearly liquid and hence close to ce

the evolution and internalization of international joint ventures in a transitioning economy although international joint ventures ijvs may mature over time and develop competitive viability they maintain some risk of instability owing to their shared ownership such instability can ultimately lead to their internalization by one of the partners in this study we consider factors that influence 1 whether ijvs evolve toward becoming a wholly owned subsidiary and 2 which parent foreign or local gains ownership of the venture we use a sample of hungarian joint ventures and find that only when there is both a power imbalance between the parents and high levels of conflict is the likelihood that the joint venture converts to a wholly owned subsidiary enhanced the extent to which the joint venture has learned from the foreign parent indirectly determines which parent gains full ownership extensive knowledge transfer to a joint venture in a transitioning economy combined with high levels of conflict increases the likelihood of the foreign parent gaining full ownership in contrast when there is extensive knowledge transfer and low conflict between the parents the local parent is more likely to internalize the venture our results suggest that the relationship between partner power and outcomes in ventures is more complex than originally believed and is contingent upon the level of conflict between the parents of the ijv