Governance of strategic alliances in technology-based industries: the case of wireless services

Abstract

This research is concerned with the examination of the mechanism through which decisions on the governance mode of strategic technology alliances are made at the firm level. Strategic alliances constitute a primary implementation means of corporate strategies that aim at innovation development and exploitation, which is considered of high strategic importance for firms in technology-based industries. A special feature of technology-based industries is the rapid rate and the difficulty of forecasting change. Strategic decision making in such environments should assure flexibility and opportunities for future value creation on the one hand, and optimization of resource allocation and cost minimization on the other. More particularly, this research addresses the strategic decision-makers’ dilemma of whether to internalize the transactions with their strategic partners or not, or, in other words, whether to pursue quasi-hierarchy or quasi-market alliances. This dilemma has already been addressed by a number of traditional theoretical perspectives, such as Transaction Cost Economics, the Resource-based, the Dynamic Capabilities, and the Knowledge-based View of the Firm, as well as the Theory of Real Options. We argue in favor of integrating a set of antecedent factors and propositions, sourced from the aforementioned theoretical perspectives, with the ultimate purpose of developing an integrative governance model. This integration is pursued under the concern of investigating the value, along with the resource and the cost, aspects of alliances. The integrative governance model is empirically tested through a survey involving strategic alliances in the wireless business environment. The quantitative data collected are analyzed with the aid of a Structural Equation Modeling (SEM) technique, namely Partial Least Squares (PLS). Moreover, an extreme cases analysis approach, involving qualitative data on two real-world alliances, is applied to confirm and substantiate the quantitative results. The research results provide support for the integration of complementary theoretical perspectives over alliance governance and set the groundwork for the development of a decision-aiding tool helping strategic managers to make up their mind on the alliance governance mode that best aligns with their firm’s corporate strategy.