The Design of Alliance Governance Systems

345 Pages·2005·4.53 MB·English

by  Sascha Albers

Edition KWV
Sascha Albers
The Design of
Alliance Governance
Systems
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Sascha Albers
The Design of
Alliance Governance
Systems
Sascha Albers
Universiteit Antwerpen
Antwerpen, Belgium
Bis 2018 erschien der Titel im Kölner Wissenschaftsverlag, Köln
Dissertation Universität zu Köln, 2005

Edition KWV
ISBN 978-3-658-24710-2 ISBN 978-3-658-24711-9 (eBook)
https://doi.org/10.1007/978-3-658-24711-9
Library of Congress Control Number: 2018968335
Springer Gabler
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Foreword

The importance of inter-company cooperation is still growing, with strategic alliances,
joint ventures, license agreements, value chain partnerships and similar forms of
cooperation now found in nearly all industry sectors. Since the mid eighties, the scientific
discussion of inter-company cooperation has developed into a research focus at the
interface of organization theory and strategic management. More and more of the
discussion is shifting from the reasons and objectives of cooperation, to questions of
management structures and processes and their embedding in the broader organizational,
strategic and industry context.
However, the current approaches are partially contradictory in theoretical foundation,
methodology, and scientific objectives. Most importantly, they do not address the
complexity of cooperation-related issues in the practice world. While aspects of partner
choice have found intensive treatment in management research, the field of alliance
management has only been marginally discussed. There has been a lack of in-depth
analysis and conclusions on the implications of structural alternatives of inter-company
cooperation.
The aim of this treatise is to develop a conceptual framework to specify relevant
variables, contingencies, and interdependencies influencing alliance performance, and to
identify consistent configurations as alternative blueprints for alliance governance. This
ambitious aim is fully achieved. Based on a precise analysis of the complex issue of
alliance governance, the author presents a comprehensive and innovative theoretical
framework which enables analysis of consistent conditions for alliance governance
patterns. The potential of configuration theory is fruitfully applied in the field of alliance
analysis and design, leading directly to guidelines for practical implementation. With this
framework, Sascha Albers not only makes a significant contribution in closing the gap in
alliance research, he also provides a strong platform for further progress in practice
alliance management.
This remarkable treatise deserves high praise in the academic discussion as well as in
the business community. I wish this treatise a very positive reception.

Werner Delfmann
Preface

This book should have been about airlines. I started research on the airline sector during
my graduate studies, and ever since this industry has exerted a splendid fascination on
me. It only seemed natural to continue in this field. However, following intriguing ques-
tions and intense discussions, it became clear that the topic that I had in mind, something
on the governance of alliances, and more specifically (then), the synergy allocation proc-
ess within these alliances, did not have to be restricted to the airline context. Thus, I was
left with the decision to take a broader theoretical context, either abstracting from
airlines, or searching for a more immediate airline-related topic. Strangely, I chose the
former path. I began by concentrating on the coordinating and incentivizing aspects of
synergy allocation in alliances, but slowly realized that I could not advance this question
without clarifying the broader issue of alliance governance as a whole. So, this became
the focus of my research. Hence, this book is neither about airlines, nor any other special
industry, but simply about alliances and their governance. Even worse, its methodology
is inspired by the analytical-typological configurational approach - that is, it aims at
building ideal types. In other words: it’s wholly theoretical.
But then, I like to think of the creation process of this book as a journey, let’s say an
intellectual flight. The flight, then, could be described as one across only vaguely known
terrain and heading towards an aim which is only clear as a name tag on departure. Only
vague associations as what to find there and in which directions to head prevail, rather
than specific descriptive features, let alone precise coordinates on a map. The flight is
thus more about searching for the destination than about directly heading towards it. Nev-
ertheless, or even maybe because of this fact, the flight requires careful planning and
preparation which, however, is based on only incomplete information and does not pro-
tect from surprises, or sudden changes in the environment. A plan needs to be there to
explain what, how and where the flight is all about, to receive approval by authorities and
sharpen the pilot’s mind on what might be expected (even though in contrast to the unex-
pected, the expected never happens). During the flight itself, that is, once in the air, navi-
gation skills, knowledge of the aircraft, and judgment are helpful, but never sufficient to
steer the vessel towards its aim – and I would not claim to have even one of those char-
acteristics to a sufficient degree. Air traffic control provides the necessary information
and guidance for a relatively safe journey, to avoid as many unnecessary complications
as possible and circumvent unfavorable conditions, both with regard to weather, technical
issues, and politically contested terrain.
For the pilot, take-off and landing phases are probably the most difficult, plus some
turbulence in between. The turbulences might result from a variety of factors: distractions
of various nature (crew, passengers, other aircraft crossing the route), exhaustion in the
cockpit, changing weather conditions, navigation difficulties, technical problems, com-
munication problems and the like. But still, they are overcome. Flights are always the re-
sult of cooperation among a variety of parties, not the pilots alone, even though they stay
responsible for the vessel and everything involved.
viii
Along the way, the guides have held their positions and communication channels
open and tuned despite a great variety of competing demands. Werner Delfmann, chief of
air traffic control, has enabled and always supported all of my academic journeys, espe-
cially this one, despite the one or the other challenge from the cockpit along the way. His
guidance, trust and confidence in my work are highly appreciated. In my time abroad, off
the screens of the German traffic control I had the pleasure to navigate under the auspices
of Ed Zajac, who provided valuable suggestions and continuing support as well.
All friends and colleagues at Werner Delfmann’s Department of Business Policy and
Logistics at the University of Cologne whom I had the pleasure working with during the
last years have been an exceptional source of inspiration and constructive dialogue, and
much more than that. Markus Reihlen, the senior fleet captain, has been a point of refer-
ence in the tasks a pilot needs to pursue – when trying to navigate, when steering the ves-
sel, when treating and comforting the passengers. While struggling with a great number
and variety of demanding flights (both flying himself and training students), he always
had at least one open ear for friends and colleagues.
Furthermore, I would like to mention Stefan Auerbach for his guidance and support
in early years and for sharing his airline affection and enthusiasm with me. Thorsten
Klaas has infected me (and not only me) with the configurational virus he himself has
suffered of, but developed to exceptional results in logistics organization. Martin Gehring
has illustrated in practice how well cooperation among actors can work who share a
common worldview and are compatible but complementary in their resource endowments
and interests. Thanks to Rowena Arzt who has never ceased her perennial, abortive ef-
forts in trying to convince me that trade fairs might be interesting topics to study and
research as well, but especially for sharing with me in which forms these fascinating
companies can internationalize. Caroline Heuermann has read the whole manuscript and
brought forward valuable suggestions. At least as valuable, however, were her successful
efforts in conserving Cologne cultural and social habits and atmosphere on longer work-
ing days in the office. Björn Götsch and Jens Rühle have been motivators in later stages
by sharing their enthusiasm and confidence. The department’s student employees have
repeatedly cursed me because of ever increasing and never ending requests for new arti-
cles and deserve special thanks, as do the department secretaries Heike Kirch, Heidi
Potschka, and Hilde Reuter for so many of the daily tasks which are easily underesti-
mated.
Finally, a great thanks is owed to my parents. They have supervised and still accom-
pany me on a much greater, even more multi-faceted journey with seemingly incessant
trust, support and encouragement.
So then, this journey has ended. I have enjoyed it all the way. Looking back, as al-
ways, even the turbulences were fun, interesting – and necessary. The record is at your
disposal. Enjoy.
Sascha Albers
Contents

Tables.............................................................................................................................. xiii
Figures...............................................................................................................................xv
A. INTRODUCTION....................................................................................................1
I. Problem: The Management of Alliances............................................................1
II. Aim ........................................................................................................................2
III. Structure and Contents........................................................................................2
B. CONSIDERING COOPERATION AND ALLIANCES.................................................5
I. Defining Cooperation............................................................................................5
1. Actors...................................................................................................................5
2. Activity, Relationship and System.......................................................................6
3. Coordination.........................................................................................................7
4. Summary...............................................................................................................8
II. Alliances as Institutionalized Interfirm Cooperation........................................8
III. Motives and Explanations for Alliance Formation..........................................12
1. The Realization of Synergies as Overarching Motive
of Interfirm Cooperation....................................................................................12
2. The Network Approach......................................................................................16
2.1 The Institutional Use: Networks as Organizational Form...............................16
2.2 The Interpretative Use: Adopting a Network Perspective...............................18
2.3 Explanatory Contribution................................................................................21
3. The Contribution of the Industrial Organization School
of Strategic Management...................................................................................23
4. The Contribution of Resource Oriented Approaches.........................................26
4.1 The Resource-Based View of the Firm...........................................................26
4.2 Resource Dependence Theory.........................................................................30
5. The Contribution of Institutional Economics Theory........................................32
5.1 Transaction Cost Theory..................................................................................32
5.2 Agency Theory................................................................................................41
6. Summary.............................................................................................................43
IV. Identifying Alliance Types.................................................................................43
C. THE GOVERNANCE OF COLLECTIVE ACTION:
ON GOVERNANCE SYSTEMS.............................................................................49
I. Cause: The Fundamental Problem of Collective Action
and the Theory of the Firm................................................................................49
1. The Contribution by Alchian and Demsetz........................................................51
x THE DESIGN OF ALLIANCE GOVERNANCE SYSTEMS
2. The Contribution by Valcárcel............................................................................53
2.1 The Concept of the Resource Pool...................................................................53
2.2 Inner Structure of the Firm...............................................................................56
2.3 Inferences on Alliances....................................................................................58
3. Synthesis: Towards a Theory of Alliances.........................................................63
II. Domain: Conceptualizing Governance Systems...............................................65
1. Excursus: An Understanding of Corporate Governance....................................65
2. Governance Structure, Mechanism and System.................................................67
3. Composition and Environment...........................................................................70
4. Mechanisms of a Governance System................................................................72
4.1 Coordination Mechanisms................................................................................73
4.2 Control Mechanisms.........................................................................................77
4.3 Incentive Mechanisms......................................................................................80
5. The Structure of a Governance System..............................................................83
6. Summary.............................................................................................................85
III. Method: Configurational Organization Theory...............................................86
1. Antecedents, Rationale and Ambition................................................................88
2. Deducting Configurations...................................................................................90
3. Critique................................................................................................................92
3.1 Simplicity.........................................................................................................92
3.2 Empirical Validity............................................................................................93
3.3 Subjectivity.......................................................................................................94
4. A Note on Game Theory.....................................................................................95
4.1 Game Theory and Alliances.............................................................................96
4.2 Critical Review.................................................................................................98
D. A FRAMEWORK FOR THE DESIGN OF
ALLIANCE GOVERNANCE SYSTEMS................................................................103
I. Alliance Governance Systems as Second Order Governance Systems.........103
1. Specificities of Alliance Governance................................................................103
2. A Model of Alliance Governance.....................................................................106
II. Elements of Alliance Governance Systems......................................................109
1. Composition and Environment.........................................................................109
2. Structure............................................................................................................110
2.1 Centralization.................................................................................................112
2.2 Specialization.................................................................................................114
2.3 Formalization..................................................................................................115
3. Mechanisms.......................................................................................................116
3.1 Coordination Mechanisms in the Alliance Context.......................................117
3.2 Control Mechanisms in the Alliance Context................................................127
3.3 Incentive Mechanisms in the Alliance Context..............................................134
III. Summary............................................................................................................142