Session 48

Managing Alliance Dynamics

Track N

Date: Tuesday, October 9, 2012


Time: 14:15 – 15:30


Room: Meeting Hall V

Session Chair:

  • Libby Weber, University of California, Irvine

Title: Breaking the Letter vs. Spirit of the Law


  • Derek Harmon, University of Michigan
  • Peter Kim, University of Southern California
  • Kyle J. Mayer, University of Southern California

Abstract: This paper investigates how people interpret contract violations as well as how these interpretations impact subsequent attempts to repair trust. By drawing on the distinction between violations of the letter of the law (i.e., breaches of the literal interpretation of documented terms in the contract) and violations of the spirit of the law (i.e., breaches of the assumed, undocumented intent of the contracting parties), we designed a two experiments that asked participants to write a contract that was subsequently violated in one of these two ways. We then examined the effectiveness of an apology for repairing this relationship. We develop and support a causal model that predicts that the assessment of blame and perceived intentionality sequentially mediated these results.

Title: Contracting Capabilities & Systematic Biases in Organizational Learning: The Impact of Group-serving Bias


  • Libby Weber, University of California, Irvine

Abstract: Prior work suggests that contracting capabilities develop by learning from past exchanges. This work assumes firms understand why exchanges succeed or fail and then update subsequent contracts to promote or deter that behavior in future exchanges. However, group-serving bias leads focal firm employees to make internal attributions for their firm’s positive behavior and external attributions for its negative behavior, while doing the reverse for their exchange partner’s behavior; taking credit for success and blaming the environment or their partner for failure. Thus, the bias often obscures the true reason for exchange success or failure, preventing the firm from accurately learning from prior exchanges and appropriately updating subsequent contracts. Thus, the firm’s organizational learning is systematically biased, serving as a flawed basis for developing contracting capabilities.

Title: Potential Milestone Payments and Incumbent Monitoring in R&D Alliances


  • Mahmut N. Ozdemir, Koc University
  • Jan Van den Ende, Erasmus University-Rotterdam

Abstract: In their R&D alliances with startups, incumbents use several governance mechanisms for incentive alignment. Although potential milestone payments tied to the performance of startups are prevalently used governance mechanisms, we know little about their antecedents. According to agency theory, potential milestone payments and incumbent monitoring are inter-related governance mechanisms. By drawing upon the substitution and complementarities views of agency theory, we investigate if the size of potential milestone payments increases or decreases as incumbent monitoring increases. Our test on a sample of 220 R&D alliances of global pharmaceutical firms with U.S.-based biotechnology startups supports the complementarities view. We also identify several important task, alliance, and firm-related contextual variables that determine the size of potential milestone payments directly or via their effects on incumbent monitoring.

Title: Value Creation in Uneven R&D Alliances: The Interplay between Innovative Capabilities and Governance Choice


  • Sascha Walter, Lancaster University
  • Won Kyung Min, Fordham University
  • MB Sarkar, Temple University
  • Achim Walter, University of Kiel

Abstract: This study explores how alliance governance (interorganizational contractual safeguards and intraorganizational process safeguards) influences the perceived value of an alliance and how firm heterogeneity, namely the innovative capability of a firm, operates as a boundary condition in this milieu. Findings from 130 uneven R&D alliances show that contractual safeguards increase relationship value. Innovative capabilities amplified the impact of governance: The more innovative the firm, the more they benefited from contractual safeguards, whereas the more they hurt from process safeguards. We discuss the implications of our results both in terms of contribution to the current literature and the practice of alliance management.

All Sessions in Track N...

Sun: 08:00 – 09:15
Session 100: Interdisciplinary Perspectives on Cooperative Strategies
Sun: 09:30 – 10:45
Session 101: Practicing Cooperative Strategies
Sun: 11:15 – 12:30
Session 102: Research Methods in Cooperative Strategies
Sun: 15:15 – 16:30
Session 46: Value Creation and Capture in Alliances
Mon: 08:00 – 09:15
Session 44: Network Contingencies and Alliance Performance
Mon: 09:30 – 10:45
Session 50: Trust and Relational Governance
Mon: 13:30 – 14:45
Session 45: New Perspectives on Alliance Termination
Mon: 16:30 – 17:45
Session 51: Resource- and Knowledge-Based Views of Cooperative Strategies
Tue: 08:00 – 09:15
Session 248: Cooperation and Industry Contingencies
Tue: 11:00 – 12:15
Session 247: Cooperative Strategies
Tue: 14:15 – 15:30
Session 48: Managing Alliance Dynamics
Tue: 15:45 – 17:00
Session 49: Organizational Learning and Alliances
Tue: 17:30 – 18:45
Session 47: Governing and Managing High-Tech Collaborations

Strategic Management Society