Does familiarity breed trust? The implications of repeated ties for contractual choice in alliances

Article Abstract:

Exploring the factors that explain the choice of governance structures in interfirm alliances, this study challenges the use of a singular emphasis on transaction costs. Such an approach erroneously treats each transaction as independent and ignores the role of interfirm trust that emerges from repeated alliances between the same partners. Comprehensive multiindustry data on alliances made between 1970 and 1989 support the importance of such trust. Although support emerged for the transaction cost claim that alliances that emcompass shared research and development are likely to be equity based, there is also strong evidence that repeated alliances between two partners are less likely than other alliances to be organized using equity. (Reprinted by permission of the publisher.)

Trust (Psychology), Industrial cooperation

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The impact of technological complexity and interfirm cooperation on business survival

Article Abstract:

This study's predictions are that businesses developing high-complexity technologies face greater risks of failure than other businesses because of greater competency demands and higher organization costs. Furthermore, alliances moderate such failure risks but provide fewer survival benefits for businesses commercializing less complex technologies. Hypotheses were tested with longitudinal data from the U.S. hospital software industry. High-complexity technology was associated with higher risk of failure, and alliances only partially moderated such risk. (Reprinted by permission of the publisher.)

Business failures

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Is slack good or bad for innovation?

Article Abstract:

This article suggests that there is an inverse U-shaped relationship between slack and innovation in organizations: both too much and too little slack may be detrimental to innovation. Two related mechanisms governing this relationship are proposed: Slack fosters greater experimentation but also diminishing discipline over innovative projects, resulting in the hypothesized curvilinear relationship. Comprehensive worldwide data on 264 functional departments of two multinational corporations support the prediction. (Reprinted by permission of the publisher.)

Household audio and video equipment, Consumer Electronics, Audio and Video Equipment Manufacturing, Business, Innovations, Consumer electronics industry, Organizational effectiveness

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