The Cost of Misaligned Governance in R&D Alliances

59 Pages Posted: 17 Apr 2001

See all articles by Rachelle C. Sampson

Rachelle C. Sampson

University of Maryland - Robert H. Smith School of Business; Georgetown University - Robert Emmett McDonough School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: December 2003

Abstract

Transaction cost economics argues that aligning transactions with governance structures leads to more efficient outcomes. While empirical evidence demonstrates that firms choose governance consistent with transaction cost predictions, the performance implications of governance choices are less well explored. Here, I examine the cost of misaligned governance in the context of R&D alliances. Two costs of misalignment are evaluated: excessive contracting hazards and excessive bureaucracy. Using a sample of R&D alliances in the telecom equipment industry, I find that alliance governance selected according to transaction cost arguments improves collaborative benefits substantially over governance not so selected. Interestingly, governance alignments imposing excessive bureaucracy reduce collaborative benefits more than misalignments imposing excessive contracting hazards do. These results provide empirical evidence of the cost of misaligned governance and have implications for research on the limits of internal organization and that linking organizational form and innovation.

Keywords: governance, alliances, R&D, patents

Keywords: governance, alliances, R&D, patents, transaction cost economics, joint ventures

JEL Classification: L22, O31, O32

Suggested Citation

Sampson, Rachelle C., The Cost of Misaligned Governance in R&D Alliances (December 2003). Available at SSRN: https://ssrn.com/abstract=265994 or http://dx.doi.org/10.2139/ssrn.265994

Rachelle C. Sampson (Contact Author)

University of Maryland - Robert H. Smith School of Business ( email )

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University of Maryland
College Park, MD 20742-1815
United States
(301) 405-7658 (Phone)

HOME PAGE: http://www.linkedin.com/in/rachelle-sampson-68a3b610/

Georgetown University - Robert Emmett McDonough School of Business ( email )

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Washington, DC 20057
United States

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