The architecture of cooperation: Managing coordination costs and appropriation concerns in strategic alliances

This study examines why firms choose different governance structures across their alliances. We focus on the coordination costs in alliances that aris e from interdependence of tasks across organizational boundaries and the re lated complexity of ongoing activities to be completed jointly or individua lly. We use a typology of alliance governance structures that differentiate s structures by the magnitude of hierarchical controls to test hypotheses p redicting alternative contractual choices. We use empirical data on allianc e announcements in three worldwide industries over a 20-year period to asse ss which factors explain the choice of alliance types. The findings suggest that the magnitude of hierarchical controls in contractual relationships s uch as alliances is influenced by the anticipated coordination costs and by expected appropriation concerns.(. )