APPROPRIABILITY HAZARDS AND GOVERNANCE IN STRATEGIC ALLIANCES - A TRANSACTION COST APPROACH

Despite the recent proliferation of interfirm alliances designed to go vern cooperative efforts in creating or exploiting technology, we have limited understanding of how firms choose among the various alliance types available to them. In this article, I examine the governance pro perties of different alliance types and develop a simplified market-hi erarchy continuum of alliances. This then forms the basis for an empir ical examination of appropriability hazards and governance. Strong sup port for hypotheses derived from transaction cost theory is provided b y analysis of a large sample of interfirm alliances. More hierarchical alliances are chosen when appropriability hazards are severe because technology is difficult to specify or because the scope of activities is wider, so that monitoring is hampered.