OUTCOME QUALITY OF SMALL-SIZED TO MEDIUM-SIZED ENTERPRISE-BASED ALLIANCES - THE ROLE OF PERCEIVED PARTNER BEHAVIORS

Proponents of transaction cost theory have assumed that alliance forma tion is motivated by environmental uncertainty, with the structure and outcomes of alliance relationships being determined by the costs vers us benefits of opportunism on the part of alliance participants (Willi amson 1985; Zaheer and Venkatraman 1995). Williamson argued that coope rative relationships driven by perceived efficiency are inherently pro ne to opportunism or ''self-interest seeking with guile'' (1975, p. 6) . In alliance relationships, opportunism generally takes the form of n egative departures from the behavioral norms established for the allia nce and is usually motivated by the firm leader's desire to improve th e firm's position, regardless of the cost to the alliance (Parkhe 1993 a). The traditional focus of transaction cost theory has been on the n orms established by the formal alliance relationship. These contractua l mandates encompass both goal-based and relationship-based expectatio ns. Failure to meet these types of expectations significantly, but not completely, explains the quality of outcomes for alliance relationshi ps. A growing body of research on social control theory suggests that the social embeddedness of the alliance relationship may also establis h behavioral norms against which opportunistic departures may be judge d (Ouchi 1979 Parkhe 1993b). Such norms are extracontractual or taken- for-granted expectations established by both the prior experience of t he firms' leaders and the placement of the firms' alliance relationshi ps within the network of interpersonal relationships maintained by the firms' leaders. This study explores the relative impact of negative d epartures from both contractual and extracontractual behavioral norms on the quality of alliance outcomes, while controlling for a wide rang e of environmental and firm-specific factors suggesting to have an imp act on alliance outcome quality. Norwegian manufacturing firms that me t the study's size criteria and belonged to any one of 10 industry typ es were surveyed. From a list of over 7,000 small- to medium-sized ent erprises (SMEs), we randomly selected and mailed surveys to the key de cision leaders of over 2,500 firms, ultimately identifying, of the 433 (17.6%) owners and general managers responding, 252 (58%) that mainta ined alliance relationships. The results of this study challenge sever al assumptions regarding the determinants of alliance outcomes. A numb er of resource- and environment-based factors, including the firm's in dustry, size, and financial strength, are not found to significantly i nfluence alliance outcomes. The financial return provided by the SME's alliance relationships, as an indicator of goal-based determinants, w as found to be the most important factor related to outcome quality, b ut the results also suggested that contract noncompliance and the perc eived behaviors of the SME's alliance partners are significant as well . Additionally, the notion that SME-based alliance relationships are g enerally marked by assumptions of trust rather than opportunism was su pported. When partner behaviors are seen or perceived to be inconsiste nt with either contractually mandated or socially obligated expectatio ns, the outcomes of those relationships are negatively effected, even when the financial goals have been met. An additional finding of this study was that firm leaders make judgments regarding the quality of al liance outcomes in light of their cumulative experience with alliance relationships. (C) 1998 Elsevier Science Inc.