Keywords: international alliances, alliance governance choices, negotiations, bargaining power, mutual hostages, partnerships, strategic alliances, technology alliances, alliance governance structure, alliance negotiations, bargaining power, partner risk, cross-border alliances, asymmetric bargaining, licensing agreements, equity joint ventures, patents, technology transfer, technology management
The influence of asymmetric bargaining power, mutual hostages and task characteristics on the governance structure of cross-border technology alliances
Most studies of governance modes in cross border technology alliances treat contractual alliance forms and equity joint ventures as substitutes. Our sample allows us to explore when firms are likely to adopt licensing agreements without equity arrangements, in contrast to hybrid alliances that use equity joint ventures and licensing agreements together. Findings for our data provide little support for often repeated – and yet seldom tested – hypothesis that equity joint ventures may be formed to serve as a 'mutual hostage' for alliance participants, because of the fear of partner opportunism and its consequences. Rather, our findings point more strongly in favour of equity-based alliances being formed when the primary technology holder has stronger bargaining power, when patents are of importance, and when the strategic objectives of the alliance envisage future technology transfers.