Joanne E. Oxley

The Scope and Governance of International R&D Alliances

Participants in research and development alliances face a difficult challenge: how to maintain sufficiently open knowledge exchange to achieve alliance objectives while controlling knowledge flows to avoid unintended leakage of valuable technology. Prior research suggests that choosing an appropriate organizational form or governance structure is an important mechanism in achieving a balance between these potentially competing concerns. This does not exhaust the set of possible mechanisms available to alliance partners, however. In this paper we explore an alternative response to hazards of R&D cooperation: reduction of the ‘scope’ of the alliance. We argue that when partner firms are direct competitors in end product or strategic resource markets even ‘protective’ governance structures such as equity joint ventures may provide insufficient protection to induce extensive knowledge sharing among alliance participants. Rather than abandoning potential gains from cooperation altogether in these circumstances, partners choose to limit the scope of alliance activities to those that can be successfully completed with limited (and carefully regulated) knowledge sharing. Our arguments are supported by empirical analysis of a sample of international R&D alliances involving electronics and telecommunications equipment companies. Copyright  2004 John Wiley & Sons, Ltd.

Institutional environment and the mechanisms of governance: the impact of intellectual property protection on the structure of inter-firm alliances

Abstract This study builds on developments in transaction cost economics to examine how institutional environment and transaction (project) characteristics affect governance of inter-firm alliances. The focus is on the choice between equity and contractual alliance forms under differing regimes of intellectual property protection and other national institutional features. Empirical results identify transaction-level characteristics as primary drivers of governance choice in alliances, but intellectual property protection is also a significant factor: firms adopt more hierarchical governance modes when protection is weak. Complete understanding of the structure of inter-firm alliances thus requires a combined focus on the institutional environment and mechanisms of governance.

Alliance Structure and the Scope of Knowledge Transfer: Evidence from U.S.-Japan Agreements

Prior research suggests that equity joint ventures (JVs) are particularly effective vehicles for accessing complex technology. Different schools of thought have emphasized different reasons why joint ventures might support greater knowledge transfer than “bare” license agreements: incentive alignment, organizational embeddedness, and enhanced administrative controls. We probe and refine these theoretical perspectives, drawing out implications of the different theories for the extent and speed of alliance-related knowledge transfer, as well as for knowledge “leakage” in areas not directly related to alliance activities. Using a proprietary data set derived from regulatory filings with the Japanese government we test these implications in our empirical analysis of U.S.-Japan agreements. The picture that emerges from the analysis is one of particularly intense but contained knowledge transfer in equity joint ventures, relative to bare license agreements: knowledge transfers directly related to the alliance activity are enhanced in the JV, and the speed of integration into the Japanese firms subsequent innovations also increases. In marked contrast, leakage of unrelated technology is significantly reduced. These findings suggest that administrative structures that reduce technology leakage are a key feature of the equity joint venture, a result that is inconsistent with a “pure” knowledge-based perspective on alliances.

Learning by Supplying

Learning processes lie at the heart of our understanding of how firms build capabilities to generate and sustain competitive advantage: learning by doing, learning by exporting, learning from competitors, users, and alliance partners. In this paper we focus attention on another locus of learning that has received less attention from academics despite popular interest: learning by supplying. Using a detailed panel dataset on supply relationships in the mobile telecommunications industry, we address the following questions: What factors contribute to a firm’s ability to learn by supplying and build technological and market capabilities? Does it matter to whom the firm supplies? Is involvement in product design important, or is manufacturing the key locus of learning? How does a supplier’s initial resource endowment play into the dynamic? Our empirical analysis yields interesting findings that have implications for theory and practice, and that suggest new directions for future research.

Alliances and performance

This chapter provides a retrospective analysis of Oxley (1997), placing the article in context, highlighting its main contributions, describing its impact on the strategy literature, and critiquing the research from the viewpoint of today. Recent advances in the analysis of alliance governance are surveyed, and opportunities for future research are suggested.

Applications and Contributions of Matching Methods to Strategy Research

Understanding of the theoretical properties of matching processes has increased significantly in recent years, and applications of a variety of matching methods to strategy research are just beginn...

How Effective are Relational Incentive Contracts? Evidence from Entrepreneurial Firms in Russia

We examine the managerial delegation decisions of foreign entrepreneurs, and assess how these decisions are shaped by characteristics of the local product and labor market environment. We argue that actual or perceived home bias in court proceedings leads foreign entrepreneurs to place little reliance on formal contracts in their dealings with local agent managers. Adopting the lens of relational contract theory, we develop hypotheses linking managerial delegation decisions to market conditions associated with stable self-enforcing agreements, and test the hypotheses in the context of post-Soviet Russia. Consistent with our arguments we find that foreign entrepreneurs are more likely to hire an agent manager in local markets where industry growth creates a substantial ‘shadow of the future,’ where managers’ outside employment options are relatively limited, and where competition and the variability of returns are not so high as to induce defection from an informal agreement. Similar observations on a sample of Russian-owned entrepreneurial firms suggest that these delegation decisions are relatively insensitive to local market conditions, but are influenced by the density of local reputation networks. Our study thus contributes to understanding of the distinctive features of foreign entrepreneurs’ managerial delegation decisions, and reinforces the view that contracting impediments constitute one important aspect of the ‘liability of foreignness’ for entrepreneurial firms.