Strategic/Interfirm Alliance (management literatures)

Manufacturer-supplier relationships in Japan and the concept of relation-specific skill
B Asanuma – Journal of the Japanese and international economies, 1989

Effective interfirm collaboration: how firms minimize transaction costs and maximize transaction value JH Dyer – Strategic management journal, 1997 (2459)

The relational view: Cooperative strategy and sources of interorganizational competitive advantage JH Dyer, H Singh – Academy of management review, 1998 (12078)

Creating and managing a high-performance knowledge-sharing network: the Toyota case JH Dyer, K Nobeoka – Strategic management journal, 2000 (4252)

The role of trustworthiness in reducing transaction costs and improving performance: Empirical evidence from the United States, Japan, and Korea JH Dyer, W Chu – Organization science, 2003 (1352)

Learning and protection of proprietary assets in strategic alliances: Building relational capital P Kale, H Singh, H Perlmutter – Strategic management journal, 2000 (3398)

Alliance capability, stock market response, and long‐term alliance success: the role of the alliance function P Kale, JH Dyer, H Singh – Strategic Management Journal, 2002 (1952)


Network location and learning: The influence of network resources and firm capabilities on alliance formation R Gulati – Strategic management journal, 1999 (3003)

Strategic networks R Gulati, N Nohria, A Zaheer – Strategic management journal, 2000 (5297)

Do firms learn to create value? The case of alliances BN Anand, T Khanna – Strategic management journal, 2000 (2317)

Interorganizational alliances and the performance of firms: A study of growth and innovation rates in a high-technology industry TE Stuart – Strategic management journal, 2000 (2105)

Don’t go it alone: Alliance network composition and startups’ performance in Canadian biotechnology JAC Baum, T Calabrese, BS Silverman – Strategic management journal, 2000

Alliance management as a source of competitive advantage RD Ireland, MA Hitt, D Vaidyanath – Journal of management, 2002 (1476)

Do formal contracts and relational governance function as substitutes or complements? L Poppo, T Zenger – Strategic management journal, 2002 (2893)


Inter-firm networks: antecedents, mechanisms and forms A Grandori, G Soda – Organization studies, 1995



Recent papers

Creating and capturing value in repeated exchange relationships: The second paradox of embeddedness D Elfenbein, T Zenger – Organ. Sci., 2017

A broad literature on:
1] repeated exchange between firms → improves the efficiency of exchange ← by [mitigating ex post opportunism] + [fostering value-creating adaptation]
(e.g., Granovetter 1985, Williamson 1996, Dyer 1997, MacLeod 2007)
2.1] repeated exchange develops trust (Zaheer et al. 1998, Jeffries and Reed 2000),
2.2] interorganizational routines (Dyer and Singh 1998)
2.3] social connections between individuals in each firm (Levinthal and Fichman 1988, Uzzi 1999)
2.4] heightened expectations of relationship continuity (Parkhe 1993)
=>>  value created/increased in evolving exchange histories (Kale et al. 2000, Gulati and Sytch 2008) == value-creating potential of “embedded” interorganizational relationships
3] empirical documents (e.g., Gulati 1995, Zollo et al. 2002, Dyer and Chu 2003, Gulati and Nickerson 2008)
3.1] direct evidence within a dyad (Elfenbein and Zenger 2014)
=>> A clear firstorder implication: repeated exchange → buildup of relationship value ← buyers to focus their exchange, developing increasingly deep relationships with a limited set of capable suppliers, to maximize value creation
3.2] a history of prior exchange with a supplier raises the buyer’s willingness-to-pay (Elfenbein and Zenger 2014) + creating what others have termed as valuable “relational capital” (Kale et al. 2000).

highlighted hazards associated with relationships: → suggest a buyer may distribute exchange across suppliers rather than concentrate it
1] concentrating exchange/developing only a handful of deep, socially embedded exchange relations → buyers “stuck” in suboptimal long-term relationships ← changing exchange conditions or production technology undermine current suppliers’ advantages
(Blau 1964, Uzzi 1997, Afuah 2000)
2] interpersonal affinity may shape/distort the selection of exchange partners → “strong attachments prevent individuals from exploring alternative opportunities” Blau (1964)
=>> an embeddedness paradox (Uzzi 1997) → buyers benefit from deep (and potentially exclusive) relationships in the present but at the cost of neglecting to identify/choose suppliers better suited to future needs

largely ignored in the literature on relationships: → a buyer’s choice of supplier →
3.1] tradeoff between increase [ the maximum relationship value available for future appropriation ] or [ the minimum it is assured of appropriating ]
3.2] reveals information to the supplier about the value the buyer assigns to relationships, making it easier for the supplier to claim a portion of the value that is “up for grabs” in the future (asset specificity)

3.1→tensions as “second paradox of embeddedness.”
→ existence in an empirical context in which relationships create value ← where traditional dark side challenges have been mitigated by [ a routinized process of extensive search for and screening of potential new suppliers + a transparent, de-socialized supplier selection process that minimizes distortions due to interpersonal affinity] 

theoretical argument for 3.1
→ builds on the valuebased strategy literature → focuses on how a firm’s [added value] constrains [its capacity to capture value] ← as it engages competitively or cooperatively with other firms in generating value
(Brandenburger and Stuart 1996, Lippman and Rumelt 2003, MacDonald and Ryall 2004, Stuart 2016)
→ drawing inspiration from biform games
(Brandenburger and Stuart 2007, Bennett 2013)
=>>  how the future added value of suppliers changes as a consequence of the buyer’s current decision → the buyer’s dilemma between growing [the minimum appropriable value by distributing exchange] & [the maximum appropriable value by focusing exchange] ← (Focus creates deep relationships and larger value with few sellers but leaves the division of this greater value between buyer and seller uncertain)

=>> Distribution restricts the maximum value created by relationships → but also diminishes the bargaining power of any given supplier’s relational history → 3.2

We use this unique empirical setting to test for evidence consistent with hypotheses derived from theoretical articulation of the second paradox of embeddedness
Our results support our hypotheses
→ an alternative mechanism → through which firms forgo the benefits of deep relationships in favor of shallower ones (do not claim primacy of this mechanism over others)
→ but do provide evidence consistent with its existence in an economically important setting
→ contribute to small empirical studies on [value appropriation in interfirm relationships] +  broader theoretical of [how value creation and value appropriation concerns shape performance differences in and across firms over time]
(Lavie 2007, Chatain 2011, Adegbesan and Higgins 2011, Grennan 2014) +  (Ryall and Sorenson 2007; Chatain and Zemsky 2007, 2011; Bennett 2013; Obloj and Zemsky 2015).




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