Embedded patterns of international alliance formation

Organization Studies, Fall, 1998 by Richard N. Osborn, John Hagedoorn, Johannes G. Denekamp, Geert Duysters, C. Christopher Baughn

If the survival of the alliance is a necessary condition for its viability as an entity, systems contingency theory (e.g. Donaldson 1985) and population ecology studies (e.g. Freeman and Hannan 1989) suggest that there should be an interactive association among the environment and the form of the alliance. Note here that the form of embeddedness is a very specific 'if-then' statement. This has generally been interpreted in empirical studies as a statistical interaction over and above simple additive effects (see Bluedorn 1993).

So far, we have suggested that the alliance's industry is a common environment for the sponsors and a focal point for imitation. It seems reasonable to propose that international alliances may be embedded in their industrial settings. As discussed in more detail below, the administrative form of the alliance and the product/knowledge flows through the alliance are two theoretically important and visible alliance-formation characteristics. If the sponsors utilize informed imitation and the role of relationship among the environment, and internal characteristics is interactive, the following may be stated:

H1: The industry of the international alliance, the alliance's administrative form and the product/knowledge flows through the alliance will be embedded into one another such that statistically the industrial setting and the alliance characteristics will be interactively associated.

International Alliances as Action Takers

So far, we have suggested that industrial practices are a locus for imitation. The formation pattern is expected to be consistent with the viability of the alliance as a framework for the sponsors' collective interests. This view emphasizes both the socially constructed aspects of international alliances and recognizes that the alliance's viability serves as a restraint on unbridled executive choice.

An institutional view also suggests that international alliances are not just a framework for the sponsors' actions (adaptation and cooperation) but also action takers (cf. Holm 1995). That is, the alliance may have a function that is separable from those of any one sponsor, even if this function can be related to the sponsor's interests (cf. Holm 1995). Further, new international alliances are, by definition, experiments in institution building. They are unique, relational institutions. As relational entities, the internal configuration of the alliance may reflect its needs as an action taker as well as the interests of the sponsors.

The Administrative Forms of International Alliances

If the international alliance is an action-taking entity that is expected to be viable, it is again useful to consider the very large body of research on contingency theory. Studies dating back to the work of Bums and Stalker (1961) and Thompson (1967) generally suggest the potential importance of a specific fit between or among (a) an entity's environment, (b) its administrative structure, and/or (c) its internal throughput (technology), if it is to be successful (see Bluedorn 1993, Donaldson 1996). Many studies of alliances describe the administrative form on a singular continuum ranging from contracts to partial equity forms (Gulati 1995). Institutional and contingency perspectives suggest that distinct types of administrative form may be salient. Consistent with Holm (1995), there may be distinctly different administrative logics underlying different administrative forms. Selznick, for instance, suggests an 'intrinsic conflict between the premises of contract and those of association (1996: 270)'.