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To bound or not to bound: preliminary Theory of Time Bounds Specification in strategic alliances

Bakker, Rene & Knoben, Joris (2011) To bound or not to bound: preliminary Theory of Time Bounds Specification in strategic alliances. In 27th EGOS Colloquium, 7–9 July 2011, Gothenburg (Sweden), Gothenburg, Sweden.

Abstract

This article augments Resource Dependence Theory with Real Options reasoning in order to explain time bounds specification in strategic alliances. Whereas prior work has found about a 50/50 split between alliances that are time bound and those that are open-ended, their substantive differences and antecedents are ill understood. To address this, we suggest that the two alliance modes present different real options trade-offs in adaptation to environmental uncertainty: ceteris paribus, time-bound alliances are likely to provide abandonment options over open-ended alliances, but require additional investments to extend the alliance when this turns out to be desirable after formation. Open-ended alliances are likely to provide growth options over open-ended alliances, but they demand additional effort to abandon the alliance if post-formation circumstances so desire. Therefore, we expect time bounds specification to be a function of environmental uncertainty: organizations in more uncertain environments will be relatively more likely to place time bounds on their strategic alliances. Longitudinal archival and survey data collected amongst 39 industry clusters provides empirical support for our claims, which contribute to the recent renaissance of resource dependence theory by specifying the conditions under which organizations choose different time windows in strategic partnering.

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ID Code: 47043
Item Type: Conference Paper
Keywords: Resource Dependence Theory with Real Options, Alliances
Subjects: Australian and New Zealand Standard Research Classification > COMMERCE MANAGEMENT TOURISM AND SERVICES (150000) > BUSINESS AND MANAGEMENT (150300) > Organisation and Management Theory (150310)
Divisions: Current > Research Centres > Australian Centre for Entrepreneurship
Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Management
Deposited On: 17 Nov 2011 09:33
Last Modified: 17 Nov 2011 09:33

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