City Research Online

Abstract

We study the role of alliance governance in the behavior of partners in alliances with different degrees of competition. Using data from a lab experiment on 1,009 alliances and 31,662 partners' choices, we explore whether and how alliances succeed in different competitive scenarios, contingent on the use of formal governance mechanisms (termination clauses) and the number of partners in the alliance. We find that trust, an informal governance mechanism, emerges as a complement to formal governance in order to establish success in our experimental alliances, especially when competition is high. In particular, we document the significance of “trust-building” in initial stages and “trust repair” in later stages of our experimental alliances.

Publication Type:	Article
Publisher Keywords:	Strategic alliances, Lab experiment, Alliance dynamics, Forgiveness, Stability
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Departments:	School of Policy & Global Affairs > Economics
SWORD Depositor:	Symplectic Administrator

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