SEMINAR CANCELLED Alliance Design

ABRI M&O seminar

This session will develop a research agenda on the design and governance of alliances, with particular focus given to the structural planning aspects of contracts. The attached paper will be put in a broader context, but focus will also be given to this analysis of the locus of authority in alliances. Steering committees incorporated through contracts serve as important governance instruments for managing complex collaborations by facilitating coordination and knowledge sharing. Although they ease concerns of adapting to unforeseen contingencies, they may not function effectively and become vulnerable to deadlocks when agreement cannot be reached expeditiously. Hence, when partners contract for authority delegation to the steering committee, they also need to account for the possibility of stalemates. We examine the bounds partners agree to put on a steering committee’s authority by contractually specifying the locus of delegated authority in the event of unforeseen contingencies. We specify the conditions that explain the extent to which decision-making authority is given to steering committees as well as the conditions that provisionally shift final decision-making authority in a bounded manner back to one of the alliance partners. We argue that joint coordination concerns increase the likelihood for authority delegation, whereas timely adaptation concerns are associated with authority reversion. We develop hypotheses on the locus of delegated authority and present supportive evidence from empirical analyses of 648 strategic alliances from the bio-pharmaceutical industry. Our study advances research on alliance governance by showing that coordination and decision speed considerations are important drivers for the locus of delegated authority in alliances.