Governance of International Strategic Alliances (RLE International Business) by Oxley Joanne;

Author:Oxley, Joanne;
Language: eng
Format: epub
Publisher: Taylor & Francis Group

FIVE

An Empirical Study of Appropriability Hazards in International Strategic Alliances Stage 2: Cross-National Comparisons

In this chapter I apply the TCE framework to an examination of hybrid organizations that cross international boundaries.1 While the essential nature of the organizational problems facing firms is the same as in the domestic context, many added complications must be confronted when the focus shifts to the international arena. Additional features of the operating environment include cultural and language differences, government policies that vary across countries (and that are often applied in discriminatory ways against foreign firms), the lack of satisfactory supranational adjudication of disputes, and wide gaps in the relative capabilities of firms.

The framework developed in the previous chapters, in common with most other work in the transaction cost tradition, focused exclusively on the “mechanisms” of governance, whereby economic agents align transactions with governance structures to effect economizing outcomes, taking the institutional-environment as given (Williamson, 1996, p. 5). The narrow focus of previous work has sometimes led to criticism that transaction cost economics has developed in relative isolation from the study of the institutional (i.e. legal, social and political) environment. In response, Williamson (1991) introduced a comparative static framework to consider how equilibrium distributions of transactions (and governance structures) change in response to disturbances in the institutional environment. This is done by treating the institutional environment as a set of parameters, changes in which elicit shifts in the comparative costs of governance. Testing the empirical framework developed in Chapter 4, in conjunction with this “shift parameter framework,” on a sample of international alliances thus allows an examination of (1) the applicability of the logic developed for domestic governance choices to international organization, and (2) the effects (if any) of national differences in the institutional environment on the choice of governance mode in hybrid organizations.

Although the “shift parameter framework” for analyzing the impact of changes in the institutional environment on governance is conceptually straightforward, empirical tests to date have been elusive. This reflects difficulties in obtaining adequate measures of relevant dimensions of the institutional environment, and in isolating the impact on governance structures. Furthermore, since institutional environments change only slowly and in complex ways, comparative static analysis in a single country setting is problematic. If analysis is shifted to the international arena, however, some of these empirical problems can be mitigated: here we find sufficient heterogeneity in institutional environments to support cross-sectional analysis. In addition, while measurement problems do not disappear, data on several aspects of the institutional environment have been developed and applied in international business research focusing on the institutional determinants of foreign direct investment decisions. These institutional determinants include foreign investment regulations (Contractor, 1990), national cultural differences (Kogut & Singh, 1988; Shane, 1994) as well as aggregated concepts of “political risk” or “investment risk” (e.g., Agarwal & Ramaswami, 1992; Kim & Hwang, 1992).

Stage 2 of the empirical study, described in this chapter, draws on the relevant international business literature, along with a new data source on intellectual property regimes in 110 countries, and

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