Accounting, Organizations and Society 29 (2004) 27–49
www.elsevier.com/locate/aos
Control of inter-organizational relationships: evidence on
appropriation concerns and coordination requirements
Henri C. Dekker*
Vrije Universiteit Amsterdam, Amsterdam Research Center in Accounting (ARCA),
De Boelelaan 1105, 1081 HV Amsterdam, the Netherlands
Abstract
This paper presents a framework of the control of inter-organizational relationships. Building on transaction cost
economics and organizational theory, two control problems are identified that arise when firms engage in interorganizational relationships: the management of appropriation concerns and the coordination of tasks. The control
mechanisms used to manage these control problems and their interrelationships with informal (trust-based) mechanisms are discussed. The explanatory power of the framework is assessed by a case study of a strategic alliance between a
buyer and a supplier of railway safety equipment.
# 2003 Elsevier Ltd. All rights reserved.
Introduction
Following its widespread dispersion in practice,
research into the inter-organizational relationship
(IOR) is proliferating. In several social science
disciplines, such as economics, strategy, organizational and management research, the IOR has
become a research topic of substantial importance.
Accounting researchers, however, have been slow
to incorporate the concept of the IOR into their
research. It has been for some years that more
attention to this issue is called for (e.g. Hopwood,
1996; Otley, 1994). Since then, a few accounting
studies have explored accounting and control
issues in IORs, for instance in the context of
international joint-ventures (Groot & Merchant,
2000), outsourcing relationships (Anderson,
Glenn, & Sedatole, 2000; Gietzman, 1996; Van der
* Corresponding author. Tel.: +31-20-444-6066; fax: +3120-444-6005.
E-mail address: hdekker@feweb.vu.nl (H.C. Dekker).
Meer-Kooistra & Vosselman, 2000) and integrative buyer–supplier arrangements (Frances &
Garnsey, 1996). These boundary-spanning forms
of organizing economic activities have several
implications for the role of management control in
and in particular between firms, as ‘‘the scope of
the activity of management control is enlarged and
it no longer confines within the legal boundaries of
the organization’’ (Otley, 1994, p. 293). For
example, with respect to buyer-supplier arrangements Otley (1994, p. 293) notes that ‘‘there is
increased monitoring and control between organizations along the supply chain’’. And as Hopwood
argues (1996, p. 589) ‘‘planning, budgeting and
control processes flow from one organization into
others, creating, as they do, a more explicit
awareness of the interdependency of action and
the role which joint action can play in organizational success’’. Further, the literature reports high
failure rates of IORs, which are often attributed to
the difficulty of managing them (Ireland, Hitt, &
Vaidyanath, 2002). Management accounting and
0361-3682/03/$ - see front matter # 2003 Elsevier Ltd. All rights reserved.
doi:10.1016/S0361-3682(02)00056-9
28
H.C. Dekker / Accounting, Organizations and Society 29 (2004) 27–49
control thus seem to be of substantial importance
for the management and performance of IORs.
The structure chosen to govern an IOR is often
argued to be critical to its success (Ittner,
Larcker, Nagar, & Rajan, 1999; Osborn &
Baughn, 1990) and effective governance is even
argued to be a source of inter-organizational
competitive advantage (Dyer & Singh, 1998; Ireland et al., 2002).
Despite the extensive attention towards IOR
governance in the literature, research into the
actual structuring, management and control of
these relationships has had less attention (Gulati
& Singh, 1998; Sobrero & Schrader, 1998). To
understand the management and control of
IORs, and its consequences, it is suggested that
researchers study and describe the coordination
mechanisms and processes used for IOR management (Grandori, 1997; Ireland et al., 2002).
Similarly, with respect to management accounting research, Tomkins (2001) argues that ‘‘the
area warrants more empirical research with a
greater emphasis upon business processes and
the use of accounting in action/negotiation’’ (p.
164).
This paper, in the next section, develops a
framework for explaining control in IORs, which
builds on transaction cost economics (TCE),
organization theory and notions of formal and
social control. The explanatory power of this
framework is evaluated in the light of empirical
evidence from a case study of a strategic alliance
between a buyer and supplier on the supply and
joint innovation of railway safety equipment. An
in-depth analysis of the structuring, management
and control of the strategic alliance is provided
and then the empirical evidence is related to the
constituent parts of the theoretical framework,
providing an explanation of the data. This case
study demonstrates the importance of acknowledging both the concepts of ‘appropriation concerns’ from TCE and ‘coordination requirements’
from organizational theory to explain the use of
control mechanisms in IORs. Furthermore, the
study signifies the importance of management
accounting mechanisms in the management of the
alliance. The paper ends with conclusions and
directions for future research.
The control of inter-organizational relationships
Generally, when discrete market exchange is
abandoned, some form of organizational relationship is crafted, either in the form of hierarchical
governance, referring to one firm, or in the form
of ‘hybrid governance’. Hybrid governance
encompasses a variety of IOR forms, varying from
joint ventures, buyer–supplier relationships, franchising and licensing agreements to inter-organizational networks. The organizational literature
focuses mainly on three interrelated issues in
IORs: (1) the motivations for IOR formation, (2)
the choice of governance structure and (3) the
effectiveness and performance of IORs (Kale,
Singh, & Perlmutter, 2000). The issue of control
relates directly to the second issue, the choice of
governance structure. In the literature this choice
has primarily been studied from a governance
perspective, which, informed predominantly by
transaction cost economics (TCE), predicts the
institutional form chosen to govern a transaction.
The governance of IORs: a transaction cost economic
perspective
TCE maintains that in principle a transaction
can be governed by three discrete structural
mechanisms: market, hierarchy or hybrid governance (Williamson, 1991).1 The choice of mechanism to govern a transaction depends on a
comparative analysis of the transaction costs of
these alternatives, which costs relate to writing,
monitoring, adapting and enforcing contracts.
Assuming equal production costs, TCE predicts
that the governance structure associated with the
lowest transaction costs will be chosen to govern
the transaction (Williamson, 1985, 1991). Transaction costs depend on a combination of certain
characteristics of the transaction taking place (i.e.
asset specificity, uncertainty and frequency) and
certain characteristics of human nature (i.e. bounded rationality and opportunism). When collaborating firms make investments specifically for
the IOR, which have little alternative use, and
1
Speklé (2001) recently provided an analysis of how TCE
can be used to inform the study of management control.
H.C. Dekker / Accounting, Organizations and Society 29 (2004) 27–49
hence little alternative value outside the IOR,
appropriation concerns arise. They therefore need
to safeguard their investments from being appropriated by the potentially opportunistic other.
When these investments are made in a situation
characterized by uncertainty about the future state
of events, over time partners may face adaptation
problems as unexpected contingencies arise. However, bounded rationality limits them to write
contingent claim contracts, covering every possible future contingency. Therefore, they are left
with the use of incomplete contracts, which can
become subject of adaptation problems and leave
room for opportunistic behavior. These incomplete contracts need to be managed by alternative
control mechanisms of which hierarchical controls
are conceived to be particularly effective by aligning incentives, providing monitoring and realizing
control by fiat (Gulati & Singh, 1998).
TCE considers ‘the hybrid’ to be an intermediate form of governance, encompassing all
alternative exchange mechanisms between the
extremes of market and hierarchy. It is regarded
as a mixture of market and hierarchical governance, as it sacrifices some of the high powered
incentives of the market in favor of superior coordination and some cooperativeness of the hierarchy
in favor of superior market incentives (Gulati, 1995;
Williamson, 1991). The extent to which hybrid
governance will resemble market or hierarchical
elements depends on the magnitude of appropriation concerns. Increasing appropriation concerns
lead to increasing use of hierarchical controls.
In recent years TCE has received many critiques
and it has been argued that for understanding
IOR governance the theory has not been very
useful (Larson, 1992). TCE’s main ability is to
predict the form of governance structure (i.e.
market, hybrid, hierarchy, or ‘the degree of hierarchical governance’) as a function of transaction
characteristics (Chiles & McMackin, 1996). This
prediction, however, is insufficient to adequately
explain the management and control of IORs for a
number of reasons. First, due to its singular focus
on the notions of opportunism and transaction
cost minimization TCE lacks recognition of the
variety in IORs’ forms and goals. Second, TCE’s
static nature has resulted in a negligence of the
29
organizational mechanisms used in IOR governance. Furthermore, due to its lack of dynamism
TCE has taken little account of the social
mechanisms of governance, while IORs often are
embedded in a rich and influential social context.
The heterogeneity of IORs: goals and forms
In contrast to TCE’s treatment of the hybrid
form as a homogeneous category of organization
structures somewhere between market and hierarchy, in recent years it is increasingly being
acknowledged that ‘the IOR’ actually comprises a
rather heterogeneous phenomenon. IORs may use
a wide range of transaction forms (Osborn &
Baughn, 1990) and can serve a great variety of
functions, of which economizing on transactions
may only be a part (Osborn and Hagedoorn,
1997). Because IORs are initiated for many reasons and are structured in many ways, it can be
questioned whether treating them as a generic
intermediate mode between market and hierarchy
is very insightful. Osborn and Hagedoorn (1997)
argue that different administrative forms of IORs
may better be viewed as separate and unique entities. Although Williamson (1999) agrees that
economizing on transaction costs may not be the
only goal of organizing transactions in particular
governance forms, he argues it to be ‘‘the main
case’’ (p. 1090). However, as argued by Osborn
and Hagedoorn (1997), ‘‘some alliances may be
designed to reduce transaction costs, but this is
not their only function’’ (p.274). And ‘‘focusing
exclusively on transaction costs [. . .] may hide
more than it reveals’’ (p. 274). For this reason they
and other authors suggest to apply different theoretical perspectives to the study of IORs, as it is
unlikely that a single theoretical perspective can
provide a thorough understanding of the complexities of this phenomenon (Chiles & McMackin,
1996; Smith, Carroll, & Ashford, 1995).
What other purposes may control in IORs then
relate to? According to Fisher (1995) in intra-firm
settings ‘‘control is used to create conditions that
motivate the organization to achieve desirable or
predetermined outcomes’’ (p. 25). Translated to an
inter-organizational setting the primary purpose of
control can be described as creating the conditions
30
H.C. Dekker / Accounting, Organizations and Society 29 (2004) 27–49
that motivate the partners in an IOR to achieve
desirable or predetermined outcomes. This definition suggests that managing transaction risks is
only part of the control challenges in the pursuit
of desirable or predetermined outcomes. Firms
establish IORs for realizing mutually beneficial
outcomes by cooperatively performing valuecreating activities (Borys & Jemison, 1989; Dyer &
Singh, 1998; Zajac & Olsen, 1993). When adopting
a value-creation perspective on IORs, then TCE’s
value-appropriation concerns reduce to only a
subset of organizational issues in IORs. To create
transactional value, IOR partners pool resources,
determine tasks to be performed and decide on a
division of labor. The resulting interdependence
between the subtasks the partners agree to perform subsequently needs to be coordinated across
organizational boundaries to ensure a fit between
their points of contact. A second purpose of control in IORs therefore can be described as the
coordination of interdependent tasks between partners. Different logics of value creation, as determined by the strategic rationale of an IOR, result
in different levels of interdependence, requiring
different degrees of mutual adaptation and
adjustment (Borys & Jemison, 1989). As the IOR’s
tasks become more interdependent and more
uncertain, the need for coordination and joint decision making increases (Dyer, 1996; Galbraith, 1977;
Gulati & Singh, 1998; Thompson, 1967). Hierarchical control mechanisms are considered to be
effective mechanisms to manage increasing information processing requirements (Galbraith, 1977;
Gulati & Singh, 1998; Thompson, 1967). Consequently, different (higher) degrees of interdependence result in different (more complex)
administrative forms of organization. Gulati and
Singh (1998) stress the importance of using control
mechanisms for managing task interdependence by
arguing that ‘‘concerns about anticipated coordination costs are particularly salient in alliances,
which can entail significant coordination of activities
between partners and yet have to be managed without the benefit of the structure and systems available
in traditional hierarchies’’ (p. 784). In addition, task
characteristics influence appropriation concerns, as
more complex and uncertain tasks lead to increasing
contracting difficulties (Anderson et al., 2000).
The level of interdependence in IORs can vary
from very low, requiring few coordination efforts,
to very high, requiring continuous communication
and decision making between partners. This can
be described well by Thompson’s (1967) categorization of pooled, sequential and reciprocal interdependence. In IORs characterized by pooled
interdependence each partner renders a discrete
contribution to and can draw from the common
pool of resources (Thompson, 1967). Coordination requirements are low as partners have little
need for any ordering of activities. In a situation
of sequential interdependence, for instance a typical buyer–supplier relationship, resources are
transferred from one partner to another and
coordination is characterized by ensuring an
appropriate fit between the points of contact
(Borys & Jemison, 1989), for instance by crossactivity programming (Grandori, 1997; Thompson, 1967). IORs characterized by reciprocal
interdependence, in which partners’ activities are
necessary inputs for each other’s activities, generally ask for fit between a wider range of partner
operations and require more complex coordination mechanisms for communication and ongoing adjustment to each other’s situation (Borys &
Jemison, 1989). Examples are IORs focusing on
sharing complementary technology, jointly reducing innovation time and jointly developing new
technology, in which partners actively seek to
deepen and broaden skills or to learn and develop
new skills (Gulati & Singh, 1998).
Summarizing, appropriation concerns and coordination requirements are powerful concepts in
explaining IOR management and control, by
jointly describing collaborating firms’ need to
manage the creation and to safeguard the appropriation of value.2 Governance mechanisms are
useful in the management of these problems.
2
Tomkins (2001) recently described two similar management problems in relationships, alliances and networks, which
he labels ‘the generation of trust’ (i.e. the management of
appropriation concerns) and ‘the mastery of events’ (i.e. the
coordination of activities). The framework in this paper provides a theoretical rationale for the presence and magnitude of
those two problems in IORs and the use of control mechanisms, which he labels as ‘type I’ and ‘type II’ information.
H.C. Dekker / Accounting, Organizations and Society 29 (2004) 27–49
The mechanisms of governance
A second limitation of TCE for adequately
explaining IOR control lies in its recognition of
the mechanisms of governance. As a consequence
of TCE’s singular focus on the notion of opportunism, the primary mechanisms to govern IORs
or ‘hybrid forms’ are often considered to consist
only of legal and private ordering (Nooteboom,
Berger, & Noorderhaven, 1997). Legal ordering
comprises the writing and third party enforcement
of contractual agreements. Private ordering comprises formal self-enforcing mechanisms or ‘hostages’ created intentionally to align the economic
incentives of the transacting parties, such as equity
stakes and symmetrical investments in specialized
assets. This primarily contractual view of governance is incomplete, as it lacks the examination of
the organizational mechanisms of governance
(Grandori, 1997; Sobrero & Schrader, 1998; Zaheer & Venkatraman, 1995; Zajac & Olsen, 1993).
Gulati and Singh (1998), for instance, identify five
important types of control mechanisms in IORs
that include such organizational elements: command structures and authority systems, incentive
systems, standard operating procedures, dispute
resolution procedures and non-market pricing
systems. Sobrero and Schrader (1998) argue that
while in general the contractual structuring is used
to provide the institution for aligning the partners’
incentives, the procedural (or organizational)
structuring concerns mainly how firms actually
align their joint processes through organizational
mechanisms.3
A second form of governance not well recognized
by TCE is informal or social control. By isolating the
transaction from its context and treating it as an
independent event, TCE ignores the (governance)
3
Although Sobrero and Schrader (1998) argue that contractual and procedural mechanisms serve different purposes
and can be separated empirically, this does not necessarily hold
true. A contract is not only used to reduce a partner’s incentives to behave opportunistically, but in addition serves as a
framework for coordination in which the cooperation proceeds
(Gulati, 1995). And a joint venture’s administrative hierarchy
not only coordinates the joint venture’s day to day functioning
and addresses problems as they arise; simultaneously it is used
to detect opportunism when it occurs.
31
effects of prior and repeated interactions between
firms and individuals (Gulati, 1995; Ring & Van
de Ven, 1992). Repeated interactions can cause an
IOR to become embedded in an influential economic and social context, which may strongly
influence its formal structure. This social context,
which can result in informal coordination and
monitoring and high trust between partners, touches upon some of the key assumptions of TCE
(Klein, Palmer, & Conn, 2000). For instance, with
similar or even increasing levels of asset specificity
in the IOR, it enables the partners to gradually use
less hierarchical elements in organizing their relationships (Gulati, 1995, 1998). Many alternative
views on the nature of IOR governance exist, such
as reciprocity norms, reputations, trust, personal
relationships and the embeddedness of relationships in a social network of current and prior ties.
These ‘informal self-enforcing safeguards’ (Dyer,
1996; Dyer & Singh, 1998) differ substantively
from control by prices in the market and the
administrative authority in the hierarchy. These
critiques on TCE’s limited recognition of both
formal and social mechanisms of governance warrant a broader classification of control mechanisms in IORs.
A classification of control mechanisms in IORs
A useful classification of control forms that
complies with the previous critiques is the distinction between formal and informal control
mechanisms (Smith et al., 1995). Formal control
consists of contractual obligations and formal
organizational mechanisms for cooperation and
can be subdivided into outcome and behavior
control mechanisms (Ouchi, 1979). Informal control, also referred to as social control and relational
governance, relates to informal cultures and systems influencing members and is essentially based
on mechanisms inducing self-regulation (Ouchi,
1979). Outcome, behavior and social control are
often equated with the conceptions of market,
hierarchy and clan/community types of governance
(e.g. Adler, 2001; Ouchi, 1979) and are useful
mechanisms for both managing appropriation
concerns and coordinating interdependent tasks.
Based on the extant literature on IOR governance,
32
H.C. Dekker / Accounting, Organizations and Society 29 (2004) 27–49
Table 1
Formal and informal control mechanisms in inter-organizational relationships
Outcome control
Ex-ante mechanisms
Goal setting
Incentive systems/reward structures
Ex-post mechanisms
Performance monitoring and rewarding
Behavior control
Social control
Structural specifications:
Planning
Procedures
Rules and regulations
Partner selection
Trust (goodwill/capability):
Interaction
Reputation
Social networks
Behavior monitoring and rewarding
Trust building:
Risk taking
Joint decision making and
problem solving
Partner development
Table 1 identifies and classifies several behavior,
outcome and social control mechanisms in IORs.
Ex-ante control mechanisms mitigate control
problems by aligning partners’ interests and by
reducing coordination needs before implementing
the IOR. Because ex-ante formal control mechanisms are often incomplete, during the relationship
unresolved control problems are managed by expost control mechanisms that achieve control by
processing information and evaluating performance (Ittner et al., 1999; Ouchi, 1979).
Formal control: outcome and behavior control
Outcome control mechanisms specify outcomes
to be realized by the IOR and by its partners and
monitor the achievement of these performance
targets. Goal setting sets directions for task performance, clarifies mutual expectations and
increases goal congruence (Das & Teng, 1998), in
particular when rewards are explicitly linked to
goal attainment.
Behavior control mechanisms specify how IOR
partners should act and monitor whether actual
behaviors comply with this pre-specified behavior.
Typical ex-ante behavior controls used in IORs are
planning, programs, rules, standard operating
procedures and dispute resolution procedures
(Gulati & Singh, 1998). Das and Teng (1998) suggest that behavior monitoring consists of elements
such as ‘‘reporting and checking devices, written
notice of any departure from the agreement,
accounting examination, cost control, quality control, arbitration clauses, and lawsuit provisions’’
(p. 507). They argue that because IORs are often
characterized by goal incongruence and performance ambiguity, behavior control mechanisms
can be important to ensure desirable behavior.
Informal control: social control mechanisms
Trust often is argued to be the principal mode of
social control in IORs (e.g. Adler, 2001; Ring &
Van de Ven, 1992).4 Rousseau, Sitkin, Burt, and
Camerer (1998) define trust as ‘‘a psychological
state comprising the intention to accept vulnerability based upon positive expectations of the
intentions or behavior of another’’ (p. 394). They
argue that ‘‘trust is not a behavior (cooperation),
or a choice (e.g. taking a risk), but an underlying
psychological condition that can cause or result
from such actions’’ (p. 395). Trust manifests itself
in different ways and can have several origins.
Trust can relate to distinct firm characteristics, of
which in IORs a partner’s goodwill and capabilities
are of particular importance (Sako, 1992). Goodwill
trust is the expectation that another will perform in
the interests of the relationship, even if it is not in
the other’s interest to do so, and essentially relates
4
Das and Teng (1998) argue that trust cannot be considered
being a control mechanism, as ‘‘self-control does not involve
influencing behavior of others’’ (p. 495). However, as self-control is the basic principle of social control, trust can be regarded
being an important component of social control.
H.C. Dekker / Accounting, Organizations and Society 29 (2004) 27–49
to not behaving opportunistically. Capability trust
relates to expectations about another’s competencies to perform a task satisfactorily.
Rousseau et al. (1998) differentiate calculusbased trust, relational trust and institution-based
trust as different origins of trust. Calculus-based
trust is based on utilitarian considerations and
relies on credible information, such as reputations
and information from network relationships about
another’s goodwill and competencies. Furthermore, it relies on opportunities for deterrence
whenever malfeasance may occur, such as withdrawing future business opportunities and
spreading of information about one’s behavior
among networked partners, affecting other current
and future relationships the partner is and may get
involved in. Relational trust emerges from repeated interaction between trustor and trustee and
is based on information available to the trustor
from within the relationship itself. It is often
found in IORs with a long-lasting history of prior
interaction (Gulati, 1995; Kale et al., 2000).
Although relational trust is an emergent characteristic and cannot simply be implemented, over
time it can be built. Mechanisms to build trust are
deliberate risk taking and increasing interaction,
for instance by joint goal setting, problem solving,
decision making and partner development activities (Das & Teng, 1998; Kale et al., 2000; Saxton,
1997; Uzzi, 1997).5 Close interaction further leads
to commitment to and interest in the outcomes of
the relationship, and, by reducing information
asymmetry, results in a decreasing likelihood of
opportunistic behavior and a better recognition of
it when it occurs (Saxton, 1997). Moreover, interaction enables partners to learn about another’s
skills and expectations and to establish standardized communications and routines, influencing
formal coordination (Jones, Hesterly, & Borgatti,
1997). Institution-based trust, finally, is based on
5
For trust to arise, two necessary conditions, risk and
interdependence, must be present (Rousseau et al., 1998). Risk
refers to a perceived probability of loss, as there is uncertainty
whether another intends to and will act appropriately. Nooteboom et al. (1997) in addition suggest the size of loss to be an
important component of relational risk. Interdependence exists
when a firm cannot achieve its goals without reliance upon
another.
33
institutional controls the relationship is subject to,
such as the ability to rely on legal forms and societal norms and values, which may as well undermine trust.
Another way of deliberately generating trust
and thereby mitigating control problems before a
governance structure is designed and implemented
is selecting an appropriate partner, based on good
predictors of desirable cooperative behaviors
(Grandori & Soda, 1995; Ireland et al., 2002; Jones
et al., 1997; Ouchi, 1979). Ireland et al. (2002)
argue that effective alliance management begins
with selecting a good partner, which influences the
need to design and implement expensive formal
control mechanisms by increasing confidence in
another’s goodwill and capabilities. Selecting a
partner with appropriate skills, for instance based
on quality criteria, technological capabilities and
supplier certification, influences expected future
coordination efforts. And goal incongruence and
related appropriation concerns can be reduced by
assessing a potential partner’s norms, values and
motivation to perform, for instance through
information collection at joint network relationships. Similar to the use of formal controls,
increasing anticipated appropriation concerns and
coordination requirements will induce firms to
invest more efforts in selecting a good partner.
The relationship between trust and formal control
A much-debated question in the IOR literature
is the relationship between formal control
mechanisms and trust; i.e. whether (goodwill) trust
is a substitute or a complement for formal control
mechanisms in the management of appropriation
concerns (Adler, 2001; Chiles & McMackin, 1996;
Das & Teng, 1998; Gulati, 1995, 1998; Jones et al.,
1997; Nooteboom et al., 1997; Poppo & Zenger,
2002; Ring & Van de Ven, 1992; Rousseau et al.,
1998; Tomkins, 2001; Zaheer & Venkatraman,
1995). A substitutive relationship suggests that
trust and formal control are inversely related; more
trust results in less use of formal control mechanisms and vice versa. When, for instance, a firm has a
reputation for being trustworthy, its partners may
choose to use less formal control mechanisms compared to a firm with a less favorable reputation.
34
H.C. Dekker / Accounting, Organizations and Society 29 (2004) 27–49
Because trust reduces goal conflict, the need for
formal control mechanisms to deter opportunism
reduces, as parties are inclined to act in each other’s interest (Ouchi, 1979). Furthermore, the use of
formal controls is argued to signal one’s trust in
another. Extensive use of formal control suggests
a lack of belief in one’s goodwill or competence
and therefore results in a damaging effect on relational trust (Das & Teng, 1998).
A complementary relationship, on the other hand,
suggests that trust and formal control are additively
related; an increase in the level of either trust or
formal control simply results in a higher level of
control (Das & Teng, 1998; Poppo & Zenger, 2002).
In addition, the use of formal control mechanisms
may actually enhance a trusting relationship, by
narrowing the domain and severity of risk (Poppo &
Zenger, 2002) and by their objectivity and provision
of a track record about the other’s performance,
behaviors and skills (Das & Teng, 1998).
Three observations may advance this discussion
whether formal controls substitute or complement
and damage or enhance trust. First, the arguments
above indicate that this relationship may actually
be nonlinear. Until a certain threshold (determined
by the IOR’s transaction hazards) the use of formal controls may be complementary and enhancing to trust. However, as trust is the low-cost
solution, it will substitute formal controls whenever a sufficient level of control is realized for
safeguarding the transaction. Partners will not
unnecessarily use expensive formal control
mechanisms and in addition risk damaging the
quality of their relationship. Similarly, this implies
that relational trust will only be damaged when
the use of formal control exceeds this threshold.6
6
Tomkins (2001) likewise discusses the relationship between
trust and information during different stages of the relationship
life cycle as an inverted U-shape; in the early stages of the
relationship trust and information are additively related, while
later on they become substitutes. Here the argument relates not
necessarily to the stage of the relationship, but to the level of
trust at a certain point in time (which may also result from
other sources than interaction over time alone) and the need for
control. Only when trust is insufficient will formal control
mechanisms be utilized to resolve control problems. Note that
in this static argument no dynamic view is taken on increasing
commitments and the (deliberate) generation of trust over time,
as Tomkins does.
Second, the effect of trust may better not be
expressed as a direct effect on the use of formal
control mechanisms, but rather as a moderating
effect on the relationship between control problems and use of control mechanisms. A moderating effect suggests that the use of formal control
mechanisms to manage transaction hazards
depends on the level of trust. Tomkins (2001), in
his discussion of the relationship between building
trust and using control mechanisms to absorb
uncertainty from economic interdependence, suggests that ‘‘it is the level of uncertainty absorption
effort that has to be related to economic interdependence, not trust per se’’ (p. 167). Thus, it is
the magnitude of the transaction hazards that
induces the use of formal control mechanisms,
while the level of trust only influences the strength
of this association.
Third, it is important to differentiate between
the different purposes of control. While high
mutual goodwill trust may diminish partners’
concerns about transaction hazards, formal control mechanisms may still be used for task coordination. The relationship between trust and the use
of formal control mechanisms for task coordination is less often addressed in the literature. Kale
et al. (2000) suggest that in learning alliances relational trust not only helps to protect the firm’s
core specific assets from partners, in addition it
significantly influences the ability of a firm to
manage learning from them. And Gulati and
Singh (1998, p. 791) argue that ‘‘firms that trust
each other are likely to have a greater awareness or
willingness to become aware, of the rules, routines,
and procedures each follows [. . .] firms may have
developed routines together to enable ease in joint
interaction with each other from their prior
experience’’. Uzzi (1997) illustrates how socially
strong embedded ties between a designer and manufacturer positively influence the coordination and
performance of outsourced garment production:
If we have a factory that is used to making
our stuff, they know how it’s supposed to
look. They know a particular style. It is not
always easy to make a garment just from the
pattern. But a factory that we have a relationship with will see the problem when the
H.C. Dekker / Accounting, Organizations and Society 29 (2004) 27–49
garment starts to go together. They will know
how to work the fabric to make it look the
way we intended. A factory that is new will
just go ahead and make it. They won’t know
any better (Uzzi, 1997, p. 46).
Whereas the design pattern serves to coordinate
the manufacturer’s activities, the manufacturer
independently decides to modify the garment
manufacturing from the design. The manufacturer’s knowledge of the designer’s needs, and
the designer’s trust in the manufacturer’s skills
thus complement the design pattern as a formal
coordination mechanism to achieve a higher level
of control and performance.
These arguments suggest that increasing (capability) trust in and knowledge of a partner can
result in either a reduced need for formal coordination or in improved coordination. Analogous to
the relation between trust and appropriation concerns, it is suggested that (capability) trust complements the use of formal control mechanisms for
task coordination until a sufficient level of control
is realized, after which the relationship becomes
substitutive. The influence of trust may also best
be presented as a moderating effect on the relationship between coordination requirements and
formal control.
Finally, a similar effect of trust may be expected
on the relation between control problems and the
partner selection process, which is postulated as
an alternative to the use of formal controls. For
given transaction characteristics and coordination
requirements increasing goodwill and capability
trust are expected to moderate the efforts invested
in searching among alternative IOR partners.
Summary of the framework
Fig. 1 summarizes the main predictions of the
theoretical framework. It suggests how control
problems, as described by variables from TCE and
organization theory, influence collaborating firms’
need to invest effort in selecting a good partner to
mitigate the problems and to design and implement formal control mechanisms to manage the
problems. Investing more efforts in finding a good
partner reduces the need for formal control.
35
Increasing trust in goodwill and capabilities, after
thresholds, are expected to reduce the strength of
the association between respectively appropriation
concerns and coordination requirements and the
use of formal controls and partner selection
efforts.
The next sections assess the explanatory power
of this framework, using data from an in-depth
investigation of the initiation and design of a
strategic alliance.
A case study on the control of a strategic
alliance
Research method and design
In November 1999 NMA Railway Signalling
(NMA), a supplier of railway safety systems, and
Railinfrabeheer (RIB), a task organization of the
Dutch government responsible for the Dutch rail
infrastructure, formally agreed to engage in a
strategic alliance for the supply and innovation of
automatic half-barrier installations. A detailed
analysis of this alliance’s formal governance
structure was made to provide empirical evidence
on the theoretical framework. The extent to which
the framework contributes to a satisfactory
explanation of the structuring and control of this
alliance is indicative of its explanatory power
(Yin, 1994). Furthermore, the evidence may suggest shortcomings in the explanation, providing
directions for extensions or modifications.
Although the explanation of the governance
structure is at the dyadic level of analysis, the
constructs of interest, such as appropriation
concerns and trust are studied from both partners’ perspectives. This focus on the firms within
the dyad allows to account for heterogeneity
between the partners and for their differential
influence on the governance structure (Klein et
al., 2000).
The data collection started 2 weeks before the
partners signed the alliance contract. Semi-structured interviews and informal discussions were
held with boundary spanners of both firms, who
were the designers of the governance structure and
are involved in the management and operation of
36
H.C. Dekker / Accounting, Organizations and Society 29 (2004) 27–49
Fig. 1. A representation of the main predictions of the framework.
the alliance.7 Further, an analysis of the alliance
contract was made and several other internal and
external documents that relate to the initiation
and design of the alliance were studied.8
The context of the alliance
For over 120 years NMA has supplied components for railway safety systems to the Dutch Railways (in Dutch: Nederlandse Spoorwegen, from
now on NS), that until 1995 was a public organization. The components NMA delivered to NS
relate to three types of systems, which historically
7
The interviews were structured by an interview protocol
based on the theoretical framework, but left ample room for
the interviewee to discuss what in his or her perception was
important. The interviews were tape recorded and fully transcribed for analysis.
8
The analysis of the contract was a good opportunity to
obtain a good picture of the alliance’s formal governance
structure, as it in detail describes its structuring and functioning. Other documents used included a brochure and internal
slides about the alliance and general company and product
information. The use of multiple sources of evidence (triangulation) enables to crosscheck findings, making conclusions
more reliable and convincing (Yin, 1994). Further, each source
can provide explanations for and additions to findings from
other sources.
have been developed in joint cooperation with NS:
electronic point machines, railway crossing protection systems and color light signals. As there
are no competitors with comparable products that
would fit directly into the existing rail infrastructure, NMA is monopolist in the Netherlands.
NS (and later RIB) has always been NMA’s largest domestic customer and accounts for a significant part of its turnover.
In 1995 NS was privatized from the Dutch
State. Its tasks were divided among several task
organizations of the Dutch Ministry of Transport,
Public Works and Water Management and several
commercial units that together form the NS Group,
in which the State is the only shareholder. The task
organizations became responsible for the building,
maintenance and use of the rail infrastructure; functions that were considered socially too important to
be commercialized. RIB became the task organization responsible for the building, installation and
maintenance of the Dutch rail infrastructure.
In general two types of activities are performed
on the railways, which are almost completely outsourced to contractors: the building of new rail
infrastructure and the maintenance and control of
existing rail infrastructure. While building activities
are outsourced to project contractors on a project
H.C. Dekker / Accounting, Organizations and Society 29 (2004) 27–49
basis, maintenance and control are outsourced to
process contractors for a fixed time period. After
the privatization, RIB’s new management decided
that contractors should also become responsible
for the purchasing of components and materials.
In its ordering to contractors RIB then would
specify the required quantities and quality. RIB
recognized, however, that many of its supply
chains were characterized by large inefficiencies. In
the supply chain of the half-barrier installation,
for instance, NMA delivered components to
assembling firms, which subsequently delivered
assembled systems to RIB’s contractors to be kept
in stock and installed on the railways. Without
adding much value these parties added significant
cost to the supply chain.
An important goal of RIB’s management was to
better control purchasing costs. It decided to pursue different purchasing strategies for different
types of products, as categorized by their financial
risks and delivery risks (based on Kraljic, 1983).
NMA’s products were classified as ‘bottleneck
products’, as their cost impact is modest, but their
delivery risks are high, because of the monopolistic supply situation and the serious consequences of inadequate delivery. These products
are relatively difficult and costly to specify and to
secure continuous and adequate supply a closer
long-term relationship with the supplier is desired.
Following the purchasing strategy, for this type of
products RIB agrees on a call-off contract with the
supplier. Contractors must use this supplier and are
bound tot the contractual conditions. The alliance
with NMA is RIB’s first formal long-term relationship in this segment of the purchasing portfolio.
The initiation of the alliance
RIB had several reasons to initiate an alliance
with NMA. First, RIB’s management expected to
achieve significant cost reductions by reorganizing
the half-barrier installation’s supply chain. Second, to moderate delivery risks the new purchasing strategy suggested to engage in a long-term
relationship with NMA. Third, an alliance was
considered a good vehicle to internally manage a
cultural change towards more market orientation
and cost consciousness. RIB’s management
37
describes the organization as predominantly
‘‘technology driven’’, with less recognition of its
associated costs. Traditionally RIB technicians
have always made and exchanged technical product specifications with NMA. A better trade-off
between cost, quality and safety should be
achieved by having them to write ‘functional specifications’, describing the essential functions the
product should be able to perform at a certain
level of performance, for which a cost efficient
solution must be developed in joint cooperation
with NMA. This requires RIB technicians to shift
their internal technological focus towards cost and
functionality. Fourth, RIB initiated this first alliance with a long-related supplier to gain experience in the building, designing and outcomes of a
close relationship. As RIB’s management believed
that cultural differences are important impediments to alliance success, ‘having the right fit’ was
an important criterion in selecting NMA.
At the time RIB approached NMA with the
proposition to collaborate (in 1998), NMA’s
management had just finished a study about the
firm’s future. This study concluded that NMA,
similar as in its export markets, domestically
should achieve to become a systems supplier, by
integrating forward into the supply chain. This
meant NMA should also take care of component
assembly to systems, stock keeping and transportation to the installation site. Therefore, NMA was
eager to accept RIB’s proposition to collaborate.
The alliance contract
RIB and NMA boundary spanners spent
approximately 1 year on negotiating and designing
the alliance. The 5-year during legal contract that
resulted from this process in detail handles a wide
range of agreements about the alliance and is central in its governance.9 It includes its scope, goals
9
Informally, the partners have agreed on subsequent contract extensions, as long as the alliance results in ‘mutual satisfaction’. This is realized when the alliance achieves the partners’
joint and individual goals and as long as no better (long-term)
alternative is available in the market. The contract mentions that
NMA’s systems, compared to similar functions of other suppliers, have to be ‘good’ products, in which safety, maintenance
and operational aspects and standardization are key aspects.
38
H.C. Dekker / Accounting, Organizations and Society 29 (2004) 27–49
and plans for achieving those goals, the organizational and personnel structuring, a financial
incentive system, the partners’ mutual responsibilities, the distribution and protection of intellectual property rights, and the exchange of cost
information. The contract’s appendices describe
agreements in more detail to be used in the operation of the alliance, including product descriptions and prices, a ‘program of improvement’ to
coordinate innovations, quality plans and guidelines for calamities and operational mechanisms.
These appendices are used in the operations of the
alliance and are revised annually, as a result of
completion of and progress on activities, and due
to changing circumstances, such as learning about
activities and outcomes and changing market
conditions. Thus, although the contract is relatively detailed, it is intentionally left incomplete, to
provide the contracting parties room to maneuver
within uncertainties and changing contingencies.
The scope and goals of the alliance
The partners decided to focus the alliance on
automatic half-barrier installations for level crossings, in particular because of the high cost reducing potential of its supply chain. In 1999 RIB had
an installed base of approximately 2800 automatic
half-barrier installations on level crossings in the
Netherlands and yearly dozens of new systems are
installed.10 NMA manufactures all important
components of the installation and because it has
been developed in cooperation with and specifically
for NS, it is unique to RIB. Therefore, as expressed
in the contract, for RIB securing supply and further
development of the installation is a driver to engage
in the alliance, while for NMA securing turnover
for a longer time period is an important goal.
The first specific goal the partners agreed on was to
reorganize the supply chain, by relocating tasks and
reducing the number of firms operating in it. NMA
took over component assembly from the assembling
firms and stock keeping and transportation from
10
This number is growing rapidly as in 2001 a program has
been initiated to improve railway safety by converting warning
systems on level crossings without barriers to automatic halfbarrier installations on a reasonable large scale. For 2001, 120
conversions were planned.
the contractors, while RIB bound both project and
process contractors to purchase at NMA. For
NMA this change resulted in exclusive business
and an augmentation of its supply task. RIB gained
a significant price reduction, as many non valueadded costs in the supply chain were eliminated.
This supply chain reorganization, however, was
not sufficient to realize all goals the partners
wished to achieve by collaborating and they also
did not perceive it to be a sufficient reason for
establishing an alliance. Reductions in the costs of
components, operation and maintenance could be
achieved by improving the installation’s cost inefficient design. Furthermore, RIB wanted to use this
first alliance for learning purposes and to support
the establishment of an internal cultural change.
For these reasons, the goal of the alliance was
defined as the joint innovation of the half-barrier
installation to realize additional cost savings and to
enhance its quality and safety. As stated in the
contract: ‘‘By entering into an alliance, the parties
wish to save money on, and make innovations to, halfbarrier installations for level crossings, which savings
and innovations will benefit both parties’. The alliance
embodies an ‘intensive cooperation in the area of
development and extension of half-barrier installations, which have been produced or will be produced,
to improve continuity. In addition, the parties expect
economies of scale and a lower price for half-barrier
installations’’. Both parties benefit from innovations
by ‘‘compensating NMA for the reduced price’’ and
‘‘creating financial possibilities for innovations to
automatic half-barrier installations focused on cost
reductions (in price and RIB’s total cost of ownership), quality improvement and safety improvement’’.
The main focus of innovation thus is to design
costs out of the product, to reduce RIB’s total cost
of ownership (TCO). This can be achieved either
by changes reducing the installation’s product
costs, resulting in a price reduction, or by changes
reducing activity costs by improving the efficiency
of its maintenance and operating activities.11 A
11
An example of such an innovation is to replace an expensive high quality motor, which works safely for at least 30
years, with a less expensive motor, which works safely for at
least 10 years. This results in more replacements over time.
However, as the price reduction outweighs the costs of extra
replacements, RIB’s TCO is reduced.
H.C. Dekker / Accounting, Organizations and Society 29 (2004) 27–49
second goal of the innovation is improving the
installation’s quality and safety, for instance by
improving visibility and by increasing resistance
against wind and vandalism. To achieve these
objectives and to manage the alliance a governance structure has been developed that builds on
five interrelated mechanisms: (1) a supply
arrangement, (2) an organizational structure, (3)
a program of improvement, (4) a financial incentive system and (5) the protection of the proprietary knowledge transferred to the alliance.
The supply arrangement
The reorganization of the supply chain changed
the relationships between RIB, NMA and the
contractors. The ‘promotion’ of NMA from component to systems supplier re-established the
business relationship with RIB and changed the
ordering and delivery processes with the contractors. Project contractors now must purchase
complete systems at NMA, who delivers at the
installation site on the day of installation. This
just-in-time delivery requires NMA to have more
timely ordering information and contractors
therefore are bound to order at least 12 weeks in
advance, to prevent disturbances in NMA’s production process. Similarly, for maintenance and
replacement, process contractors are required to
purchase components, and occasionally complete
systems, at NMA.12 Product descriptions and
price lists at the system and component level are
used to coordinate purchases with contractors.
While for the alliance’s first year prices were
based on historical data and assumptions about
expected ordering quantities, the years thereafter
prices are adapted to NMA’s new cost data (as
discussed further on). Further, NMA can adapt
its production process to the yearly and quarterly
forecasted ordering quantities that RIB provides
to the alliance.
12
In addition, NMA has taken over responsibility for keeping emergency stock from the process contractors, which is
used when installations need to be repaired or replaced
instantly, for instance after an accident on the railways.
39
The organizational structure
The partners have transferred several activities
to the alliance that they used to perform individually, enabling NMA to augment its control over
RIB’s product specifications and RIB to augment
its control over NMA’s production process. The
alliance is organized as a separate organizational
structure, which includes an alliance board and
alliance staff. The board consists of four members,
two of both firms including their general managers, and serves as an authority structure in
which both partners have control over the alliance
activities performed. The board first has set out an
‘alliance strategy’, focused on innovation, to realize the alliance’s goal (reducing RIB’s TCO). The
board further is responsible to turn this strategy
into action, by setting or approving on short-term
(yearly) goals to be included in the program of
improvement, which at least include the expected
cost reduction and a forecast of ordering quantities. The expected cost reduction is based on
specific proposals for innovations made by the
alliance staff. Quarterly, the board members
meet to discuss the acceptance of proposals and
to review the progress on the short-term goals.
Yearly, they meet to review and discuss the alliance’s performance and its future direction.
Informal meetings and communication take
place whenever contingencies arise that require
coordination.
The alliance staff that performs operational and
support tasks is organized in six functional task
groups called Development, Production, Cost Control, Quality Control, Installation & Service and
Purchasing. Each task group includes employees
of both firms and contributes to implementing the
alliance strategy, either by directly working on
innovations or by facilitating and monitoring this
process. The technicians from Development are
most important for generating and realizing ideas
for innovations through direct communication.
Proposals for innovations must remain within the
boundaries of RIB’s functional specifications,
which are also approved by the board. Approved
proposals for innovations are included in the program of improvement and are realized by the task
groups following the mechanisms of this program.
40
H.C. Dekker / Accounting, Organizations and Society 29 (2004) 27–49
The program of improvement
For each proposal for innovation the program
of improvement specifies a planning and progress
scheme, a budget scheme and an estimation of the
expected cost reduction. The planning scheme
specifies five general activities required to realize
the innovation: (1) definition of functional requirements, (2) attainability study, (3) development, (4)
release, and (5) adoption for use. During execution,
progress on these activities is measured and compared with the planning scheme. For each innovation the alliance fund (as discussed further on)
provides a budget for the costs of the attainability
study, the development and the release of the
innovation, after testing and quality checks. RIB
takes care of the definition of functional requirements and adoption for use. The program further
specifies the hour wages to be charged for NMA’s
engineering and mechanical assembly activities in
the alliance.
As the installation’s safety and quality are of
utmost importance, innovations have to meet high
standards. Quality plans, following NMA’s
ISO-9001 quality procedures, are used to safeguard the quality of the innovation process. These
plans describe agreements and methods that have
to be followed when working on innovations and
relate to the quality of the alliance, its systems and
the lower product (subassembly and component)
level. Quality Control annually performs quality
audits to assess the conformance to and effectiveness of the quality plans in the realization of
innovations. To measure the attainment of the
alliance’s main goal, Cost Control annually measures the cost consequences of realized innovations, using cost data that NMA provides to the
alliance on basis of ‘open book accounting’.
The financial incentive system
To induce mutual collaborative behavior in the
innovation process the partners have developed a
financial incentive system, called the alliance fund.
This fund focuses on aligning the partners’ individual (financial) objectives with the alliance’s
objectives by financing all planned innovations,
accruing their financial results and dividing the
residual. As a startup capital the partners have
made an equal financial contribution. Yearly
expected cost reductions from planned innovations are forecasted. Multiplying these with the
forecasted ordering quantities delivers the total
expected cost reduction. When an innovation has
been realized, its value, called the ‘Total Value’
(TV), is determined by multiplying the realized
cost reduction with the forecasted number of
sales.13 The TV is used to determine the contribution each partner should make to the alliance
fund. NMA contributes the actual realized cost
savings, i.e. the realized cost reduction multiplied
with the actual ordering quantities. When actual
ordering quantities are less than forecasted, RIB
contributes the missed savings, i.e. the difference
between the TV and the realized cost reduction.
Fig. 2 provides an illustration of these calculations
of and contributions to the alliance fund.
NMA thus sells the installation for X and contributes (RS + RP)Z=130,500. Because actual
sales lag expectations, RIB contributes the missed
savings equaling (Y Z)/Y TV=14,500.
As over time cost–reducing innovations are successfully realized the alliance fund increases in
size. Yearly the fund is evaluated and when
exceeding a certain threshold, following an allocation scheme, the surplus is allocated among the
partners and a second alliance fund, that is used to
finance further innovations that cannot be
financed from the general fund. Similarly, whenever this fund exceeds a certain threshold, the
residual is shared between the partners. When,
however, the alliance fund becomes insufficient to
finance further innovations, after approval of the
board, the partners will make equal reinvestments.
The alliance fund can be thought of as a ‘truth
inducing mechanism’. RIB has incentives to predict
a high demand, because higher expected total cost
savings provides NMA with stronger incentives to
13
The calculation of the realized cost reduction, however,
only measures savings in product costs. Due to a lack of
appropriate cost data, reductions in RIB’s costs of operating
and maintenance activities are not calculated, while this is
required to make a fair division of the alliance’s financial
benefits. The partners explicitly left this question open for the
future and will negotiate in good faith about a reasonable
estimation of this cost reduction.
H.C. Dekker / Accounting, Organizations and Society 29 (2004) 27–49
41
Fig. 2. Illustration of the alliance fund.
accomplish cost reducing innovations and increases the budget available for innovation. However,
when purchases lag expectations, RIB must compensate for the difference, providing incentives to
forecast future demand accurately and honestly.
The protection of proprietary knowledge
Because NMA’s knowledge of and experience
with the installation is regarded a key factor for the
alliance’s success it is agreed in the contract that:
NMA will completely place its current and
future knowledge and experience related to
design, construction, installation and maintenance of the automatic half-barrier installation at the disposal of the alliance.14
This transfer of intellectual property to the alliance
caused an explicit concern about the boundaries of
14
A similar agreement included in the contract specifies that
RIB, as far as possible will place its knowledge and experience
at the disposal of the alliance, which NMA is allowed to use to
improve the installation.
this knowledge. NMA has always used product
coding and drawings for product specification.
The absence of detailed technical specifications
complicated the specification and protection of
intellectual property rights by formal mechanisms.
In addition, there were little incentives to do so.
Because of the confidence in RIB’s (and before
NS’s) goodwill, NMA perceived the risks of
opportunistic behavior, such as information spillover (the conscious leaking of information to
other suppliers) to be small. The only effort NMA
undertook was simply labeling the product drawings with its company logo.
Because the alliance explicitly brought this issue
to the surface the partners decided to make better
agreements on the specification and allocation of
intellectual property rights. NMA agreed to specify the installation’s configuration by drawings
and product coding and share this with RIB.
NMA contractually was assigned all intellectual
property rights on the installation, its subsystems,
components and related products and services.
These property rights are adjusted whenever new
innovations are realized. In return RIB received a
nontransferable and nonexclusive license for the
42
H.C. Dekker / Accounting, Organizations and Society 29 (2004) 27–49
use of the technology. Despite this safeguard,
NMA’s managing director commented that it is
difficult to measure whether RIB uses this information according to the agreement. However,
similar to the prior situation, this is not perceived
to be a large risk, because of NMA’s confidence in
RIB’s goodwill. In addition, it was suggested that
negative reputational effects would also be an
effective deterrent for the opportunistic use of
intellectual property.
Explaining the governance structure
The management of appropriation concerns
Although other suppliers offer systems with
comparable functionality, worldwide no systems
are available with similar technological specifications, that would fit well into the existing rail
infrastructure. As stated by the contract:
The automatic half-barrier installations have
been developed in close cooperation with
(and for) NS, and are unique in the sense that
no comparable systems and subsystems exist
which have similar specifications.
The case study was designed as explanatory
(Yin, 1994). First, a theoretical framework was
developed after which data were collected on the
variables and relationships of this framework,
enabling a test of its explanatory power. Satisfactory explanatory power is attained when the
observations in the case study comply with the
proposed linkages between the variables in the framework, meaning the framework is able to make
sense of the data. Thus the concepts of appropriation concerns, coordination requirements and
trust should contribute to explaining the alliance’s
governance structure.15 In the alliance a great
variety of formal and informal control mechanisms is used, which are summarized in Table 2.16
The formal control structure of the alliance
thus consists of a mixture of outcome and behavior control mechanisms. The next sections analyze how the case evidence relates to the
constituent parts of the framework (as depicted in
Fig. 1).
Switching to manufacturers with technologically
different systems would result in large transaction
costs for RIB. The contract expressed the specificity of the installation as follows:
15
An alternative explanation when an alignment or ‘fit’
between control problems and governance structure is not
found, is that a misfit exists, which over time would result in an
escalation of control problems in the alliance and declining or
lower performance. With the current data it is impossible to
assess the longer-term performance effects of the alliance,
although this possibility did not seem to be the situation.
16
The structure of the alliance has much in common with a
joint venture. Joint financial investments are made, a separate
organizational structure with a joint board and joint task
groups is installed, specific tasks and resources are dedicated to
it, and separate rules, regulations and costing and non-market
pricing are used.
incompatibility of other systems with existing systems,
amongst others resulting in inefficient control of the
systems, which in addition has consequences for safety;
technical difficulties in the operation and maintenance of
systems, which in addition has consequences for safety;
a necessary replacement of existing systems;
new training of employees and contractors’ employees,
resulting in a disproportionate destruction of capital,
which in addition has consequences for the safety of the
systems.
The reason for including this description is that RIB has to
comply with European regulations and needs to prove that these
products does not have to be tendered in European competition.
The development of identical automatic halfbarrier installations by other manufacturers
would take a long period of time, especially
because no functional specifications are
available for the installation, while because of
safety considerations the utmost care should
be fostered.17
Because the installation has been developed with
and specifically for NS, it is also specific to NMA.
NMA depends strongly on RIB, as it is its largest
buyer and there are no other buyers to switch to.
17
The partners recognize these transaction costs well and the
implications of switching to another supplier are also specified
in the contract. If RIB would switch to another supplier, then
transaction costs would arise due to:
H.C. Dekker / Accounting, Organizations and Society 29 (2004) 27–49
43
Table 2
Formal and informal control mechanisms used in the alliance
Outcome control
Ex-ante mechanisms
Goal setting:
Strategic goals
Short-term goals: cost reductions
and ordering quantities
Incentive systems:
Alliance fund
Behavior control
Social control
Structural specifications:
Ordering and supply procedures
Functional specifications
Program of innovations
Quality plans
Specification and division
intellectual property rights
Partner selection:
Long-lasting joint history and
cultural ‘fit’
Interactive goal setting:
Joint governance design
Short-term goals
Reputation:
Trustworthiness RIB for
other alliances
Trust:
Long-lasting relationship
Reputation RIB
Open book agreement
Intentional incomplete contracting
Organizational structuring:
Alliance board
Task groups
Ex-post mechanisms
Performance monitoring:
Open book accounting: cost
reductions
Rewarding:
Benefit sharing
Behavior monitoring:
Pre-action review of ideas for
innovations
Board monitoring
Auditing use quality plan
Moreover, the uncertainty caused by the privatization of NS and RIB’s changes to become an
autonomous governmental agency made securing
this turnover more important for NMA.
Thus, while RIB cannot switch to alternative
systems from other suppliers without incurring
considerable transaction costs, NMA cannot
switch to other buyers. Although this situation of
mutual dependency to a great extent aligns the
partners’ interests, it was not sufficient to manage
the additional transaction hazards that were created by engaging in an alliance. RIB’s main concern was that NMA would have little incentives to
work actively on innovating the half-barrier
installation and just would use the alliance to
secure turnover for another 5 years. NMA’s concern was to earn a fair share of the cost savings
realized by innovations and to realize sufficient
turnover from RIB. For this purpose, according to
the contract, ‘the alliance contains such incentives
that, when successful, it provides benefits to both
parties’. The financial incentive system was developed to align the partners’ interests and to motivate
Shared decision making and goal
setting:
Joint alliance board
Joint task groups
them to perform adequately. This mechanism
provides the partners a prospect of fair rewards
for their individual contributions, which, as Tomkins (2001) argues, is a precondition for partners’
willingness to participate in IOR activities. Further, RIB allows NMA to exploit quality and
safety enhancing innovations in its product
assortment for export markets. These externalities
provide NMA important additional incentives to
participate actively in the alliance.
A second mechanism for managing appropriation concerns is the behavior monitoring by the
alliance board. This command and authority
structure oversees the functioning and performance of the alliance and serves to reduce information asymmetry between the partners, by
regular information sharing, pre-action reviews,
joint decision making and problem solving. This
joint supervision provides both partners with significant control over the alliance activities and
resources involved and prevents them from using
resources for personal benefits (such as when NMA
would use alliance resources for innovations to its
44
H.C. Dekker / Accounting, Organizations and Society 29 (2004) 27–49
other products). Furthermore, the specification of
intellectual property rights contributes to minimizing NMA’s concerns about information spillover of the specific and valuable knowledge
transferred to the alliance.
The explanation so far indicates that the use of
the formal control mechanisms described above
indeed seem to be related to TCE arguments.
However, these arguments do not provide a complete account of the governance structure, that
exists of more mechanisms and also other uses of
these mechanisms. This may be accounted for by
the alliance’s task coordination requirements.
The coordination of tasks
Following the strategic rationale of the alliance,
two types of tasks are performed, a supply task
and an innovation task. The supply task focuses on
the delivery of half-barrier installations to contractors, which can be characterized by sequential
interdependence. NMA’s production and supply
activities depend on RIB’s demand, which is the
main cause of task uncertainty. For RIB it is difficult to forecast perfectly how many new installations in a period will be ordered. Although the
addition of assembly and (just-in-time) delivery to
the supply task has somewhat increased interdependence, the consequences for coordination
are fairly limited. This limited interdependence
and uncertainty is reflected by the mechanisms
used to coordinate the supply task. To be able to
adapt its processes, NMA needs more timely
information about ordering quantities and expected demand. As agreed in the supply arrangement
contractors are required to follow standard ordering procedures and order at least 12 weeks in
advance. Further, RIB shares (imperfect) forecasts
of quarterly demand with NMA.
The innovation task relates to the joint innovation of the half-barrier installation to reduce
RIB’s TCO. For this more complex task the partners pool resources (personnel, knowledge, technology and financial resources) and jointly work
on innovations. This task is characterized by reciprocal interdependence. Task performance is characterized by more uncertainty, as it is unclear at
the outset what innovations should be performed
and what they will result in, limiting the possibility
to completely program these activities and
measure relevant outcomes and behaviors. The
theoretical framework suggests that a broader set
of more complex mechanisms will be required to
manage the information processing requirements
associated with higher levels of interdependence
and uncertainty. The evidence indeed indicates
such a relationship, as in the alliance more extensive and complex mechanisms are used to manage
this task. A hierarchical organizational structure
was installed, consisting of a joint alliance board
and joint task groups, which were assigned decision rights and responsibilities. The alliance board
has set out a general strategy, which is translated
into short-term goals to be achieved by the task
groups. Although it is difficult to precisely manage
the behaviors required to accomplish innovations,
in the program of improvement the general process that needs to be followed to realize an innovation is specified and monitored by formal
control mechanisms. These mechanisms consist of
task planning and specification, budgeting, progress evaluation and performance measurement.
They further facilitate coordination of the innovation task by informal means, such as joint interaction, communication and problem solving between
task group members. Finally, as the installation’s
safety and quality are essential, the innovation
process is managed by quality plans and yearly
auditing of the use and performance of these plans.
This analysis thus suggests that the concept of
coordination requirements indeed adds to
explaining the alliance’s governance structure.
Increasing information processing requirements
resulting from higher levels of interdependence are
associated with more extensive use of more complex formal control mechanisms. This finding
supports Gulati’s (1995) argument that legal contracts are important frameworks in which cooperation proceeds and not necessarily focus on
managing appropriation concerns alone.
The influence of social control mechanisms: partner
selection and trust
The long-lasting history between NMA and RIB
has resulted in a rich social context in which the
H.C. Dekker / Accounting, Organizations and Society 29 (2004) 27–49
alliance is embedded. An important reason for
choosing NMA to collaborate with, was their
prior history and matching cultures, as RIB, in
initiating this ‘learning alliance’ strongly believed
that unsuccessful alliances most often fail due to
conflicting organizational cultures. Thus, RIB
perceived selecting a good partner to be an
important mechanism to mitigate control problems and ultimately alliance failure. Because of
RIB’s trust in NMA’s goodwill and competence,
selection efforts remained limited. The choice for
NMA in this case was made even before a specific
goal for the alliance was decided on.
The basis of the alliance, both partners argue, is
the trusting relationship that they have built up
over a long period of time. Although RIB’s new
management was unfamiliar to NMA’s management (due to NS’ reorganization and because
before NMA interacted with NS mainly on a
lower management level), the frequent interactions
during the initiation and design of the alliance
positively effected relational trust. Moreover,
NMA’s knowledge of RIB’s plans to initiate more
(larger scaled) alliances, for which purpose RIB
attempted to establish a reputation as a trustworthy alliance partner, added to NMA’s (calculus-based) trust. This high trust situation was
clearly demonstrated by NMA during the design
of the alliance, as RIB was allowed detailed insight
into the cost structure of the half-barrier installation, including its profit margins, without that
any agreement had yet been made. This openness
made NMA vulnerable to potential opportunistic
behavior, as it provided RIB the opportunity to
terminate discussions with NMA and use the cost
information in future price negotiations. However,
as a result of its trust in RIB’s goodwill, NMA did
not perceive sharing this information to be a large
risk. This risk taking behavior and RIB’s reciprocating behavior further nurtured relational trust
and speeded up negotiations and the design of the
alliance significantly.
Despite the choice for a ‘good partner’ and the
high level of trust, the partners developed a relatively detailed governance structure. This decision,
however, did not seem to be related strongly to
concerns about potential opportunism or a lack of
competence. As suggested by the partners, a more
45
important reason for creating this governance
structure was that it clearly specifies where the
alliance should be heading for (i.e. its strategic
direction) and that it provides the instruments to
achieve its goals. Moreover, the partners believe
mutual transparency of behaviors and results to be
an important basis of their trusting relationship.
The formal controls, in particular goal setting,
performance measurement and information sharing, contribute to this transparency.
RIB suggested that, on basis of their trust, the
formal agreement could even have been handled
by a single page of paper. NMA, however, had
more problems with this approach, due to the
uncertainty created by RIB’s recent organizational
and management changes. As NMA’s managing
director explained:
We wanted to have a sound agreement based
on trust, but in which certain issues are
arranged well, because, in the end, we are not
sitting here for our pleasure. And it is nice,
those blue eyes [referring to the trust in RIB’s
current management], but what if in the
future some other blue eyes are sitting over
there, what then? And for that reason we
have put this on paper.
Thus for NMA, RIB’s uncertain future, which
may involve another management with different
ideas about alliances, was an important reason to
arrange the alliance agreements by a legal contract. Moreover, the contract enables to manage
another aspect of uncertainty related to organizational change. It was argued that when new
people are introduced to the alliance, the contract
provides them with information about the purpose, agreements and history of the alliance,
enabling them to efficiently proceed with its activities. The use of the contractually arranged governance structure thus seems to be driven by the
desire to guarantee stability and continuity in the
future and to facilitate the planning and execution
of the alliance activities.
The relatively modest influence of appropriation
concerns was illustrated by the observation that
the alliance’s main mechanism for incentive alignment, the alliance fund, is essentially incomplete in
46
H.C. Dekker / Accounting, Organizations and Society 29 (2004) 27–49
its measurement of RIB’s TCO reduction. For
cost reductions in operating and maintenance
activities, which are difficult to measure with
RIB’s cost data, the partners in good faith simply
agreed to ‘negotiate a reasonable estimate’ of the
savings, to come to a fair division of the alliance’s
financial benefits. Similarly, the ‘concerns’ about
intellectual property rights on NMA’s specific
knowledge only came to the surface by engaging
in the alliance. This issue also existed before and
was simply handled by trust. As NMA’s managing
director argued, the alliance actually provided the
opportunity to finally discuss and specify these
issues well, although it still remains difficult to
monitor whether RIB behaves to the agreement.
These observations overall suggest that despite
the use of this extensive governance structure, the
high level of goodwill trust indeed seemed to
moderate the use of formal control mechanisms to
manage transaction hazards. Furthermore,
because the formal controls included in the contract provide mutual transparency and facilitate
the achievement of the alliance’s goals, the partners
strongly believe they add to the quality of their
relationship, instead of being deteriorating to it.
Conclusion and suggestions for further research
This paper contributes to the accounting literature, by studying the control of inter-organizational relationships, a subject that until recently
has received scant attention in this literature.
Using transaction cost economic reasoning it is
argued that managing appropriation concerns,
resulting from a partner’s potential opportunistic
behavior, can be an important objective of control
in inter-organizational relationships. Criticism on
transaction cost economics, however, suggests that
this is not the sole or even the main purpose of
control. Therefore, organizational theory is used
to argue that the coordination of interdependent
tasks performed by interfirm partners in their
pursuit of transactional value may strongly influence a relationship’s governance structure. While
designing and implementing formal control
mechanisms may be important to manage these
two control problems, recent literature suggests
that selecting a ‘good’ partner may to some extent
mitigate these problems and thereby reduce the
need for expensive formal governance. Moreover,
sociological perspectives on governance contend
that account should be taken of the social context
in which the relationship is embedded. Arising
from a variety of mechanisms, trust in a partner’s
goodwill and capabilities may strongly influence
the strength of association between the relationship’s control problems and the use of control
mechanisms.
Consistent with these arguments, a case study of
a strategic alliance between two firms on the supply and joint innovation of railway safety systems
provides evidence that in addition to appropriation concerns, coordination requirements and the
social context of the alliance significantly influence
its formal control structure. The findings suggest
that using transaction cost economic reasoning
only would provide an insufficient explanation of
the alliance’s formal governance structure.
Although the partners’ high level of goodwill trust
seemed to weaken the association between the
transaction hazards and use of formal control
mechanisms, such mechanisms were nevertheless
extensively used to facilitate the coordination of
alliance tasks. The case findings comply with
Tomkins’ (2001) suggestion that ‘‘the major value
of contracting may lie in it being a device to set
down goals and methods to enable mutual planning, rather than being primarily and ex-post
control device’’ (p. 177). Further, due to their
support in realizing the alliance’s goals and the
creation of mutual transparency the partners
found these control mechanisms to be enhancing
to their trusting relationship. Finally, another
important purpose of the alliance’s formal governance structure, not directly accounted for by
the theoretical framework, was to guarantee stability and continuity of the alliance in the future in
particular to cope with uncertainty about organizational, management and personnel changes.
An additional benefit of using the case study
methodology was that it enabled to identify and
describe a set of specific control mechanisms used in
an alliance. Although the theoretical framework discusses several forms of control mechanisms described in the literature, few empirical descriptions are
H.C. Dekker / Accounting, Organizations and Society 29 (2004) 27–49
available of specific control mechanisms used in
inter-organizational relationships. The case reveals
a wide range of control mechanisms that are used
in the alliance for both motivational and coordination purposes. These mechanisms to a great
extent consist of management accounting practices, such as a financial incentive system, planning, budgeting, cost calculations and open book
accounting. This finding suggests that management accounting can be an essential element of
governance in inter-organizational relationships
and signifies the importance of these relationships
for management accounting research.
The results of study suggest several directions
for further research into the control of interorganizational relationships. First, because the
focus of this study was on explaining the governance structure as observed, the framework and
case study were described and analyzed in a rather
static way. A logical extension of this analysis
would be to focus on dynamic relationships
between the variables of interest over time using
longitudinal data. For instance, an important
question is how over time the evolution of trust
influences the governance structure and in particular the use of formal control mechanisms. And
how does learning about task characteristics and
initial uncertainties influence the use of formal
coordination mechanisms?
Second, in the case study the choice for a partner was made before the purpose of the alliance
was decided on. Although a main reason for
selecting NMA as a partner was to mitigate (cultural) control problems, it is unclear whether these
problems can be related straightforward to the
control problems specified in the theoretical
framework. A more clear assessment of the influence of control problems on partner selection will
be possible in situations where firms first identify a
problem or a need for which a collaboration is
required and only then start the partner selection
process.
Finally, no assessment could be made of the
performance consequences of the alliance and in
particular of its governance structure. Underlying
the theoretical framework is the assumption that
aligning the alliance’s governance structure with
its transaction and task characteristics will result
47
in higher performance. In a case study as discussed
in this paper, assessing this assumption would
require the researcher to follow the alliance for a
longer time frame. Alternatively, this could be
studied quantitatively using a sample of alliances
with differential transaction and task characteristics, in which alliances with ‘fitting’ governance
structures are expected to perform better than
those characterized by a misfit. This also remains
an important challenge for future research into the
governance of inter-organizational relationships.
Acknowledgements
I gratefully acknowledge the contributions of
Margaret Abernethy, Shannon Anderson, Ivo
Blij, Jan Bouwens, Tom Groot, Frederick Lindahl, David Otley, Erik Peek, Eelke Wiersma and
two anonymous reviewers to this paper. I also
would like to thank the participants of the case
companies for their time and data generously
provided.
References
Adler, P. S. (2001). Market, hierarchy, and trust: the knowledge economy and the future of capitalism. Organization
Science, 12, 215–234.
Anderson, S. W., Glenn, D., & Sedatole, K. L. (2000). Sourcing
parts of complex products: evidence on transaction costs,
high-powered incentives and ex-post opportunism. Accounting, Organizations and Society, 25, 723–749.
Borys, B., & Jemison, D. B. (1989). Hybrid arrangements as
strategic alliances: theoretical issues in organizational combinations. Academy of Management Review, 14, 234–249.
Chiles, T. H., & McMackin, J. F. (1996). Integrating variable
risk preferences, trust, and transaction cost economics.
Academy of Management Review, 21, 73–99.
Das, T. K., & Teng, B. S. (1998). Between trust and control:
developing confidence in partner cooperation alliances.
Academy of Management Review, 23, 491–512.
Dyer, J. H. (1996). Specialized supplier networks as a source of
competitive advantage: evidence from the auto industry.
Strategic Management Journal, 17, 271–291.
Dyer, J. H., & Singh, H. (1998). The relational view: cooperative strategy and sources of interorganizational competitive
advantage. Academy of Management Review, 23, 660–679.
Fisher, J. (1995). Contingency-based research in management
control systems: categorization by level of complexity. Journal of Accounting Literature, 14, 24–53.
48
H.C. Dekker / Accounting, Organizations and Society 29 (2004) 27–49
Frances, J., & Garnsey, E. (1996). Supermarkets and suppliers
in the UK: system integration, information and control.
Accounting, Organizations and Society, 21, 591–610.
Galbraith, J. R. (1977). Organization design. Reading, MA:
Addison-Wesley.
Gietzman, M. B. (1996). Incomplete contracts and the make or
buy decision: governance design and attainable flexibility.
Accounting, Organizations and Society, 21, 611–626.
Grandori, A. (1997). An organizational assessment of interfirm
coordination modes. Organization Studies, 18, 897–925.
Grandori, A., & Soda, G. (1995). Inter-firm networks: antecedents, mechanisms and forms. Organization Studies, 16,
183–214.
Groot, T. L. C. M., & Merchant, K. A. (2000). Control of
international joint-ventures. Accounting, Organizations and
Society, 25, 579–607.
Gulati, R. (1995). Does familiarity breed trust? The implications of repeated ties for contractual choice in alliances.
Academy of Management Journal, 38, 85–112.
Gulati, R. (1998). Alliances and networks. Strategic Management Journal, 19, 293–317.
Gulati, R., & Singh, H. (1998). The architecture of cooperation: managing coordination costs and appropriation concerns in strategic alliances. Administrative Science Quarterly,
43, 781–814.
Hopwood, A. (1996). Looking across rather than up and down:
on the need to explore the lateral processing of information.
Accounting, Organizations and Society, 21, 589–590.
Ireland, R. D., Hitt, M. A., & Vaidyanath, D. (2002). Alliance
management as a source of competitive advantage. Journal of
Management, 28(3), 413–446.
Ittner, C. D., Larcker, D. F., Nagar, V., & Rajan, M. V. (1999).
Supplier selection, monitoring practices, and firm performance. Journal of Accounting and Public Policy, 18, 253–281.
Jones, C., Hesterly, W. S., & Borgatti, S. P. (1997). A general
theory of network governance: exchange conditions and
social mechanisms. Academy of Management Review, 22,
911–945.
Kale, P., Singh, H., & Perlmutter, H. (2000). Learning and
protection of proprietary assets in strategic alliances: building relational capital. Strategic Management Journal, 21,
217–237.
Klein, K., Palmer, S. L., & Conn, A. B. (2000). Interorganizational relationships: a multilevel perspective. In K. J. Klein,
& S. W. J. Kozlowski (Eds.), Multilevel theory, research, and
methods in organizations (pp. 267–307). San Francisco:
Jossey-Bass.
Kraljic, P. (1983). Purchasing must become supply management. Harvard Business Review, September–October, 109–
117.
Larson, A. (1992). Network dyads in entrepreneurial settings: a
study of the governance of exchange relationships. Administrative Science Quarterly, 37, 76–104.
Nooteboom, B., Berger, H., & Noorderhaven, N. G. (1997).
Effects of trust and governance on relational risk. Academy
of Management Journal, 40, 308–338.
Osborn, R. N., & Baughn, C. C. (1990). Forms of inter-
organizational governance for multinational alliances. Academy of Management Journal, 33, 503–519.
Osborn, R. N., & Hagedoorn, J. (1997). The institutionalization and evolutionary dynamics of interorganizational
alliances and networks. Academy of Management Journal, 40,
261–278.
Otley, D. (1994). Management control in contemporary
organizations: towards a wider framework. Management
Accounting Research, 5, 289–299.
Ouchi, W. G. (1979). A conceptual framework for the design of
organizational control mechanisms. Management Science,
25, 833–848.
Poppo, L., & Zenger, T. R. (2002). Do formal contracts and
relational governance act as substitutes or complements?
Strategic Management Journal, 23(8), 707–725.
Ring, P. S., & Van de Ven, A. (1992). Structuring cooperative
relationships between organizations. Strategic Management
Journal, 13, 483–498.
Rousseau, D. M., Sitkin, S. B., Burt, R. S., & Camerer, C.
(1998). Not so different after all: a cross-discipline view of
trust. Academy of Management Review, 3, 393–404.
Sako, M. (1992). Prices, quality and trust: inter-firm relationships
in Britain and Japan. Cambridge: Cambridge University Press.
Saxton, T. (1997). The effects of partner and relationship characteristics on alliance outcomes. Academy of Management
Journal, 40, 443–461.
Smith, K. G., Carroll, S. J., & Ashford, S. J. (1995). Intra- and
interorganizational cooperation: toward a research agenda.
Academy of Management Journal, 38, 7–23.
Sobrero, M., & Schrader, S. (1998). Structuring inter-firm
relationships: a meta-analytic approach. Organization Studies, 19, 585–615.
Speklé, R. F. (2001). Explaining management control structure
variety: a transaction cost economics perspective. Accounting, Organizations and Society, 26, 419–441.
Thompson, J. D. (1967). Organizations in action. New York:
McGraw-Hill.
Tomkins, C. (2001). Interdependencies, trust and information
in relationships, alliances and networks. Accounting, Organizations and Society, 26, 161–191.
Uzzi, B. (1997). Social structure and competition in interfirm
networks: the paradox of embeddedness. Administrative
Science Quarterly, 42, 35–67.
Van der Meer-Kooistra, J., & Vosselman, E. J. G. (2000).
Management control of interfirm transactional relationships:
the case of industrial renovation and maintenance. Accounting, Organizations and Society, 25, 51–77.
Williamson, O. E. (1985). The economic institutions of capitalism. New York: Free Press.
Williamson, O. E. (1991). Comparative economic organization:
the analysis of discrete structural alternatives. Administrative
Science Quarterly, 36, 269–296.
Williamson, O. E. (1999). Strategic research: governance and
competence perspectives. Strategic Management Journal, 20,
1087–1108.
Yin, R. K. (1994). Case study research: design and methods.
London: Sage.
H.C. Dekker / Accounting, Organizations and Society 29 (2004) 27–49
Zaheer, A., & Venkatraman, N. (1995). Relational governance
as an interorganizational strategy: an empirical test of the
role of trust in economic exchange. Strategic Management
Journal, 16, 373–392.
49
Zajac, E. J., & Olsen, C. P. (1993). From transaction cost to
transactional value analysis: implications for the study of
interorganizational strategies. Journal of Management Studies, 30, 131–145.