Asset Specificity and Organizational Arrangements: the Case of the New Telecommunications Services Market

Abstract

This paper uses new institutional economics to support strategic analysis in industries, where the production of goods and services requires the pooling of the assets of several firms. The type of assets owned by these firms has an impact on their bargaining power; this consequently influences the firms‘ ability to be involved in specific organizational arrangements. With the objective of conceiving optimal strategies for firms involved in these agreements, our study seeks to bring to light the relationships between the nature of organizational arrangements, the role of the firms in these arrangements and their competitive position in the industry in which the cooperation is formed. This analysis uncovers three principal forms of organizational arrangements: core firm with a network of subcontractors, homogeneous alliance and complementary alliance. With the support of various statistical methods, this framework is applied to the telecommunications industry