Dynamic contracting scenarios in international strategic alliances: inter-temporal culturally sensitive incentive schemes

Abstract

This chapter studies repeated contracting in international strategic alliances on the basis of information asymmetries owing to different cultural, organizational and/or technological backgrounds. The theoretical underpinning shows that these problems are embedded in the theoretical paradigms of contract theory. In general, the alliance partners have several options to take into account the uncertainty about ability and effort of the other players and the impact on the durability of the alliance. The complexity of multi-person decision-making is reflected in incentive schemes for the stages of an alliance life cycle. This dynamic contracting scenario should avoid cheating and enhance cooperation in terms of contributions and expertise in the stages of the life cycle. The outcome is the design of inter-temporal, culturally sensitive contracts.