Abstract
Abstract The present paper aims to extend the discussion in the governance literature about whether structural and relational governance mechanisms complement or substitute each other in innovation alliances. Where structural governance mechanisms refer to the division of tasks within the alliance and to upfront contractual and non-contractual input, output and risk-related agreements, relational governance mechanisms refer to trust, using informal norms and rules for coordination purposes. In innovation literature much attention has been paid to relational governance, which is expected to offer more of the flexibility needed for innovation than the regulations in structural governance that are perceived as rigid. However, the authors argue that the essential role of structural governance as a solid basis for creating trust, especially in alliances in which the partners do not know each other, is clearly underexposed in management literature. To fill this gap, a model conceptualizing the innovation alliance from inception to performance was tested using Partial Least Squares, employing a cross-sectional dataset of 94 innovation alliances in the Netherlands, Belgium, Germany and Austria. The results do indeed show the essential role of structural agreements in creating a platform for trust on which relational governance can strive, while a clear task division can help to reduce the complexity of the inter-organizational innovation process, by reducing the interdependency of the partners. Both structural mechanisms ease communication among the alliance partners, leading to a higher level of knowledge exchange, and ultimately leading to better alliance performance.
Highlights
In order to remain competitive in a world of global competition a company must adapt to changing situations at an ever increasing speed
The present paper aims to extend the discussion in the governance literature about whether structural and relational governance mechanisms complement or substitute each other in innovation alliances
In innovation literature much attention has been paid to relational governance, which is expected to offer more of the flexibility needed for innovation than the regulations in structural governance that are perceived as rigid
Summary
In order to remain competitive in a world of global competition a company must adapt to changing situations at an ever increasing speed. At a single point in time, the innovation potential of a single company, based on its resources and core competencies, might be enough to face the competition. If the company’s resources and capabilities need to be transformed to face the fast-changing business competition this process might take too long, and the new capabilities. Could be outdated by the time the change is completed. In such fast-changing circumstances a company might win the race by entering an innovation alliance, combining its own resources and capabilities with those of partner organizations. ‘the capability of building and maintaining inter-organizational network relationships, such as joint ventures, license agreements, supplier customer partnerships and strategic alliances is increasingly viewed as key to sustained competitive advantage’
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