THE LINKS AMONG CHARACTERISTICS, CONTROLS AND PERFORMANCE OF INTER-FIRM INNOVATION PROJECTS

Abstract

This study aims to explore the effects of: (1) the project characteristics of asset specificity, uncertainty and complexity on the performance of, and, the use of formal and social controls in inter-firm innovation projects, and, (2) the use of formal and social controls on the performance of inter-firm innovation projects. In addition, the mediating role of the use of formal and social controls in the relationships between the characteristics and performance of inter-firm innovation projects is also examined. Survey data from 75 organisations in innovation–active industries in Australia were analysed using the structural equation modelling with the Partial Least Square technique. The results show that uncertainty and complexity affected performance of inter-firm innovation projects, but in opposite directions. Higher levels of uncertainty were associated with less use of social controls but higher levels of complexity were partnered with a greater use of both formal and social controls. The use of formal and social controls individually impacted on inter-firm innovation project performance. Finally, the use of formal and social controls played a partial mediating role in the relationships of uncertainty and complexity with inter-firm innovation performance. Responding to gaps in research, this study clarifies that asset specificity may be irrelevant whilst uncertainty and complexity may be highly relevant in the performance of, and, the use of controls in inter-firm innovation projects. The study offers valuable insights into how a complementary use of controls contributes to the performance of inter-firm innovation projects.