Organising cooperative institutional forms in knowledge transfer across borders – a transaction cost approach to comparative firm performance

Organising cooperative institutional forms such as alliances, mergers, joint ventures and acquisitions on the basis of their comparative performance is critical for firms dealing in make or buy decisions. The decision may appear more significant if managers decide by comparing performance aspects of production activities of alternative cooperative forms. This study presents a less rigid view of the framework of transaction cost approach to develop its implications for organising cooperative governance forms. This framework adapts 'capability' as one of the transactional dimensions where transaction costs could be minimised within the exchange conditions of complementarity between the partners. This transactional dimension is conceptualised to minimise the risks of moral hazards, as the framework further translates the transactional dimension into complementary capabilities and complementary investments. Thus, the relationship between capability, complementary capability and complementary investments is conceptualised as a key performance measure of the cooperative relationship development process.