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Strategic Flexibility in Information Technology Alliances: The Influence of Transaction Cost Economics and Social Exchange Theory

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  • Candace Young-Ybarra

    (Argyros School of Business and Economics, Chapman University, Orange, California 92866)

  • Margarethe Wiersema

    (Graduate School of Management, University of California, Irvine, Irvine, California 92697-3125)

Abstract

Utilizing a model drawn from both transaction cost economics and social exchange theory, we analyze determinants of strategic flexibility in a sample of strategic alliances involved in joint development agreements or joint research pacts. Findings indicate that, in general, determinants suggested by transaction cost economics provided flexibility in modification and inflexibility in exit. From social exchange theory, trust was found to be positively related to both types of flexibility while another component of social exchange theory, dependence, was found to be negatively related to the strategic flexibility of the alliance. Results also found that factors suggested by both transaction cost economic theory and social exchange theory were related to the concept of trust. Economic constraints as suggested by transaction cost economics were positively related to trust between the alliance partners while dependence was negatively related to trust. Additionally, the quality of communication and the existence of shared values were positively related to trust between the exchange partners. Results provide support for the role of determinants from both transaction cost economics and social exchange theory in the flexibility of strategic alliances.

Suggested Citation

  • Candace Young-Ybarra & Margarethe Wiersema, 1999. "Strategic Flexibility in Information Technology Alliances: The Influence of Transaction Cost Economics and Social Exchange Theory," Organization Science, INFORMS, vol. 10(4), pages 439-459, August.
    • Handle: RePEc:inm:ororsc:v:10:y:1999:i:4:p:439-459
    DOI: 10.1287/orsc.10.4.439
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    References listed on IDEAS

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    3. Bruce Kogut, 1991. "Joint Ventures and the Option to Expand and Acquire," Management Science, INFORMS, vol. 37(1), pages 19-33, January.
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    5. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 2, number 2.
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