W2: Reuer, J.J., & Devarakonda, S. V. (2016). Mechanisms of Hybrid Governance: Administrative Committees in Non-Equity Alliances

when might partners benefit from a steering committee?

• 3 factors

When they:

• Have significant technological uncertainty.

• Have interdependent activities that elevate anticipated coordination costs.

• Have similar technological resources.

What are downsides of steering committees?

• contracting costs that might fail to be recouped during alliance execution

• opportunity costs associated with management’s time

• governance costs for partners

• litigation risk

Administrative/steering committees

Structural interfaces that reduce information barriers to adaptation by allowing information sharing and joint decision making.

• Those committees within contracts suggest that partners foresee the need for adjustments but are unsure ex ante about the exact nature of the contingencies or required adjustments.

• It is an administrative apparatus that enables parties to orchestrate co-ordinated adaptation to unanticipated disturbances.

What are some functions of steering committees?

• revolving collaboration issues during implementation of the contract

• handling gaps in the contract

• coordination, oversight, and information sharing

• reducing information barriers

• responding to contingencies, preventing minor conflicts

• coordinating resource allocation decisions

• altering agreed-upon plans to fit the changing circumstances

• guide partners’ interactions to reduce unintended knowledge leakage

• managing interdependence among partners

Are steering committees and board of directors part of equity or non-equity agreements?

• Steering committee: non-equity agreements

• Board of directors: equity agreements

differences between committees in non-equity alliances and boards in equity alliances:

Boards:

• empowered to decide on all matters residual to the contract

• legal mandates

Steering committees:

• may only decide on matters that are assigned to it by the contract

• efficiency considerations

what are mechanisms through which administrative committees can promote efficiency?

• facilitating sequential decision making to adapt collaborations

• improve information processing

• improve the coordination of alliance activities

• guide partners’ interactions to manage access to knowledge

• address knowledge leakage concerns

in the absence of the above needs, it is expected that partner firms will be less likely to establish a steering committee to support the governance of a collaborative agreement.

H1: the likelihood that partners will establish an administrative committee within a non-equity alliance is positively related to technological uncertainty.

As the degree of uncertainty surrounding a transaction increases, contracting parties encounter substantial challenges and costs in foreseeing potentially disruptive conditions and in designing appropriate responses to such contingencies in the agreement, thus leaving gaps in the contract and creating the need to adapt through sequential decision making.

• Steering committees with delegated decision-making authority represent a formal means of facilitating coordinated adaptation under conditions of technological uncertainty.

• Because participants of the alliance come from both partner organizations, communication from the steering committee can serve as the last word for the purpose of the alliance’s response to a particular contingency. Thus, the steering committee serves as a dedicated interface for the partners to develop and coordinate responses to unforeseen conditions, and possesses authority to guide execution of new action plans when responding to emergent conditions.

• Supported.

H2: the likelihood that partners will establish an administrative committee within a non-equity alliance is positively related to the degree of interdependence between partners.

Low interdpeendence: activities of each unit are discrete and are separated.

High interdependence: inputs and outputs of the 2 units are mutually related and reciprocal.

Information processing and decision-making burdens increase as an alliance’s actvities become more interdpeendent. Rules and routines can be used when interactions are stable and predictable.

• However, as partners engage in R&D, they will need to rely on interactive means of coordination and mutual adjustment to facilitate communication and joint decision making.

• A steering committee can address coordination needs by facilitating information exchange, setting and changing subgoals, etc.

• Supported.

H3: the likelihood that partners will establish an administrative committee within a non-equity alliance is positively related to partners’ technology overlap.

Partners may accidentally expose tacit knowledge and routines through the movement of personnel, and such problems become more severe when firms have overlapping domains of technological expertise.

• Steering committees can help partners manage access to know-how and adapt to knowledge leakage.

• Given that the concerns surrounding knowledge access and leakage tend to magnify when firms have overlapping domains of technological expertise, it is expected that 2 partners having similar resources will be more likely to establish an administrative committee in a non-equity alliance

• Supported.

when are high-technology alliances more likely to establish steering committees?

When these collaborative agreements are subject to:

• greater technological uncertainty

• high anticipated coordination costs from interdependent activities

• challenges due to similarities in partners’ knowledge sources

How can steering committees enhance adaptive limits of contracts?

By providing a forum for partners to convene during the implementation of an agreement, steering committees can expand the adaptive limits of contractual hybrids by enabling the process of achieving mutual consent when potentially destabilizing contingencies arise.

• They resembles a board-like structure, but with clearly delineated authority over activities specified in the contract.

• It is an administrative apparatus that enables parties to orchestrate co-ordinated adaptation to unanticipated disturbances.

Which of the following are functions of a steering committee in non-equity alliances? (There can be more than one correct answer).

• Design the governing contract for the alliance.

• Facilitate information exchanges and processing among partners.

• Decide on all matters that are residual to the contract.

• Coordinate activities and resources to manage the interdependence among partners.

• Structurally guide partners’ interactions to reduce unintended knowledge leakage.

• Facilitate information exchanges and processing among partners.

• Coordinate activities and resources to manage the interdependence among partners.

• Structurally guide partners’ interactions to reduce unintended knowledge leakage.

Delegating more responsibilities to the steering committee increases coordinated adaptation in a contractual alliance. Is that statement true?

Yes