Hostname: page-component-586b7cd67f-rdxmf Total loading time: 0 Render date: 2024-11-27T12:08:26.233Z Has data issue: false hasContentIssue false
  • English
  • Français

Organizational governance of inter-firm resource combinations: The impact of structural embeddedness and vertical resource relatedness

Published online by Cambridge University Press:  18 March 2016

Sungho Kim  and
Kyuho Jin
Sungho Kim
Affiliation:
School of Business, Southern Illinois University, 2128 Founders Hall, Campus Box 1100, Edwardsville, IL 62025, USA
Kyuho Jin*
Affiliation:
College of Business Administration, Seoul National University, Daehak-dong, Gwanak-gu, Seoul 151-916, South Korea
*
Corresponding author: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

Firms not only combine resources within firm boundaries but tap into, acquire, or consolidate resources outside firm boundaries. Alliances and mergers and acquisitions (M&A) are distinct vehicles for governing inter-firm resource combinations. Prior studies on the governance choice between them have relied on firm- or dyad-level attributes to explicate the choice firms make about the governance. However, any firm or dyad is a micro-structure embedded in networks that shape the flow of information and resources to the focal firm or dyad. In addition, although alliances and mergers and acquisitions involve either horizontal or vertical resource combinations, the vertical dimension of resource relatedness has been largely neglected in prior research. This study examines the impact of structural embeddedness and vertical resource relatedness on governance choice. We find that structural embeddedness is an important driver of governance choice and that a significant portion of resource combinations occurs along the vertical dimension of relatedness.

Keywords

organizational governanceresource combinationstructural embeddednessnetwork clustervertical relatedness
Type
Research Article
Information
Journal of Management & Organization , Volume 23 , Issue 4 , July 2017 , pp. 524 - 544
Copyright
Copyright © Cambridge University Press and Australian and New Zealand Academy of Management 2016 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Anand, J., & Singh, H. (1997). Asset redeployment, acquisitions and corporate strategy in declining industries. Strategic Management Journal, 18(S1), 99–118.3.0.CO;2-B>CrossRefGoogle Scholar
Argyres, N. S., & Zenger, T. R. (2012). Capabilities, transaction costs, and firm boundaries. Organization Science, 23(6), 1643–1657.CrossRefGoogle Scholar
Baker, W. E. (1990). Market networks and corporate behavior. American Journal of Sociology, 96(3), 589–625.CrossRefGoogle Scholar
Barney, J. B. (1999). How a firm’s capabilities affect boundary decisions. Sloan Management Review, 40(3), 137–145.Google Scholar
Barney, J. B., & Ouchi, W. G. (1986). Organizational economics. San Francisco: Jossey-Bass.Google Scholar
Baum, J. A., Calabrese, T., & Silverman, B. S. (2000). Don’t go it alone: alliance network composition and startups’ performance in Canadian biotechnology. Strategic Management Journal, 21(3), 267–294.3.0.CO;2-8>CrossRefGoogle Scholar
Baum, J. A., Shipilov, A. V., & Rowley, T. J. (2003). Where do small worlds come from? Industrial and Corporate Change, 12(4), 697.CrossRefGoogle Scholar
Beckman, C. M., & Haunschild, P. R. (2002). Network learning: The effects of partners’ heterogeneity of experience on corporate acquisitions. Administrative Science Quarterly, 47(1), 92–124.CrossRefGoogle Scholar
Borgatti, S. P., Everett, M. G., & Freeman, L. C. (2002). Ucinet 6 for windows: Software for social network analysis. Harvard, MA: Analytic Technologies.Google Scholar
Burt, R. S. (1992). Structural holes: The social structure of competition. Cambridge, MA: Harvard University Press.CrossRefGoogle Scholar
Burt, R. S. (2005). Brokerage & closure. An introduction to social capital . New York, NY: Oxford University Press.CrossRefGoogle Scholar
Buvik, A., & Reve, T. (2001). Asymmetrical deployment of specific assets and contractual safeguarding in industrial purchasing relationships. Journal of Business Research, 51(2), 101–113.CrossRefGoogle Scholar
Capron, L., & Hulland, J. (1999). Redeployment of brands, sales forces, and general marketing management expertise following horizontal acquisitions: A resource-based view. The Journal of Marketing, 63(2), 41–54.CrossRefGoogle Scholar
Capron, L., Mitchell, W., & Swaminathan, A. (2001). Asset divestiture following horizontal acquisitions: A dynamic view. Strategic Management Journal, 22(9), 817–844.CrossRefGoogle Scholar
Carayannopoulos, S., & Auster, E. R. (2010). External knowledge sourcing in biotechnology through acquisition versus alliance: A KBV approach. Research Policy, 39(2), 254–267.CrossRefGoogle Scholar
Coleman, J. S. (1988). Social capital in the creation of human capital. American Journal of Sociology, 94(1), 95–120.CrossRefGoogle Scholar
Demsetz, H., & Villalonga, B. (2001). Ownership structure and corporate performance. Journal of Corporate Finance, 7(3), 209–233.CrossRefGoogle Scholar
Dussauge, P., Garrette, B., & Mitchell, W. (2000). Learning from competing partners: Outcomes and durations of scale and link alliances in Europe, North America and Asia. Strategic Management Journal, 21(2), 99–126.3.0.CO;2-G>CrossRefGoogle Scholar
Dutz, M. A. (1989). Horizontal mergers in declining industries: Theory and evidence. International Journal of Industrial Organization, 7(1), 11–33.CrossRefGoogle Scholar
Dyer, J. H., Kale, P., & Singh, H. (2003). When to ally & when to acquire. Harvard Business Review, 82(7–8), 108–115.Google Scholar
Dyer, J. H., & Singh, H. (1998). The relational view: Cooperative strategy and sources of interorganizational competitive advantage. Academy of Management Review, 23(4), 660–679.CrossRefGoogle Scholar
Erel, I., Liao, R. C., & Weisbach, M. S. (2012). Determinants of cross-border mergers and acquisitions. The Journal of Finance, 67(3), 1045–1082.CrossRefGoogle Scholar
Fan, J. P., & Lang, L. H. (2000). The measurement of relatedness: An application to corporate diversification. The Journal of Business, 73(4), 629–660.CrossRefGoogle Scholar
Faust, K. (1988). Comparison of methods for positional analysis-structural and general equivalences. Social Networks, 10, 313–341.CrossRefGoogle Scholar
Fleming, L., & Marx, M. (2006). Managing innovation in small worlds. MIT Sloan Management Review, 48(1), 8.Google Scholar
Folta, T. B. (1998). Governance and uncertainty: The tradeoff between administrative control and commitment. Strategic Management Journal, 19(11), 1007–1028.3.0.CO;2-8>CrossRefGoogle Scholar
Folta, T. B., & Miller, K. D. (2002). Real options in equity partnerships. Strategic Management Journal, 23(1), 77–88.CrossRefGoogle Scholar
Gadde, L.-E., Hjelmgren, D., & Skarp, F. (2012). Interactive resource development in new business relationships. Journal of Business Research, 65(2), 210–217.CrossRefGoogle Scholar
Gnyawali, D. R., & Madhavan, R. (2001). Cooperative networks and competitive dynamics: A structural embeddedness perspective. Academy of Management Review, 26(3), 431–445.CrossRefGoogle Scholar
Gould, R. V. (2002). The origins of status hierarchies: A formal theory and empirical test. American Journal of Sociology, 107, 1143–1178.CrossRefGoogle Scholar
Granovetter, M. (1973). The strength of weak ties. American Journal of Sociology, 78(6), 1360–1380.CrossRefGoogle Scholar
Granovetter, M. (1985). Economic action and social structure: The problem of embeddedness. American Journal of Sociology, 91(3), 481–510.CrossRefGoogle Scholar
Granovetter, M. (1992). Problems of explanation in economic sociology. In N. Nohria & R. G. Eccles (Eds.), Networks and organization (pp. 25–56). Boston, MA: Harvard Business School Press.Google Scholar
Greene, W. H. (2012). Econometric analysis (7th ed.), Boston, MA: Prentice Hall.Google Scholar
Gulati, R. (1995). Does familiarity breed rust? The implications of repeated ties for contractual choice in alliances. Academy of Management Journal, 38(1), 85–112.CrossRefGoogle Scholar
Gulati, R. (1995a). Does familiarity breed trust? The implications of repeated ties for contractual choice in alliances. Academy of Management Journal, 38, 85–112.CrossRefGoogle Scholar
Gulati, R. (1995b). Social structure and alliance formation patterns: A longitudinal analysis. Administrative Science Quarterly, 40, 619–652.CrossRefGoogle Scholar
Gulati, R. (1998). Alliances and networks. Strategic Management Journal, 19(4), 293–317.3.0.CO;2-M>CrossRefGoogle Scholar
Gulati, R. (1999). Network location and learning: The influence of network resources and firm capabilities on alliance formation. Strategic Management Journal, 20(5), 397–420.3.0.CO;2-K>CrossRefGoogle Scholar
Gulati, R., & Gargiulo, M. (1999). Where do interorganizational networks come from? American Journal of Sociology, 104(5), 1439–1493.CrossRefGoogle Scholar
Gulati, R., & Singh, H. (1998). The architecture of cooperation: Managing coordination costs and appropriation concerns in strategic alliances. Administrative Science Quarterly, 43(4), 781–814.CrossRefGoogle Scholar
Haleblian, J. (John), McNamara, G., Kolev, K., & Dykes, B. J. (2012). Exploring firm characteristics that differentiate leaders from followers in industry merger waves: A competitive dynamics perspective. Strategic Management Journal, 33(9), 1037–1052.CrossRefGoogle Scholar
Hamel, G. (1991). Competition for competence and inter-partner learning within international strategic alliances. Strategic Management Journal, 12, 83–103.CrossRefGoogle Scholar
Hannan, M. T., & Freeman, J. (1977). The population ecology of organizations. American Journal of Sociology, 82(5), 929–964.CrossRefGoogle Scholar
Haunschild, P. R. (1993). Interorganizational imitation: The impact of interlocks on corporate acquisition activity. Administrative Science Quarterly, 38(4), 564–592.CrossRefGoogle Scholar
Hayward, M. L., & Hambrick, D. C. (1997). Explaining the premiums paid for large acquisitions: Evidence of CEO hubris. Administrative Science Quarterly, 103–127.CrossRefGoogle Scholar
Heckman, J. J. (1979). Sample selection bias as a specification error. Econometrica, 47(1), 153–161.CrossRefGoogle Scholar
Hennart, J. F., & Reddy, S. (1997). The choice between mergers/acquisitions and joint ventures: The case of Japanese investors in the United States. Strategic Management Journal, 18(1), 1–12.3.0.CO;2-R>CrossRefGoogle Scholar
Hennart, J.-F., & Reddy, S. B. (2000). Digestibility and asymmetric information in the choice between acquisitions and joint ventures: Where’s the beef. Strategic Management Journal, 21, 191–193.3.0.CO;2-E>CrossRefGoogle Scholar
Hoetker, G. (2007). The use of logit and probit models in strategic management research: Critical issues. Strategic Management Journal, 28, 331–343.CrossRefGoogle Scholar
Hoskisson, R. E., Johnson, R. A., & Moesel, D. D. (1994). Corporate divestiture intensity in restructuring firms: Effects of governance, strategy, and performance. The Academy of Management Journal, 37(5), 1207–1251.Google Scholar
Jensen, M. C., & Ruback, R. S. (1983). The market for corporate control: The scientific evidence. Journal of Financial Economics, 11, 5–50.CrossRefGoogle Scholar
Jones, C., Hesterly, W. S., & Borgatti, S. P. (1997). A general theory of network governance: Exchange conditions and social mechanisms. Academy of Management Review, 22(4), 911–945.CrossRefGoogle Scholar
Kapoor, R. (2013). Persistence of integration in the face of specialization: How firms navigated the winds of disintegration and shaped the architecture of the semiconductor industry. Organization Science, 24, 1195–1213.CrossRefGoogle Scholar
Klein, B., Crawford, R. G., & Alchian, A. A. (1978). Vertical integration, appropriable rents, and the competitive contracting process. Journal of Law and Economics, 21(2), 297–326.CrossRefGoogle Scholar
Kogut, B. (1991). Joint ventures and the option to expand and acquire. Management Science, 37(1), 19–33.CrossRefGoogle Scholar
Leiblein, M. J. (2003). The choice of organizational governance form and performance: Predictions from transaction cost, resource-based, and real options theories. Journal of Management, 29(6), 937–961.CrossRefGoogle Scholar
Leiblein, M. J., & Miller, D. J. (2003). An empirical examination of transaction-and firm-level influences on the vertical boundaries of the firm. Strategic Management Journal, 24(9), 839–859.CrossRefGoogle Scholar
Leiblein, M. J., Reuer, J. J., & Dalsace, F. (2002). Do make or buy decisions matter? The influence of organizational governance on technological performance. Strategic Management Journal, 23(9), 817–833.CrossRefGoogle Scholar
Lin, Z. (John), Peng, M. W., Yang, H., & Sun, S. L. (2009). How do networks and learning drive M&As? An institutional comparison between China and the United States. Strategic Management Journal, 30(10), 1113–1132.CrossRefGoogle Scholar
Lockett, A., Wiklund, J., Davidsson, P., & Girma, S. (2011). Organic and acquisitive growth: Re-examining, testing and extending Penrose’s Growth Theory. Journal of Management Studies, 48(1), 48–74.CrossRefGoogle Scholar
Mahoney, J. T. (1992). The choice of organizational form: Vertical financial ownership versus other methods of vertical integration. Strategic Management Journal, 13(8), 559–584.CrossRefGoogle Scholar
Martin-Rios, C. (2014). Why do firms seek to share human resource management knowledge? The importance of inter-firm networks. Journal of Business Research, 67(2), 190–199.CrossRefGoogle Scholar
Masten, S. E., Meehan, J. W., & Snyder, E. A. (1991). The costs of organization. Journal of Law, Economics, & Organization, 7(1), 1–25.Google Scholar
McCann, B. T., Reuer, J. J., & Lahiri, N. (2015). Agglomeration and the choice between acquisitions and alliances: An information economics perspective. Strategic Management Journal, doi:10.1002/smj.2387 (in press).Google Scholar
Mesquita, L. F., Anand, J., & Brush, T. H. (2008). Comparing the resource-based and relational views: Knowledge transfer and spillover in vertical alliances. Strategic Management Journal, 29(9), 913–941.CrossRefGoogle Scholar
Miller, D. J., & Leiblein, M. J. (2003). An empirical examination of transaction-and firm-level influences on the vertical boundaries of the firm. Strategic Management Journal, 24(9), 839–859.Google Scholar
Mowery, D. C., Oxley, J. E., & Silverman, B. S. (1996). Strategic alliances and interfirm knowledge transfer. Strategic Management Journal, 17(1), 77–91.CrossRefGoogle Scholar
Nickerson, J. A., & Silverman, B. S. (2003). Why firms want to organize efficiently and what keeps them from doing so: Inappropriate governance, performance, and adaptation in a deregulated industry. Administrative Science Quarterly, 48(3), 433–465.CrossRefGoogle Scholar
Nickerson, J., Yen, C. J., & Mahoney, J. T. (2012). Exploring the problem-finding and problem-solving approach for designing organizations. The Academy of Management Perspectives, 26(1), 52–72.CrossRefGoogle Scholar
Phelps, C. C. (2010). A longitudinal study of the influence of alliance network structure and composition on firm exploratory innovation. The Academy of Management Journal, 53(4), 890–913.Google Scholar
Podolny, J. M. (1993). A status-based model of market competition. American Journal of Sociology, 98(4), 829–872.CrossRefGoogle Scholar
Ravenscraft, D. J., & Long, W. F. (2000). Paths to creating value in pharmaceutical mergers. In S. N. Kaplan (Ed.), Mergers and productivity (pp. 287–326). Chicago: University of Chicago Press.Google Scholar
Reuer, J. J., & Ragozzino, R. (2011). The choice between joint ventures and acquisitions: Insights from signaling theory. Organization Science, 23(4), 1175–1190.CrossRefGoogle Scholar
Rice, J., Liao, T.-S., Martin, N., & Galvin, P. (2012). The role of strategic alliances in complementing firm capabilities. Journal of Management & Organization, 18(06), 858–869.CrossRefGoogle Scholar
Robins, J., & Wiersema, M. F. (1995). A resource-based approach to the multibusiness firm: Empirical analysis of portfolio interrelationships and corporate financial performance. Strategic Management Journal, 16(4), 277–299.CrossRefGoogle Scholar
Rosenkopf, L., & Schilling, M. A. (2007). Comparing alliance network structure across industries: Observations and explanations. Strategic Entrepreneurship Journal, 1(3–4), 191–209.CrossRefGoogle Scholar
Rothaermel, F. T., Hitt, M. A., & Jobe, L. A. (2006). Balancing vertical integration and strategic outsourcing: Effects on product portfolio, product success, and firm performance. Strategic Management Journal, 27, 1033–1056.CrossRefGoogle Scholar
Rowley, T., Behrens, D., & Krackhardt, D. (2000). Redundant governance structures: An analysis of structural and relational embeddedness in the steel and semiconductor industries. Strategic Management Journal, 21(3), 369–386.3.0.CO;2-M>CrossRefGoogle Scholar
Rowley, T. J., Baum, J. A. C., Shipilov, A. V., Greve, H. R., & Rao, H. (2004). Competing in groups. Managerial and Decision Economics, 25(6), 453–471.CrossRefGoogle Scholar
Rowley, T. J., Greve, H. R., Rao, H., Baum, J. A. C., & Shipilov, A. V. (2005). Time to break up: Social and instrumental antecedents of firm exits from exchange cliques. The Academy of Management Journal, 48(3), 499–520.Google Scholar
Schilling, M. A. (2009). Understanding the alliance data. Strategic Management Journal, 30(3), 233–260.CrossRefGoogle Scholar
Schilling, M. A., & Phelps, C. C. (2007). Interfirm collaboration networks: The impact of large-scale network structure on firm innovation. Management Science, 53(7), 1113–1126.CrossRefGoogle Scholar
Seth, A. (1990). Value creation in acquisitions: A re-examination of performance issues. Strategic Management Journal, 11(2), 99–115.CrossRefGoogle Scholar
Seth, A., Song, K. P., & Pettit, R. (2000). Synergy, managerialism or hubris? An empirical examination of motives for foreign acquisitions of US firms. Journal of International Business Studies, 31(3), 387–405.CrossRefGoogle Scholar
Srivastava, M. K., & Gnyawali, D. R. (2011). When do relational resources matter? Leveraging portfolio technological resources for breakthrough innovation. Academy of Management Journal, 54(4), 797–810.CrossRefGoogle Scholar
StataCorp (2009). Stata: Release 11. Statistical software. College Station, TX: StataCorp LP.Google Scholar
Stuart, T. E. (2000). Interorganizational alliances and the performance of firms: A study of growth and innovation rates in a high-technology industry. Strategic Management Journal, 21(8), 791–811.3.0.CO;2-K>CrossRefGoogle Scholar
Stuart, T. E., Hoang, H., & Hybels, R. C. (1999). Interorganizational endorsements and the performance of entrepreneurial ventures. Administrative Science Quarterly, 44(2), 315–349.CrossRefGoogle Scholar
Tan, J., & Peng, M. W. (2003). Organizational slack and firm performance during economic transitions: Two studies from an emerging economy. Strategic Management Journal, 24, 1249–1263.CrossRefGoogle Scholar
Tanriverdi, H., & Venkatraman, N. (2005). Knowledge relatedness and the performance of multibusiness firms. Strategic Management Journal, 26(2), 97.CrossRefGoogle Scholar
Teece, D. J. (1986). Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy. Research Policy, 15, 285–305.CrossRefGoogle Scholar
Uzzi, B. (1996). The sources and consequences of embeddedness for the economic performance of organizations: The network effect. American Sociological Review, 61(4), 674–698.CrossRefGoogle Scholar
Uzzi, B. (1997). Social structure and competition in interfirm networks: The paradox of embeddedness. Administrative Science Quarterly, 42(1), 35–67.CrossRefGoogle Scholar
van Dongen, S. (2000). Graph clustering by flow simulation. Doctoral thesis, University of Utrecht.Google Scholar
van Dongen, S. (2008). Graph clustering via a discrete uncoupling process. SIAM Journal on Matrix Analysis and Applications, 30, 211–239.CrossRefGoogle Scholar
Villalonga, B., & McGahan, A. M. (2005). The choice among acquisitions, alliances, and divestitures. Strategic Management Journal, 26(13), 1183–1208.CrossRefGoogle Scholar
Walker, G., Kogut, B., & Shan, W. (1997). Social capital, structural holes and the formation of an industry network. Organization Science, 8(2), 109–125.CrossRefGoogle Scholar
Walker, G., & Weber, D. (1984). A transaction cost approach to make-or-buy decisions. Administrative Science Quarterly, 29(3), 373–391.CrossRefGoogle Scholar
Wang, L., & Zajac, E. J. (2007). Alliance or acquisition? A dyadic perspective on interfirm resource combinations. Strategic Management Journal, 28(13), 1291–1317.CrossRefGoogle Scholar
Wasserman, S., & Faust, K. (1994). Social network analysis: methods and applications. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5(2), 171–180.CrossRefGoogle Scholar
White, H. C., Boorman, S. A., & Breiger, R. L. (1976). Social-structure from multiple networks: Blockmodels of roles and positions. American Journal of Sociology, 81, 730–780.CrossRefGoogle Scholar
Wiklund, J., & Shepherd, D. A. (2009). The effectiveness of alliances and acquisitions: The role of resource combination activities. Entrepreneurship Theory and Practice, 33(1), 193–212.CrossRefGoogle Scholar
Williamson, O. E. (1979). Transaction-cost economics: The governance of contractual relations. The Journal of Law and Economics, 22(2), 233.CrossRefGoogle Scholar
Williamson, O. E. (1991). Comparative economic organization: The analysis of discrete structural alternatives. Administrative Science Quarterly, 36(2), 269–296.CrossRefGoogle Scholar
Williams, R. (2010). Fitting heterogeneous choice models with oglm. The Stata Journal, 10, 540–567.CrossRefGoogle Scholar
Wooldridge, J. M. (2010). Econometric analysis of cross section and panel data (2nd ed.), Cambridge, MA: MIT Press.Google Scholar
Yang, H., Lin, Z. J., & Peng, M. W. (2011). Behind acquisitions of alliance partners: Exploratory learning and network embeddedness. Academy of Management Journal, 54(5), 1069–1080.CrossRefGoogle Scholar
Yang, H., Lin, Z., & Lin, Y. (2010). A multilevel framework of firm boundaries: Firm characteristics, dyadic differences, and network attributes. Strategic Management Journal, 31(3), 237–261.CrossRefGoogle Scholar
Zaheer, A., & Bell, G. G. (2005). Benefiting from network position: Firm capabilities, structural holes, and performance. Strategic Management Journal, 26(9), 809–825.CrossRefGoogle Scholar
Zaheer, A., & Venkatraman, N. (1995). Relational governance as an interorganizational strategy: An empirical test of the role of trust in economic exchange. Strategic Management Journal, 16(5), 373–392.CrossRefGoogle Scholar
Zaheer, S., Albert, S., & Zaheer, A. (1999). Time scales and organizational theory. Academy of Management Review, 24(4), 725–741.CrossRefGoogle Scholar
Zajac, E. J., & Olsen, C. P. (1993). From transaction cost to transactional value analysis: Implications for the study of interorganizational strategies. Journal of Management Studies, 30(1), 131–145.CrossRefGoogle Scholar
Supplementary material: File

Kim and Jin supplementary material

Kim and Jin supplementary material 1

Download Kim and Jin supplementary material(File)
File 92.6 KB