Governance Options for Strategic Technology Alliances in Value Webs

Transcription

1 Governance Options for Strategic Technology Alliances in Value Webs Adamantia G. Pateli PhD Candidate Athens University of Economics and Business Athens, Greece George M. Giaglis Associate Professor Athens University of Economics and Business Athens, Greece Abstract Strategic alliances are the primary collaboration form for organizations participating in value webs, the most widely used form of structuring business activities in the digital economy. Such alliances can assume many alternative governance modes, ranging from hierarchy-like alliances (joint ventures) to market-like alliances (contractual agreements). This paper proposes a conceptual model of factors affecting managers preferences for an alliance governance mode. The model integrates a set of influencing factors that concern the organization, the environment in which it operates, as well as its compatibility with the alliance partner(s). The model also incorporates a new determinant, called Expected Alliance Value, which denotes the value that a firm expects to receive from its alliance with a value web partner. 1. Introduction The need for strategic partnerships between the participants of a value web is primarily imposed by the complexity of product/service offerings and the risks typically associated with digital markets. Under such strains, single actors cannot solely master the technological know-how needed to create sophisticated offerings, and thus resort to partnerships to increase the final product s value potential. The key to capturing value within such a relational form is ownership of an asset that is needed to make the value creation possible and which is not readily available elsewhere [7]. Although the need for partnerships seems to be established, research has yet to address how firms expect to capture value by collaborating and competing in strategic alliances. This is the aim of this paper, which is structured as follows. We start with the definition of the primary concepts dealt with in our research. We then propose a conceptual model of the factors affecting the governance mode of strategic alliances, which is anchored on strategic management research, as well as theories and models on decision making. The paper concludes with a discussion on future extensions and plans for empirical validation of the proposed model. 2. Basic Research Concepts 2.1 Strategic Technology Alliances A strategic alliance is defined as a long-term cooperative arrangement between two or more independent firms that engage in business activities for mutual gain. Here "long-term" does not refer to any specific period of time, but rather, to the intention of the partners that the arrangement is not going to be a transient one [50]. A strategic alliance involves mutual exchange, sharing, or co-development, of organizational assets, such as capital, technology, and human resources [14] with the objective of enhancing the competitive position of each partner [47]. Strategic alliances can be of the following types: technology and know-how alliances, marketing and sales. alliances, and production and manufacturing alliances [40]. This research focuses on strategic technology alliances, defined as inter-firm cooperation agreements for which a combined innovative activity or an exchange of technology is at least part of their agreement [15], between partners of a value web. 2.2 Alliance Governance Mode The term governance has been broadly defined as a mode of organizing transactions [57]. Stated differently, alliance governance defines how an alliance is managed, how it is organized and regulated by agreements and processes, and how the partners control and influence its evolution and performance over time [10]. In this research, the term alliance governance is used to denote the degree of interdependence that partners wish to maintain and the level of command-and-control that they agree to mutually exercise. It includes the coordination, control, and safeguarding measures that will be employed for regulating the inter-firm relationships. The most popular theory used to explain alliance governance has probably been Transaction Cost /06/$20.00 (C) 2006 IEEE 1

2 Economics (TCE). While early TCE literature was restricted to the choice between markets and hierarchies [54], later work [55] has extended the framework of analysis to include choices between other, intermediate, forms of governance as well. Such include the choice between equity and non-equity alliances. Equity alliances are conceived as quasi-hierarchies, that is they rely more on hierarchical governance mechanisms, while non-equity alliances are conceived as quasi-markets [34]. Gulati and Singh have proposed a typology of alliance structures, differentiating them by the degree of hierarchical control [14]. At the one end are joint ventures, which involve partners creating a new entity in which they share equity, thus effectively replicating hierarchical control mechanisms. At the other end are contractual agreements, which are alliances with no sharing of equity and only a few hierarchical controls built into them. In between, the authors define minority alliances in which firms agree to cooperate by sharing equity in each other. The same typology has been proposed by Killing [25]. 3. A Decision Model on Alliance Governance Preference Recent studies on strategic alliances have identified factors affecting the governance mode of alliances [11, 14 36, 3, 48, 49, 42]. Most of them focus on the individual impact of numerous factors, derived from a wide set of theories from the finance, industrial organization, and strategic management literature, which are used to explain the formation and governance of strategic alliances. Amongst them, the most widely discussed theories are Transaction Cost Economics, Resource-based and Knowledge-based Views, Social Exchange Theory, Game Theory, and Real Options Theory. Each of them provides a different perspective on why alliances occur and what factors influence firms decision on the alliance governance structure. Existing frameworks and models on alliance governance mode include factors, such as partners trust, alliance scope (number of functional activities involved) [36], number of partners, [4, 36], inclusion of R&D contracts and technology exchange agreements [36, 11], partners competitive relationship [36], previous alliances with the same partner(s) [4, 14, 36], level of strategic interdependence [14], and national culture [26]. Compared to similar models [2, 14, 36] addressing the alliance governance decision from either a particular or a set of contradictory perspectives, the model proposed in this paper has been developed in an attempt to integrate, through exploiting the complementarities of, diverse theoretical perspectives, and thus develop a more complete theory of governance in the field of strategic alliances. Moreover, the proposed model introduces a new building block, called Expected Alliance Value, which denotes the value that a firm expects to receive from its alliance with a value web partner. Under the impact of the Game and Real Options theories, the crux argument of this research is that the governance of an alliance is primarily determined by managers expectations for the value raised for their organization through the alliance. Such an approach has also been proposed by Zajac and Olsen [59] as an opportunity for future research towards providing a more efficient framework to explain the variety of interorganizational strategies as a function of their expected value. The proposed value-leading decision model builds on a well-established framework of strategic decision processes [39]. The framework identifies three sets of antecedent factors: environmental factors, organizational factors, and decision-specific factors. In our review towards the development of the decision model, we refer to research examining these factors as Streams I, II and III respectively. Stream I pertains to the relationship between environmental factors and the strategic decision on the governance mode of an alliance. The key issue addressed in this stream is how environmental factors (e.g. environmental complexity, uncertainty, and hostility) influence towards either hierarchy-like or market-like alliance governance modes. Stream II examines a set of organizational factors (e.g. firm size, past strategies and behavior, strategic orientation) as well as their influence on the alliance governance mode decision. Finally, Stream III investigates the relationship between a set of decision-specific factors, tailored to match the special characteristics of the concerned decision, and the strategic decision outcome. Such decision-specific factors, relative to the choice of an alliance s governance mode, involve characteristics of the partners relationship, such as resource complementarity, alliance history, organizational and cultural compatibility, and competitive relationship, which are considered vital for estimating the value derived from an alliance [10]. In the following sections, we review key studies and theories in each stream to identify and analyze the impact of the respective factors on the alliance governance mode decision. 3.1 Stream I - Environmental Factors Given that strategic decisions for alliances are made in the context of a specific market, cultural, and/or geographical environment, the process by which the governance decision is made is naturally influenced by the special characteristics of this environment. There is a broad spectrum of variables that can be included in the model for capturing the impact of the external 2

3 environment, such as environment uncertainty, hostility, complexity, dynamism and predictability [39]. The most important dimensions worthy of examination in the digital economy context are environment uncertainty and competition intensity, as argued below. Digital markets usually exhibit rapid and discontinuous change, since information and networking technologies are evolving in a rapid pace, transforming the technological basis on which firms develop and provide their services. Based on Transaction Cost Economics, one of the two critical parameters on which the alliance governance decision is dependent is the uncertainty to which transactions are subject [55]. Uncertainty is an intrinsic feature of all transactions [42], leading to various types of risks, such as commercial, technology, and innovation risk. Coupled with the phenomenon of information asymmetries that characterizes digital markets [52], the overall uncertainty to which alliances are exposed is not negligible. Apart from technology uncertainty, firms decisions are also affected by uncertainty deriving from the market s attitude towards new products and services [12]. In digital markets, where changes in technology are not only fast but also discontinuous, while market preferences are also volatile, the increased need for flexibility may urge firms towards market-like forms of collaboration [52, 16, 34]. This view is partly supported by Dalziel s empirical research [6], which has shown that high levels of technological and market uncertainty are associated with less hierarchical governance structures. However, there is also a counter argument, derived from the TCE literature, over the need for more control under conditions of increased uncertainty, so that the risk of opportunism is minimized. Firms competitive behavior is also subject to changes in digital markets. The nature of competition is shifting towards a dynamic model that is based on frequent shifts in the key bases of competition, such as price to product/service characteristics or to range of distribution channels or to after-sales support. The dynamic model of competition in digital markets urge firms towards more flexible forms of cooperation that enable them to experiment with new ideas under a low risk regime. Proposition 1: The external environment affects a firm s preference for an alliance governance mode. H1a: The greater the environment s uncertainty, the more quasi-market governance modes will be preferred for the alliance. H1b: The higher the competition intensity, the more quasi-market governance modes will be preferred for the alliance. 3.2 Stream II - Organizational Factors Key organizational features that may affect a strategic decision outcome include firm size, age, competitive position, product diversity, financial resources, and network embeddedness. However, not all of them concern the same alliance-related decision [24]. Some of them have an impact on firms propensity towards forming alliances, while others affect the decision on the governance mode. In the latter category, we identify the following set of factors: firm size, current competitive position, strategic orientation, and alliance history. Firm size, measured usually in number of employees, is an important factor that affects not only the firm s propensity towards alliance formation but also its preference regarding the alliance structure. According to Grabher [13], two main patterns of alliances can be observed: a) between large firms, which usually takes the institutional form of joint ventures, and b) between large and small firms. The main incentive for large firms to enter the alliance is to gain access to new resources, while the basic incentive for small firms is to achieve economies of scale [6]. Small firms usually opt towards less hierarchical governance structures to keep their autonomy, while large firms wish greater interdependence to assure better control over their partners resources. Moreover, small firms are less likely than larger ones to choose hierarchical governance modes that require substantial resource commitments [50]. The strategic or competitive position of a firm can also be defined as the resource position of a firm [8]. Sapienza et al. [43] argue that firms which possess resources providing competitive advantage are more likely to be able to enter into alliances and are more attractive alliance partners. To protect the value of their resources and skills, highly competitive companies are more likely to opt towards hierarchical alliances, which entail higher degree of control against property leakages. Based on the strategic behavior perspective, firms enter into strategic alliances as part of their corporate strategy [46]. Especially large companies rely heavily on alliances to support their growth strategy [20]. Firms decisions on alliances are driven by a strategy of expansion and diversification into related areas [1]. The focus is often on exploitation of complementary assets for expanding in new areas [33], as well as on saving time from product development to market exploitation [9]. Managers select the mode of an alliance to serve the immediate strategic interests of their company [35]. Strategic interests reflect both the corporate and the business (competitive) strategy followed by the firm and express its aspirations for the firm s future strategic position. In the context of competitive positioning, managers select the alliance governance mode that can enhance their current sources of advantage, positional 3

4 advantages, and performance outcomes in the long-term [8]. A firm that has formulated a diversification or market expansion strategy is likely to opt for more hierarchical governance modes to assure the partner s commitment towards the achievement of the company s strategic goals. Theoretical and empirical research has proved that alliance history, regarding the frequency and the mode of alliances that the firm contracts with its partners, is related to the continued use of a specific governance mode [49]. According to Powell et al. [38], firms persist in using a particular governance mode because they develop skills in managing such alliances and reputation as a reliable partner. Such persistence in a certain way of collaboration continues until some internal or external change forces them to reconsider the most beneficial way of collaborating [24]. Additionally, under the prospective for an iterative cooperation between partners, firms estimations for the future alliance gains are affected by their current actions. This is the so-called shadow of the future, which prevents partners from violating an agreement under the risk of future retaliation [37]. Under this strain, the decision on alliance s governance mode is greatly affected by past behavior of firms in previous iterations of the alliance. Proposition 2: The internal environment affects a firm s preference for an alliance governance mode. H2a: The greater the firm s size, the more quasihierarchy governance modes will be preferred for the alliance. H2b: The stronger the firm s current competitive position, the more quasi-hierarchy governance modes will be preferred for the alliance. H2c: Quasi-hierarchy modes of alliances are preferred when firms have long alliance history with the same partner. H2d: The higher importance is attributed to the firm s strategic goal of differentiation and integration, the more quasi-hierarchy governance modes will be preferred for the alliance. 3.3 Stream III - Decision-Specific Factors Even within the same external environment and between organizations of similar internal organizational characteristics, alliance governance preferences may still vary across alliances because of differences in the partners strategic, operational, technology or cultural level. The degree of compatibility among partners has been found to be an important predictor of joint venture success or failure [31, 44]. Partner compatibility is conceptualized in this research to include the following dimensions: competitive relationship, resource complementarity, and cultural and operational compatibility [2]. Hamel et al. suggest that when seeking collaborators for technology-related projects firms should target partners whose strategic goals converge while their competitive goals diverge [17]. The rationale behind this prescription is that if alliance partners are competitors in end-product markets (i.e., if their competitive goals converge ), then each may be so intent on internalizing the other s knowledge and at the same time limiting access to their own proprietary skills that the goal of the alliance will be thwarted. This does not mean that alliances between competitors do not occur or are damned to failure. However, due to the increasing risk of knowledge and resource linkage, strategic alliances between competitors in a value web are less likely to be organized under a hierarchical organizational structure (joint venture or minority investment). If partners of the concerned alliance are competitors, then the alliance generates risks of property rights leakage [5], which may urge firms towards quasi-market forms of alliances. However, this may change when partners develop trust, resulting from previous alliances with the same partners. The exchange of complementary resources, which may include complementary technologies, competence for extending a technology, or content, acts as glue for keeping partners in tight collaboration. Even large and diversified firms might lack some competence in specific technological fields, and thus may need a partner providing the necessary complementary technology to enable them to capitalize on economies of scope through joint efforts [15]. In their empirical research, Chen and Chen conclude that complementarity of resources tilts the choice towards contract-based alliances rather than joint ventures [3]. Cultural and operational compatibility among partners influence the extent to which they manage to realize the primary goal for which the alliance has been contracted, and thus raise the value they expect. On the one hand, a kind of similarity in their organizational processes and working styles may lead to a reduction of coordination and communication costs, thus raising expectation for more economic profits. On the other hand, possible incompatibilities in social norms may even cause the failure of the alliance due to the inability of the two entities to work seamlessly and come into agreement [58]. Thus, partner compatibility is considered as a prerequisite for equity alliances. Proposition 3: The diversity of partners affects a firm s preference for an alliance governance mode. 4

5 H3a: The greater the partner resource complementarity, the more quasi-hierarchy governance modes will be preferred for the alliance. H3b: The greater the partner operational and cultural compatibility, the more quasi-hierarchy governance modes will be preferred for the alliance. H3c: The more intense the competitive relationship of partners, the more quasi-market governance modes will be preferred for the alliance. Table 1 lists the primary determinants of a firm s governance decision, classified under three categories of antecedent factors in the strategic decision process model of Rajagopalan et al. [39]. Table 1. Predictors of alliance governance mode Environment Items 1. Environment (Market and Technological) Uncertainty 2. Competition Intensity Organizational Items 3. Size 4. Strategic Position 5. Corporate Strategy 6. Past Collaborative Behavior Decision-Specific Items 7. Competitive Relationship 8. Resource Complementarity 9. Organizational (Cultural and Operational) Compatibility 3.4 The Expected Alliance Value Several researchers of strategic alliances have followed the Game Theory principles to explain the individual behavior of partners in a strategic alliance, especially when this alliance involves some conflict of interests [37, 40]. A key assumption underlying Game Theory is that the players (partners) are rational, and their primary objective is to maximize utility, that is value gained from a specific strategy (e.g. alliance) implementation. Apart from Game Theory, the theory of Real Options has also underlined the influence of unveiled future opportunities on firms expectations from, and consequently decision on, current strategic investments. Following the same approach [40], we argue that firms will make investment decisions based on expected payoffs that may incur from the choice of a specific governance mode. More specifically, we contend that the governance of an alliance is primarily determined by managers expectations for the value that their firm will capture with regards to its strategic objectives at the outset of the alliance. The calculation of value capture in business relationships has been one of the most challenging research issues in the field of relationship marketing [27, 21, 28, 41, 51, 53]. In the majority of these studies, the unit of analysis constitutes buyer-seller business relationships and value calculation is made from the customer (buyer) perspective [27, 28, 41, 51]. Lately, the increasing rate of alliance failures has motivated some research on alliance value in the strategic management field as well [10, 6, 29]. Such research pursues the ex post evaluation perspective, estimating the total value generated by the alliance or, in simpler terms, the success and failure of alliances [30, 20]. Conversely, our research focuses on an ex ante perspective aiming at capturing the estimations rather than the realizations of gains from the alliance s operation. This research conceptualizes the firm s expectations on alliance value capture under the Expected Alliance Value (EAV) construct. This is defined as a multi-dimensional construct used to measure the expected benefits incurred for an organization from its participation in a strategic alliance. EAV is closely associated with the strategic motives of firms joining a strategic alliance. Therefore, the items comprising this value have been defined based on primary alliance formation motives, as they have been specified by several studies on strategic alliances formation [15, 50, 52, 47]. Given the difficulties of forecasting the cash flows associated with a particular alliance with any precision, the dominant approach to the measurement of alliance value is qualitative rather than quantitative. Realizing the multi-faceted nature of alliance value on the one hand, and wishing to connect it with the corporate strategic goals on the other, we propose the use of the Balanced Scorecard (BSC), developed by Kaplan and Norton [23], as a means to develop a value assessment approach that links a firm s expected benefits to its strategic motives for entering an alliance. The Balanced Scorecard (BSC) is accepted by the business world as a powerful tool for the performance measurement of an organization at the firm level. Its popularity rests on its ability to link various performance measures (criteria) to the stated goals and objectives of a firm under a four-dimensional framework. Each dimension of the framework corresponds to a different set of goals and measures regarding the financial, the customer, the internal business or the learning and growth perspective of a firm. Kaplan and Norton emphasize that the balanced scorecard is only a template and must be customized for the specific elements of an organization [23]. Similar customization is necessary in using the balanced scorecard in an alliance relationship. Nevertheless, we have developed a template BSC for measuring the Expected Alliance Value based on typical objectives and 5

6 expected outcomes of an alliance, as they have been expressed by authors investigating strategic motives of alliance formation [19, 15]. The value items listed in Table 2 focus on financial benefits, such as cost economization or maximization of return on assets, customer benefits, such as delivery of products/ services in lower prices and improved after sales support, operational benefits, such as access to new resources and capabilities and decrease of time-to-market, as well as growth benefits, such as differentiation of products and services. Table 2. The Expected Alliance Value (EAV) construct Expected Alliance Value Items Financial Value 1. Economize on the sum of production and transaction costs 2. Share market risk 3. Share technological risk 4. Increase flexibility to rapid market and technological changes 5. Maximise return on asset (ROA) Operational Value 6. Exploit complementary resources 7. Gain access to partner s valuable resources 8. Internalize partner s capabilities 9. Deploy new skills and knowledge 10. Reduce time-to-market Customer Value 11. Enable production in lower prices 12. Improve quality of products/ services 13. Improve quality of after-sales support 14. Expand service delivery in new channels Growth Value 15. Benefit from partner s strong name 16. Differentiate existing products/ services 17. Extend products/ services range 18. Increase knowledge about the partner and its social network 19. Deter entry from competitors 20. Increase market share We postulate that top management decides on the most efficient governance mode based on its expectations at the time of the alliance inception for the type and degree of value (net benefits) to be captured from each alternative alliance mode (joint venture, minority investment, contractual agreement). Quasi-market alliances ensure flexibility, which is a necessity for firms in dynamic environments, and thus may unveil opportunities for greater value capture in the future, whereas quasi-hierarchy alliances (e.g. joint ventures) may limit partners options to either defer investment, by selling their stake, or expand investment by acquiring their partners stakes. Proposition 4: The managers expectations for the alliance value affect a firm s preference for an alliance governance mode. H4: The greater the overall expected alliance value, the more quasi-market governance modes will be preferred for the alliance. Summarizing the above analysis, we present a figure illustrating the relationship of the three sets of antecedent factors and the newly defined and introduced factor of Expected Alliance Value with the strategic decision on alliance governance mode. Environmental Factors Environment Uncertainty Decision-Specific Factors Resource Complementarity Operational Compatibility Competition Intensity H1a,b H3a,b,c Competitive Relationship Cultural Compatibility Alliance Governance Mode H4 Figure 1. A model of factors affecting alliance governance mode 4. Overall Impact on the Alliance Governance Decision Organizational Factors Competitive Position Strategic Orientation H2a,b,c,d Financial Value Customer Value Firm Size Alliance History Expected Alliance Value Internal Business Value Growth Value Table 3 presents the conditions that favor the option of quasi-hierarchy or quasi-market alliances in managers mind, according to the analysis discussed earlier in this paper. This table can be used either a priori for guiding the decision over the most appropriate governance mode, or a posteriori for evaluating a firm s decision for a specific governance mode under certain conditions. 6

7 Table 3. Conditions favoring hierarchy-like and market-like alliances Conditions - Determinants Quasi- Hierarchy Alliances Quasi- Market Alliances 1. Environment Uncertainty Low High 2. Competition Intensity Low High 3. Firm Size Large Small 4. Firm Strategic Position Strong Weak 5. Firm Alliance History Long Short or Nonexistent High focus on Low focus on 6. Firm Strategic differentiation differentiation Orientation & integration & integration 7. Competitive Relationship Loose Intense 8. Resource Complementarity High Low 9. Operational & Cultural High Low Compatibility 10. Alliance Value Low High Option A: Quasi-Hierarchy Alliances Quasi-hierarchy alliances entail a high degree of interdependence and commitment between the parties involved. It is recommended to develop complex alliances only when conditions are perceived as promising for longterm investments and safe enough to commit resources and transfer skills. The first condition basically refers to the environment uncertainty, which must be estimated as relatively low, so that firms are encouraged to invest substantially in a new alliance venture. The second condition refers to the current inter-organizational relationship, which should not be highly competitive, the level of trust that partners share as result of previous exchanges and alliances, as well as their cultural and operational compatibility, as preconditions for successful alliance performance in the future. Furthermore, since they require a large amount of investment, quasihierarchy alliances can be predominantly pursued by firms that are large in size, an indication of financial welfare, as well as companies that are in a strong competitive position, and thus have a great bulk of resources and skills with which they can contribute in a new alliance venture. Firms that have set goals of vertical or horizontal integration and differentiation are willing to commit more resources to achieve these goals, and thus are more likely to opt towards equity alliances. Finally, quasi-hierarchy alliances are connected to low value expectations, since options for alliance change, and thus generation of new opportunities, are limited to either acquire or defer the joint venture s share. Option B: Quasi-Market Alliances Quasi-market alliances are more popular due to their flexibility in bringing together inter-organizational strengths without threatening each company s autonomy. This governance mode suits best to volatile and unsafe external conditions, such as high market volatility, technological immaturity, and competition intensity. Collaborating without losing their legal identity is a primary concern for small-sized and competitively weak partners, which anticipate benefiting from collaboration with as many large firms as possible, so that they benefit from access to large customer bases and economies of scale, under rather loose alliance governance modes. Moreover, market-like governance modes are often driven by the need to protect organizations against possible opportunistic behavior of partners or even failure of the alliance, as result of intense competition between partners, lack of resource complementarity, and low operational and cultural compatibility. Lastly, quasimarket alliances are considered as flexible, and thus more value-promising. Thus, high expectations of alliance value lead firms to opt for less complex alliances. 5. Conclusions and Further Research This paper has proposed a conceptual model for understanding the decision-making mechanism used by strategic managers to select the more efficient governance mode for a strategic technology alliance. The model has been the result of investigations in a set of established theories, sourced from the strategic management, industrial organization, finance and sociology disciplines. The examination of diverse theoretical approaches met in the alliance literature as well as the review of similar governance models, the results of which could not be analyzed in this paper due to space limits,, has resulted in specification of three primary groups of predictor (independent) variables for a firm s preference on alliance governance mode: organizational environment, external environment, and partners compatibility. A main contribution of this research has been the introduction of an additional building block, called Expected Alliance Value (EAV), which denotes the value that a firm expects to capture from its participation in an alliance. The key elements of this value reflect the most important strategic motives of a company for entering the alliance. These are classified under the four perspectives that the Balanced Scorecard approach proposes for evaluating the performance of an organization, and thus 7

8 includes financial, customer, internal business and learning and growth net benefits. As emphasized earlier, the proposed model aims at integrating a set of theories, each of which provides its own rationale for the impact of a set of factors on the strategic decision of alliance governance mode. It primarily incorporates the arguments of the Game and Real Options theories, according to which a firm s management develops a preference for a governance mode after estimating the benefits that will accrue from the alliance. The value-leading decision model that is defined in this paper is planned to be tested with empirical data on a number of operating strategic alliances. Towards this aim, a survey has already been completed aiming at collecting data on strategic technology alliances in the Greek market. The empirical research has focused on a technologically dynamic environment, namely the wireless business environment. We have investigated 57 alliances formed for providing the Greek organizations and individuals with wireless products/services. Data on these alliances has been collected via exploratory research and semi-structured interviews with key strategic managers, especially those being in charge of the sample firms portfolio of strategic alliances. The dependent variable, that is the firm s preference for governance mode, was measured as a scale variable indicating an increasing degree of interdependence between partners. Thus, the survey s respondents were asked to choose between the following values; 1) contracts (low interdependence), 2) minority investment (medium interdependence), and 3) joint venture (high interdependence). The independent variables included measures of the prime factors identified under the above three streams (environmental, organizational and decision-specific). Other information, used as control variables, such as the alliance purpose, the alliance formation date, and the type of resources that partners exchanged, were also collected to facilitate further analysis of empirical data. The empirical analysis of the collected data is planned to be conducted with the use of the Partial Least Squares (PLS) method, one of the two most widely-used Structural Equation Modelling (SEM) techniques applied in strategic management. The PLS model of this research will be analyzed and interpreted in three stages: (a) assessment of construct reliability and validity, (b) testing the direct and mediating relationships between the model s variables, and (c) comparison of a set of competing nested models to define the most powerful one from a statistical point of view. There is also ample space for empirical research towards developing a contingency model estimating and explaining the collective impact of the key determinants, listed in Table 3, over the final alliance governance decision. That requires not only estimating which factors influence the governance decision, but also providing weights on each determinant s influence, and estimating their correlations. Another similar stream of research should be directed towards using the above determinants as a checklist for the a posteriori assessment of an alliance s governance mode and possibly linking this decision with the formative or summative evaluation of the alliance. However, such research implies a longitudinal survey, so that the determinants are assessed when the alliance is initiated, and the success or failure is estimated either once in an advanced stage of the alliance or on a regular basis over the alliance s lifecycle. 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