Management control paper review
MC Paper summary
1. Anderson, S.W., Christ, M.H., Dekker, H.C. and K.L Sedatole. (2014).
Topic: The use of management controls to mitigate risk in strategic alliances: field and survey evidence.
Research question: ‘‘What are the specific alliance risks and how can managers mitigate them with control mechanisms’’?
Strategic alliances: involve voluntary collaboration between legally independent firms and, as hybrid organizational forms, fall along the continuum of arms-length market transactions (i.e., buy) and vertical integration (i.e., make).
Alliance activities typically include some mix of joint activities such as product or process development, knowledge and technology sharing, production, or marketing.
Alliance risk: relational risk, performance risk, and compliance and regulatory risk
Relational risk relates to a partner’s inability to capture a fair share of the rents generated by an alliance and arises from behavioral uncertainty of the alliance partner, coupled with investments in alliance-specific assets and incomplete contracts
Performance risk is the risk of performance failure despite full cooperation, Performance risk can be mitigated by primarily effective coordination
Compliance and regulatory risk relates to an organization being exposed to sanctions from a third party because its partner does not comply with policies, requirements, and regulations.(Found in this paper)
Narrow view on both the risk and control management could be an explanation for the high rate of failures of alliances
Key Findings:
(1) Firms use a broad range of control mechanisms to mitigate alliance.
(2) Partner selection and management mechanisms, contractual outcome specifications, and exit agreements are primary mechanisms in the management of performance and relational risks. Compliance and regulatory risks are primarily associated with use of informal controls.
(3) A longer relationship makes less use of partner selection, financial
1. Anderson, S.W., Christ, M.H., Dekker, H.C. and K.L Sedatole. (2014).
Topic: The use of management controls to mitigate risk in strategic alliances: field and survey evidence.
Research question: ‘‘What are the specific alliance risks and how can managers mitigate them with control mechanisms’’?
Strategic alliances: involve voluntary collaboration between legally independent firms and, as hybrid organizational forms, fall along the continuum of arms-length market transactions (i.e., buy) and vertical integration (i.e., make).
Alliance activities typically include some mix of joint activities such as product or process development, knowledge and technology sharing, production, or marketing.
Alliance risk: relational risk, performance risk, and compliance and regulatory risk
Relational risk relates to a partner’s inability to capture a fair share of the rents generated by an alliance and arises from behavioral uncertainty of the alliance partner, coupled with investments in alliance-specific assets and incomplete contracts
Performance risk is the risk of performance failure despite full cooperation, Performance risk can be mitigated by primarily effective coordination
Compliance and regulatory risk relates to an organization being exposed to sanctions from a third party because its partner does not comply with policies, requirements, and regulations.(Found in this paper)
Narrow view on both the risk and control management could be an explanation for the high rate of failures of alliances
Key Findings:
(1) Firms use a broad range of control mechanisms to mitigate alliance.
(2) Partner selection and management mechanisms, contractual outcome specifications, and exit agreements are primary mechanisms in the management of performance and relational risks. Compliance and regulatory risks are primarily associated with use of informal controls.
(3) A longer relationship makes less use of partner selection, financial