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Cooperation governance mode: an extended transaction cost approach

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Abstract

This paper analyses the cooperation governance mode and possible factors affecting the choice between an equity joint venture and a contractual agreement. Although transaction cost economics (TCE) provides a workable and well-used framework within which to analyse this choice, it only captures the static transaction costs related to the two modes. This has lead to a discussion about dynamic governance costs and possible benefits related to the governance mode. The objective of this paper is to show how this extended framework differs from TCE when determining the appropriate governance mode. We use four factors related to nature of cooperation to contrast these two approaches. We collected empirical data about cooperation in the information and communications technology (ICT) sector in order to find support for these arguments. Estimates based on logistic regression analysis suggest that our dynamic governance cost and benefit perspective really provides valuable complementary insights into the traditional static transaction-cost framework when it is a question of the choice of alliance form.

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Notes

  1. The press releases were collected between July and September 2003 from press-release information the sample companies publish on their web pages.

  2. The data were retrieved from http://finance.yahoo.com/search between October 2003 and November 2003.

  3. The following industries were included in the ICT sector domain: audio and video equipment, broadcasting and cable TV, communication equipment, communication services, computer equipment, computer networks, computer peripherals, computer services, computer storage devices, electronic instruments and controls, semiconductor and software and programming.

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Acknowledgements

The Academy of Finland (Research Program Liike2) has supported this study. We would like to thank the editor and the two anonymous reviewers of the Journal of Management and Governance for their insightful and valuable comments and suggestions.

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  1. School of Business, Lappeenranta University of Technology, P.O. Box 20, 53851, Lappeenranta, Finland

    Hanna Kuittinen, Kalevi Kyläheiko, Jaana Sandström & Ari Jantunen

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  1. Hanna Kuittinen
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Correspondence to Hanna Kuittinen.

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Kuittinen, H., Kyläheiko, K., Sandström, J. et al. Cooperation governance mode: an extended transaction cost approach. J Manag Gov 13, 303–323 (2009). https://doi.org/10.1007/s10997-008-9074-5

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