Handbook on International Alliance and Network Research
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Handbook on International Alliance and Network Research

Edited by Jorma Larimo, Niina Nummela and Tuija Mainela

Over the past few decades, alliance and networks have been generally examined individually. This Handbook sheds new light on this research by combining the two topics and focuses on highlighting their similarities. The expert contributors discuss topics surrounding the state-of-the-art in alliance and network research, conceptual development in alliance and network research and empirical evidence of international alliances and networks. They combine diverse types of studies including literature reviews, conceptual papers and empirical studies in order to provide the reader with a comprehensive understanding of the topic.
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Chapter 4: Transaction cost perspectives on alliances and joint ventures: explanatory power and empirical limitations

Klaus E. Meyer and Yi Wang


Transaction cost economics (TCE) has been extensively applied by international business scholars to analyze joint ventures and strategic alliances. It provides a theoretical basis to analyze how firms organize their transactions with other firms, and hence their choices of governance structures, for example, between JVs and other organizational forms. However, TCE has also been frequently critiqued and empirical findings on some of the constructs derived from TCE find inconsistent results. This chapter critically evaluates the TCE literature on cross-border business activity to evaluate to what extent this empirical literature actually supports or refutes TCE-based arguments, and to provide directions for future research. We identify four major challenges: (1) the level of analysis used to proxy transaction costs, (2) contextual drivers of transaction costs, especially in emerging economies, (3) the theoretical ambiguity of TCE arguments with respect to distance and experience, and (4) the assumption that JVs are a flexible (low-risk) mode of operation. This discussion leads to suggestions on how to design empirical research more consistent with the theory.

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