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Recently, an unprecedented number of business firms in many industries have been entering into a variety of interorganizational relationships (IORs) to conduct their business deals. Previously, these transactions often were concluded through either discrete market transactions or internal hierarchical arrangements (Friar & Horwitch, 1985; Powell, 1987; Teece, 1986). These IORs include strategic alliances, partnerships, coalitions, joint ventures, franchises, research consortia, and various forms of network organizations.(1)
How do these IORs emerge, grow, and dissolve over time? This process question is focused on the sequence of events and interactions among organizational parties that unfold to shape and modify an IOR over time. Relatively little scholarly attention has been devoted to studying developmental processes of IORs. Instead, most of the research to date has been focused either on the antecedent conditions or the structural properties of interorganizational relationships in comparison with other governance forms.
For example, working within transactions cost or agency theory perspectives, many scholars have focused their attention on comparing alternative transaction governance structures (e.g., markets, hierarchies, and mixed modes). These have been institutional economists (Armour & Teece, 1978; Coase, 1937; Fama & Jensen, 1983; Williamson, 1975, 1991), organizational sociologists (Coleman, 1986; Powell, 1990; Stinchcombe, 1990), lawyers (Goldberg, 1980; Macneil, 1980), and management scholars (Balakrishnam & Koza, 1993; Barney & Ouchi, 1986; Mosakowski, 1990). In a related vein, through an extensive stream of research, organizational sociologists have examined the environmental conditions and contingent factors that explain the formation and structure of cooperative interorganizational relationships (see reviews by Aldrich & Whetten, 1981; Galaskiewicz, 1985; Oliver, 1990; Van de Ven, 1976).
These research streams provide extremely useful insight about conditions leading to the formation of IORs, and they can help researchers when they make comparative static decisions regarding alternative organizational designs and incentive schemes for different kinds of transactions. However, scholars from these research streams have ignored process. Although knowing the inputs, structure, and desired outputs of a relationship provides a useful context for studying process, these factors do not tell us how a relationship might unfold over time.
Process, however, is central to managing IORs. As agents for their firms, managers need to know more than the input conditions, investments, and types of governance structures required for a relationship. These process issues also have important temporal...