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Please use this identifier to cite or link to this item: http://hdl.handle.net/1942/5180

Title: Choosing governance modes for external technology sourcing: a real options perspective
Authors: Van de Vrande, Vareska
Lemmens, Charmianne
Issue Date: 2005
Publisher: EIASM Proceedings
Citation: Proceedings of the 12th International Product Development Management Conference.
Abstract: This study examines the effect of uncertainty on governance mode choice of interfirm relationships in new business development (NBD). We combine transaction cost economics and real options reasoning, arguing that in the early stages of NBD, where technological and market uncertainty are very high, companies are better off using governance modes that are reversible and involve a low level of commitment. When uncertainty has decreased as a result of prior R&D investments, transaction costs considerations become dominant and companies will shift towards governance modes that are less reversible and more hierachical. We argue that technological distance leads to less hierarchical governance modes and prior cooperation between firms leads to subsequent choices for more hierachical modes. Finally, we propose that higher exogenous uncertainty leads to less hierarchical governance modes.
URI: http://hdl.handle.net/1942/5180
ISSN: 1748-7595
Category: C1
Type: Proceedings Paper
Appears in Collections: Research publications

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