Introduction

When examining firm boundary issues, researchers in new institutional economics (NIE), in particular transaction cost economists, have traditionally focussed on the choice between market and hierarchy (Williamson 1975, 1979). However, as acknowledged by Williamson (1985) and expanded by Hennart (1991, 1993), this dichotomy overlooks the fact that the economic landscape is littered with organizational forms which look neither like pure market nor like pure hierarchy. Thus, rather than a market or hierarchy dichotomy, it is more useful to think of transaction governance along a continuum, with market and hierarchy as the end points, and hybrid arrangements such as partnerships and alliances making up the “swollen middle” (Hennart 1993).

Academic interest in alliances as a distinct organizational form began in earnest during the early 1980s, coinciding with a rise in the rate of alliance formation. Early treatments in the management literature sought to understand and classify the variety of organizational forms that may be collected under the alliance rubric (e.g. Contractor and Lorange 1988). Whilst they are useful starting points, these early taxonomies lacked a theoretical underpinning and, although some of the ordering of organizational forms was intuitive, left much room for debate. Thus, the early alliance literature tended to be fragmented and non-cumulative. In the subsequent two decades, however, a voluminous theory-driven literature on alliances has emerged, and significant progress has been made in understanding the motivations, organization, and effects of inter-firm arrangements.