A Case Study on Inter-Industries Strategic Alliances and Transaction Costs
Date Issued
2007
Date
2007
Author(s)
Tsai, Jenn-Yuh
DOI
zh-TW
Abstract
The toy industry has marched into an era of competition which characterized by adding on features powered by advanced technology. To maintain competitiveness, toy makers in the traditional sector strive to engage cooperative relationships with technology-based companies. While the benefits of such inter-industry collaboration are apparent, the potential hazard to gaining positive effect from collaboration is much higher than originally expected. Given a high cost of vertical integration for both parties, inter-industry strategic alliances seem to be a useful yet difficult-to-managing strategic alternative. Therefore, the issue becomes how to select ideal partners, how to define an appropriate governance mechanism, how to reduce the likelihood of incurring transaction hazards. With these inquiries in mind, the present research would like to pursue a qualitative study aiming at this issue with a special emphasis on the sources of transaction costs of inter-industry strategic alliances.
Based on a potential collaboration between a toy maker and a major IT player in Taiwan, our research undertook a qualitative analysis of potential transaction costs. By so doing, we are able to identify sources of potential transaction hazards and transaction values. With considerations on transaction costs, we then discuss appropriate modes for inter-organization governance.
With a thorough analysis, we found that ex-post opportunistic behavior, relation-specific investments, technology uncertainty may play critical roles in elevating potential transaction costs for collaborating parties. Transaction hazards may also occur in the areas of perception to continuous innovation and ownership definition. In addition, the unbalanced scale between collaborating parties worsens the stability of collaboration. In other words, the transaction costs of this collaboration would be comparatively higher for strategic alliances than for internalization.
Facing such transaction hazards, the toy maker is suggested to recruit technological talents and establish internal venture unit for designing wisdom toys. By so doing, the benefits of budget control and efficient coordination may overcome some losses of feature superiority. Implications of these results to practitioners who are evaluating inter-industry strategic alliances and to future research that can further expand the sources of transaction hazard are discussed.
Subjects
異業合作
交易成本
策略聯盟
智慧玩具
Inter-industry Collaboration
Transaction Costs
Strategy Alliance
Wisdom Toy
Type
thesis
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