How the purpose of the inter-firm relationships influences the choice of the governance form: evidence from the machine tool and the pharmaceutical industries

Abstract

In today's competitive landscape, the choice of the appropriate mode to govern an inter-firm relationship is a critical factor for companies. In the literature several theoretical strands have examined the impact of the purpose of inter-firm relationships on the forms of governance. Building on a robust literature review on the topic, this study focuses on a specific issue influencing the choice of the form of governance in inter-firm relationships, i.e. the purpose of inter-firm relationships with relation to partner's resources. We gather in a unique framework three typologies of partner's resources, i.e. production, R&D and marketing, and through two empirical analyses in two different Italian industries, machine tool and pharmaceutical, we show how differently these purposes shape the choice of the governance mode.

Keywords:

• governance mode choice
• inter-firm relationships
• resource-based view
• transaction cost theory
• property right theory
• survey

Acknowledgement

The authors would like to thank the anonymous referees for their suggestions and criticism, which significantly improved the paper.