Abstract
Coase (1937) first explained firm boundaries as a solution to minimizing the costs of accessing markets — what Williamson (1975) termed “transaction costs”. Over time, innovations in management control and changes to legal structures have reduced the costs of monitoring, raised the costs of behaving opportunistically and created ways for partners to credibly commit to future actions. At the same time, the development of valuable and inimitable resources by entrepreneurial firms are a basis for collaboration between partners with complementary resource endowments (Penrose, 1959). Together these forces have transformed the dichotomous choice of “make” versus “buy” into a selection among a variety of hybrid modes of organization; for example, strategic alliances, joint ventures and supply chain partnerships. Hybrid structures blend characteristics of arms-length market transactions with modes of governance and control that are more common to large decentralized firms. The thesis of this chapter is that innovation in management controls has been central to the emergence, diversity and stability of hybrid organizational forms.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Alchian, A. & Demsetz, H. (1972). Production, Information Costs, and Economic Organization. American Economic Review, 62, 777–795.
Anderson, S. (2007). Managing Costs and Cost Structure throughout the Value Chain: Research on Strategic Cost Management. In C. S. Chapman et al. (Eds) Ha n dbook of Ma n agem en t A ccou n ti rig R esea re h. Oxford: El s e vi er.
Anderson, S., Christ, M., Dekker, H. & Sedatole, K. (2014a). The Use of Management Controls to Mitigate Risk in Strategic Alliances: Field and Survey Evidence. Journal of Management Accounting Research, 26: 1–32.
Anderson, S., Christ, M., Dekker, H. & Sedatole, K. (2014b). Do Extant Management Control Frameworks Fit the Alliance Setting? A Descriptive Analysis. Industrial Marketing Management (forthcoming).
Anderson, S. & Dekker, H. (2005). Management Control for Market Transactions: The Relation between Transaction Costs, Incomplete Contract Design and Subsequent Performance. Management Science, 51(12), 1734–1752.
Anderson, S. & Dekker, H. (2009a). Strategic Cost Management in Supply Chains, Part 2: Executional Cost Management. AccountingHorizons, 23(3), 289–305.
Anderson, S. & Dekker, H. (2009b). Strategic Cost Management in Supply Chains, Part 1: Structural Cost Management. Accounting Horizons, 23(2), 201–220.
Anderson, S. & Dekker, H. (2014). The Role of Management Controls in Transforming Firm Boundaries and Sustaining Hybrid Organizational Forms. Foundations and Trends in Accounting (Forthcoming).
Anderson, S., Dekker, H. & Van den Abbeele, A. (2014). Control and Residual Risk in Interfirm Transactions. UC Davis Working Paper.
Anderson, S. & Sedatole, K. (2003). Management Accounting for the Extended Enterprise: Performance Management for Strategic Alliances and Networked Partners. In Bhimani, A. (Ed.) Management Accounting in the Digital Economy. Oxford, UK: Oxford University Press.
Anthony, R. N. (1965). Planning and Control Systems: A Framework for Analysis. Boston: Division of Research, Harvard Business School.
Caglio, A. & Ditillo, A. (2008). A Review and Discussion of Management Control in Inter-Firm Relationships: Achievements and Future Directions. Accounting, Organizations and Society, 33(7-8), 865–898.
Cäker, M. (2008). Intertwined Coordination Mechanisms in Inter organisational Relationships with Dominated Suppliers. Management Accounting Research, 19, 231–251.
Coase, R. (1973). Business Organization and the Accountant. In J. Buchanan, J. and G. Thirlby (Eds). L.S.E. Essays on Cost. New York: New York University Press, 95–134.
Coase, R. (1937). The Nature of the Firm. Economica, 4, 386–405.
Coletti, A., Sedatole, K. & Towry, K. (2005). The Effect of Control Systems on Trust and Cooperation in Collaborative Environments. Accounting Review, 80(2), 477–500.
Cooper, R. & Kaplan, R. (1987). How Cost Accounting Systematically Distorts Product Costs. In W. Bruns & R. Kaplan (Eds). Accounting and Management: Field Study Perspectives. Boston, MA: Harvard Business School Press.
Cooper, R. & Slagmulder, R. (2004). Interorganizational Cost Management and Relational Context. Accounting, Organizations and Society, 29(1), 1–26.
Costello, A. M. (2013). Mitigating Incentive Conflicts in Inter-Firm Relationships: Evidence from Long-Term Supply Contracts. Journal of Accounting and Economics, 56(1), 19–39.
Das, T. & Teng, B. (2001) Trust, Control, and Risk in Strategic Alliances: An Integrated Framework. Organization Studies, 22(2), 251–283.
Dekker, H. (2008) ‘Partner Selection and Governance Design in Interfirm Relationships. Accounting, Organizations and Society, 33, 915–941.
Dekker, H. (2004) Control of Inter-Organizational Relationships: Evidence on Appropriation Concerns and Coordination Requirements. Accounting, Organizations and Society, 29, 27–49.
Dekker, H., Kawai, T. & Sakaguchi, J. (2014) Home and Host Country Effects on Strategic Outsourcing Contracts. Working paper VU University Amsterdam..
Dekker, H., Sakaguchi, J. & Kawai, T. (2013) Beyond the Contract: Managing Risk in Supply Chain Relations. Management Accounting Research, 24, 122–139.
Dekker, H. & Van den Abbeele, A. (2010) Organizational Learning and Interfirm Control: The Effects of Partner Search and Prior Exchange Experiences. Organization Science, 22(6), 1233–1250.
Ding, R., Dekker, H. & Groot, T. (2013). Risk, Partner Selection and Contractual Control in Interfirm Relationships. Management Accounting Research, 24(2), 140–155.
Dye, R. (1985) Costly Contract Contingencies. International Economic Review, 26(1), 233–250.
Emsley D. & Kidon, F. (2007) The Relationship between Trust and Control in International Joint Ventures: Evidence from the Airline Industry. Contemporary Accounting Research, 24(3), 829–858.
Faems, D., Janssens, M. Madhok, A. & Van Looy B. (2008) Toward an Integrative erspective on Alliance Governance: Connecting Contract Design, Trust Dynamics, and Contract Application. A cademy of Management Journal, 51, 1053–1078.
Geyskens, I., Steenkamp, J. B. E. M. & Kumar, F. (2006) Make, Buy or Ally: A M eta-Analysis of Transaction Cost Theory. Academy of Management Journal, 49, 519–543.
Groot, T. & Merchant, K. (2000) Control of International Joint Ventures. Accounting, Organizations and society, 25(6), 579–607.
Gulati, R. (1995) Does Familiarity Breed Trust? The Implications of Repeated Ties for Contractual Choice in Alliances, Academy of Management Journal, 38, 85–113.
Gulati, R. & Singh, H. (1998) The Architecture of cCooperation: Managing Coordination Costs and Appropriation Concerns in Strategic Alliances. Administrative Science Quarterly, 43, 781–814.
Ittner, C. D., Larcker, D. R, Nagar, V & Rajan, M. V (1999) Supplier Selection, Monitoring Practices, and Firm Performance. Journal of Accounting and Public Policy, 18, 253–281.
Jensen, M. & Meckling, J. (1992) Specific and General Knowledge, and Organizational Structure. In L. Wenn and Wijkander, H. (eds). Contact Economics. Blackwell, Oxford, UK, 251–274.
Johnson, H. & Kaplan, R. (1987) Relevance Lost, Boston, MA: Harvard Business School Press.
Joskow, P. (1987) Contract Duration and Relationships-Specific Investments: Empirical Evidence from Coal Markets. American Economic Review, 37(1), 168–185.
Kamminga, P. & Van der Meer-Kooistra, J. (2007) Management Control Patterns in Joint Venture Relationships: A Model and an Exploratory Study. Accounting, Organizations and Society, 32(1-2), 131–154.
Krishnan, R., Miller, F. & Sedatole, K. (2011) The Use of Collaborative Interfirm Contracts in the Presence of Task and Demand Uncertainty. Contemporary Accounting Research, 28, 1397–1422.
Langfield-Smith, K. & Smith, D. (2003) Management Control and Trust in Outsourcing Relationships. Management Accounting Research, 14, 281–307.
Langfield-Smith, K. (2008) The Relations between Transactional Characteristics, Trust and Risk in the Start-up Phase of a Collaborative Alliance. Management Accounting Research, 19(4), 344–364.
Luo, Y. & Tan, J. (2003) Structuring International Joint-Ventures: How Should Contractual Design be Aligned with Environmental Conditions? Management international Review, 43(2), 185–211.
Lorenzoni, G. & Lipparini, A. (1999) The Leveraging of Interfirm Relationships as a Distinctive Organizational Capability: A Longitudinal Study. Strategic Managemen t Journal, 20(4), 317–3 38.
Manama, H. (2006) Management Control Systems, Cooperation and Performance in Strategic Supply Relationships: A Survey in the Mines. Management Accounting Research, 17(3), 315–339.
Masten, S. & Saussier, S. (2002) Econometrics of Contracts: An Assessment of Developments in the Empirical Literature of Contracting. In E. Brousseau & J. M. Glachant (Eds.), Economics of Contracts: Theories and Applications, Cambridge University Press: Cambridge, 273–292.
Merchant, K. A. and W. A. Van der Stede. 2007. Management Control Systems: Performance Measurement, Evaluation and Incentives. Upper Saddle River, NJ: Prentice Hall.
Miller, J. & Vollmann, T. (1985) The Hidden Factory. Harvard Business Review, (Sept-Oct) 63, 142–150.
Neumann, K. (2010) Ex Ante Governance Decisions in Inter-Organizational Relationships: A Case Study in the Airline Industry. Management Accounting Research, 21(4), 220–237.
Nicolaou, A., Sedatole, K. & Lankton, N. (2011) Integrated Information Systems and Alliance Partner Trust. Contemporary Accounting Research, 28(3), 1018–1045.
Ouchi, W. (1979) A Conceptual Framework for the Design of Organizational Control Mechanisms. Management Science, 25, 833–848.
Penrose, E. (1959) The Theory of the Growth of the Firm. London: Basil Blackwell Publishers.
Phua, Y., Abernethy M. & Lillis, A. (2011) Controls as Exit Barriers in Multi-Period Outsourcing Arrangements. The Accounting Review, 86(5), 1795–1834.
Sako, M. (1992) Prices, Quality and Trust: Inter-firm Relations in Britain and Japan. Cambridge Cambridge University Press.
Schepker, D., Won-Yong, O., Martynov, A. & Poppo, L. (2014) The Many Futures of Contracts: Moving Beyond Structure and Safeguarding to Coordination and Adaptation. Journal of Management, 40(1), 193–225.
Schloetzer, J. D. (2012) Process Integration and Information Sharing in Supply Chains. The Accounting Review, 87(3), 1005–1032.
Simons, R. (1995) Levers of Control: How Managers use Innovative Control Systems to Drive Strategic Renewal. Boston: MA: Harvard Business School Press.
Tirole, J. (1999) Incomplete Contracts: Where Do We Stand? Econometrica, 67(4), 741–781.
Tomkins, C. (2001) Inter-Dependencies, Trust and Information in Relationships, Alliances and Networks. Accounting, Organizations and Society, 26(2), 161–191. van der Meer-Kooistra, J. & Vosselman, E. (2000) Management Control of Interfirm Transactional Relationships: The Case of Industrial Renovation and Maintenance. Accounting, Organizations and Society, 25(1), 51–77.
Velez, M., Sanchez, J. & Alvarez-Dardet, C. (2008) ‘Management Control Systems as Inter-Organizational Trust Builders in Evolving Relationships: Evidence from a Longitudinal Case Study. Accounting, Organizations and Society, 33(7-8), 968–994.
Vosselman, E. & van der Meer-Kooistra, J. (2009) Accounting for Control and Trust Building in Interfirm Transactional Relationships. Accounting, Organizations and Society, 34(2), 267–283.
Williamson, O. (1975) Markets and Hierarchies: Analysis and Antitrust Implications. New York: The Free Press.
Williamson, O. (1985). The Economic Institutions of Capitalism. New York: Free Press.
Editor information
Editors and Affiliations
Copyright information
© 2014 Shannon Anderson and Henri Dekker
About this chapter
Cite this chapter
Anderson, S., Dekker, H. (2014). From Make-or-Buy to Coordinating Collaboration: Management Control in Strategic Alliances. In: Otley, D., Soin, K. (eds) Management Control and Uncertainty. Palgrave Macmillan, London. https://doi.org/10.1057/9781137392121_4
Download citation
DOI: https://doi.org/10.1057/9781137392121_4
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-48319-8
Online ISBN: 978-1-137-39212-1
eBook Packages: Palgrave Business & Management CollectionBusiness and Management (R0)