How risk influences the choice of governance mode in biopharmaceutical inter-firm relationships

摘要

This paper proposes a new theoretical framework for assessing the influence of risk inudshaping the governance form in biopharmaceutical inter-firm relationships. In particular,udwe propose a multidimensional operationalization of relational and performance risk and,udby following Transaction Cost Economics (TCE) and Real Options (RO) theory constructs,udwe hypothesize a relation between the aforementioned risk components and the choice ofudgovernance form. Specifically, following TCE reasoning, we hypothesize that a high level ofudrelational risk leads towards more hierarchical governance forms, while, following ROudtheory, we hypothesize that a high level of performance risk leads toward market-orientedudgovernance forms; finally, we hypothesize a moderating effect of each risk component onudthe other. We empirically test our framework through the analysis of 353 inter-firmudrelationships signed worldwide between pharmaceutical and biotech companies fromud2007 to 2010. The results show substantive support for our theoretical framework.udFurthermore, we find a significant moderating effect of the performance risk on the TCEudrelation between relational risk and governance forms.