Chapter 5: Pre-Formation Processes in Inter-Organizational Relations: Determinants of Search and negotiation Efforts

Organizations increasingly seek opportunities for value creation through collaboration in inter-organizational relations (Gulati, 1995; Ireland, Hitt, &Vaidyanath, 2002). Scholars have argued such partnerships to be highly beneficial for the attainment of organizational goals (e.g., Barringer & Harrison, 2000). Others, however, have emphasized that they expose partner organizations to various risks including moral hazard and hold-up problems, causing failure or instability (e.g., Das & Teng, 2000; Parkhe, 1993; Park & Russo, 1996). To explore how organizations cope with these issues, scholars have primarily adopted a transaction cost perspective (David & Han, 2004; Gulati, 1998), which holds that transaction characteristics and governance modes and mechanisms are aligned so as to minimize transaction costs (Williamson, 1985).