Chapter 3: Risk Types and Interfirm Alliance Structures

This chapter examines the choice between equity and nonequity forms of interfirm alliances from an “integrated risk” perspective, which combines relational risk and performance risk in interfirm alliances. Relational risk relates to cooperation among alliance partners, while performance risk has to do with the hazards of not achieving the performance objectives of an alliance, given cooperation. We suggest that equity alliance is adopted to control relational risk, while nonequity alliance is aimed at minimizing performance risk. Existing studies on the choice of alliance configurations are examined from the proposed risk perspective, and a number of key propositions are advanced for empirical testing and further development of the perspective.