Competitive advantage in alliance governance: Resolving the opportunism minimization-gain maximization paradox

Abstract

This paper offers a model of alliance governance that explicitly recognizes that managers of alliances simultaneously face the objectives of maximizing gains from trade while minimizing the threat of opportunism in the transaction - an apparent paradox. Our model shows that both the gains from trade and the threat of opportunism are influenced by firm characteristics (cooperative capabilities and trustworthiness) as well as transaction attributes (information asymmetry and asset specificity). The paradox may be resolved by strong form trustworthiness combined with relationship management capabilities because these characteristics allow the pursuit of gains from trade while simultaneously limiting the threat of opportunism. Copyright ©2008 John Wiley & Sons, Ltd.