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Contract Theory: Impact on Biopharmaceutical Alliance Structure and Performance

Author

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  • Niyazi Taneri

    (NUS Business School, National University of Singapore, Singapore 119245)

  • Arnoud De Meyer

    (Singapore Management University, Singapore 188065)

Abstract

Alliances for new product development have been studied extensively in the operations management literature. Alliances between an innovator and a partner create value by utilizing their complementary capabilities. In this paper, we seek to understand what drives the alliance structure: the choice between collaborative alliances where the parties exert joint efforts and sequential alliances where, for the most part, the partner takes over going forward. Our analysis of a data set of over 2,000 biopharmaceutical alliances reveals our main finding: a key role of operational choices is to address contract theoretic concerns faced by an alliance . We also find that aligning the choice with predictions based on contract theory has consequences for performance. Therefore, our analysis not only has descriptive power about the drivers of alliance choice, but also provides valuable insight into the performance and eventual fate of alliances formed.

Suggested Citation

  • Niyazi Taneri & Arnoud De Meyer, 2017. "Contract Theory: Impact on Biopharmaceutical Alliance Structure and Performance," Manufacturing & Service Operations Management, INFORMS, vol. 19(3), pages 453-471, July.
    • Handle: RePEc:inm:ormsom:v:19:y:2017:i:3:p:453-471
    DOI: 10.1287/msom.2017.0617
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    3. Hafezi, Maryam & Zhao, Xuan & Zolfagharinia, Hossein, 2023. "Together we stand? Co-opetition for the development of green products," European Journal of Operational Research, Elsevier, vol. 306(3), pages 1417-1438.
    4. Lütkemeyer, Daniel & Heese, H. Sebastian & Wuttke, David A., 2021. "Overcoming inefficiencies in the development of personalized medicine," European Journal of Operational Research, Elsevier, vol. 290(1), pages 278-296.
    5. Shi Chen & Ted Klastorin & Michael R. Wagner, 2021. "Designing practical coordinating contracts in decentralized projects," Naval Research Logistics (NRL), John Wiley & Sons, vol. 68(2), pages 183-198, March.
    6. (Ryan) Choi, Ji-Hung & Yoon, Jiho & Song, Ju Myung, 2023. "Adaptive R&D contract for urgently needed drugs: Lessons from COVID-19 vaccine development," Omega, Elsevier, vol. 114(C).
    7. Stylianos Kavadias & Karl T. Ulrich, 2020. "Innovation and New Product Development: Reflections and Insights from the Research Published in the First 20 Years of Manufacturing & Service Operations Management," Manufacturing & Service Operations Management, INFORMS, vol. 22(1), pages 84-92, January.
    8. Hong, Jieying, 2020. "The financing of alliance entrepreneurship," Journal of Business Venturing, Elsevier, vol. 35(1).

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