Information asymmetry, adverse selection and joint-ventures

Balakrishnan, S.; Koza, Mitchell P.

doi:10.1016/0167-2681(93)90083-2

Cited by 595 publications

(423 citation statements)

References 22 publications

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“…As Kogut and Zander (1993) have pointed out, marketbased transactions in technology are more likely to occur when technologies are more codified and easier to transfer across organizational boundaries. Teece (1977) and Balakrishnan and Koza (1993) showed that the costs of transferring technology to other parties were lower in the case of more mature and standardized technologies, due to the reduced importance of asymmetric information and opportunistic behaviors. Arora and Gambardella (1994) and von Hippel (1994) also suggested that codification and standardization of knowledge makes technology transfer easier by reducing the difficulties of task-partitioning.…”

Section: H4mentioning

confidence: 99%

“…(CaDIFIABIL-ITY) Codification makes a technology more transparent and easier to value by a prospective buyer, thereby reducing the information asymmetry problem in technology transfer (Teece, 1977;Balakrishnan and Koza, 1993). Codification also makes the knowledge less sticky (von Hippel, 1994) and reduces the direct costs of information exchange across firm boundaries that a licensing agreement would entail (Kogut and Zander, 1993).…”

Section: ¡Ournal Of International Business Studiesmentioning

confidence: 99%

“…Indeed, they posit that the nature of the knowledge, or technology, is the main determinant of the choice of the mode of international expansiono If the knowledge is tacit, complex and difficult to teach then -they argue -intrafirm transfers of knowledge are easier than inter-firm transfers. However, it is exactly when knowledge is tacit and complex that contracting upon it becomes more problematic and transaction costs are the largest (Teece, 1977;Balakrishnan and Koza, 1993; van Hippel, 1994).…”

Section: ¡Ournal Of International Business Studiesmentioning

confidence: 99%

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Wholly Owned Subsidiary Versus Technology Licensing in the Worldwide Chemical Industry

2000

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Section: H4mentioning

confidence: 99%

Section: ¡Ournal Of International Business Studiesmentioning

confidence: 99%

Section: ¡Ournal Of International Business Studiesmentioning

confidence: 99%

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Wholly Owned Subsidiary Versus Technology Licensing in the Worldwide Chemical Industry

2000

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“…13 The objective of this subsection is to explore some of the dynamic issues in joint venturing under conditions of information asymmetry. Balakrishnan and Koza [1993] observed that the potential buyer of an asset could use a JV with the current owner of the asset to gather more information about its value when there is a significant level of information asymmetry between the two parties. Although they did not make the connection explicit in their article, their observation is clearly related to the strategic option concept.…”

Section: Information Asymmetrymentioning

confidence: 99%

“…A number of authors have suggested that a JV may be preferred to an outright acquisition when there exists a significant degree of information asymmetry between the potential buyer and seller of a productive asset [Balakrishnan and Koza 1993;Hennart 1988;Shan 1990]. Problems of information asymmetry can be characterized as either adverse selection or moral hazard [Holmstrom 1982].…”

Section: Information Asymmetrymentioning

confidence: 99%

Collaborative Ventures and Value of Learning: Integrating the Transaction Cost and Strategic Option Perspectives on the Choice of Market Entry Modes

1996

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Abstract:This paper employs a simple stochastic model to investigate how transaction cost and strategic option considerations interact to influence a firm's evaluation of collaborative venturing as a market entry mode. After demonstrating how uncertainty about the market and about the potential partner can add to the value of a collaborative venture, the paper explicates a condition under which the option to acquire or sell out generates a positive economic value for both of the partners. The interaction of transaction cost and strategic option considerations is then examined, and a number of testable hypotheses are proposed based on the theoretical analyses of the paper. We are grateful to Paul Beamish, Editor of JIBS, and to three anonymous reviewers for their constructive comments and valuable suggestions. All remaining errors, however, are solely our own responsibility.Published in the Journal of International Business Studies, 27(2): 285-307, 1996. as a market entry mode. After demonstrating how uncertainty about the market and about the potential partner can add to the value of a collaborative venture, the paper explicates a condition under which the option to acquire or sell out generates a positive economic value for both of the partners. The interaction of transaction cost and strategic option considerations is then examined, and a number of testable hypotheses are proposed based on the theoretical analyses of the paper.Collaborative Ventures and Value of Learning: Integrating the Transaction Cost and Strategic Option Perspectives on the Choice of Market Entry Modes. Journal of International Business Studies, 27 (2), 285-307. Publisher's Official Version: http://www.jstor.org/stable/155286 Open Access Version:

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Survival of Businesses Using Collaborative Relationships to Commercialize Complex Goods

1996

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Authors with many theoretical and managerial perspectives argue that businesses commercializing technologically complex goods benefit when they collaborate closely with other businesses. Collaboration is viewed as a means for businesses to overcome competency limitations and to achieve the close configuration of components required for complex goods. We predict that collaborative relationships often assist businesses to produce complex goods, but that the relationships might also cause problems for the collaborating businesses. We find that firms using development‐oriented and marketing‐oriented collaborative relationships in the hospital software systems industry are less likely to shut down than businesses that follow independent approaches when the environment changes gradually, but businesses using collaborative relationships are sometimes susceptible to being acquired by other firms. Following a sudden environmental shock, businesses with collaborative relationships for activities central to the shock became more likely to shut down, while businesses with collaborative relationships for activities outside the focus of the shock became more likely to survive. The study critically evaluates and tests the widely stated but little‐tested argument that interfirm collaboration is usually beneficial. The results address the issue of whether organizational choices affect comparative business performance.

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Information asymmetry, adverse selection and joint-ventures

Cited by 595 publications

References 22 publications

Wholly Owned Subsidiary Versus Technology Licensing in the Worldwide Chemical Industry

Wholly Owned Subsidiary Versus Technology Licensing in the Worldwide Chemical Industry

Collaborative Ventures and Value of Learning: Integrating the Transaction Cost and Strategic Option Perspectives on the Choice of Market Entry Modes

Survival of Businesses Using Collaborative Relationships to Commercialize Complex Goods

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