Do Extant Management Control Frameworks Fit the Alliance Setting? A Descriptive Analysis

We examine the portfolio of management controls to mitigate alliance risks of three firms' in order to analyze the suitability of three management control frameworks as descriptors of controls used in interfirm alliances: Simons (1995), Merchant and Van der Stede (2007), and Jensen and Meckling (1992). We find that, for the most part, these frameworks generalize to fit the data on how firms manage risks of strategic alliances. However, in applying these frameworks successively to the same data, we find that the theoretical lens that the researcher employs imparts a distinctive understanding of the function of alliance management controls in relation to alliance risk. Specifically, we conclude that alliances that have value-creation at their root engender management controls that are well described by management control frameworks of Simons (1995) and Merchant and Van der Stede (2007). These frameworks comprehend both economic and behavioral aspects of interfirm exchange and place much weight on coordination and communication between alliance partners. The management controls employed in alliances focused on transaction efficiency and cost minimization are described equally well by the framework of Jensen and Meckling (1992) that relies heavily on economic theory