Beyond contracts: Governing structures in non-equity alliances

Non-equity alliances are often portrayed in the literature as purely contractual collaborative agreements. This paper questions the notion that contractual safeguards and incentives alone provide the formal governance mechanisms that undergird non-equity alliances. We argue and show that partners craft elaborate committee structures that serve as administrative interfaces for collaborative agreements. These committee structures have well-defined authority relationships and oversight responsibilities and exhibit several key characteristics of hierarchy. We demonstrate that monitoring needs arising from moral hazard and knowledge misappropriation risk, as well as coordination needs arising from increased partner interdependence, are key determinants of such administrative mechanisms in the governance of non-equity alliances.