R&D Alliance Contracts in the Biopharmaceutical Industry: The Stipulation of Contractual Coordination Platforms

Alliance contracts between firms serve both to control and to coordinate joint activities. We study alliance governance structures that we label as contractual coordination platforms, implemented in these alliance contracts, designed specifically to coordinate the activities of alliance parties. Using a dataset of nearly 300 R&D contracts in the biopharmaceutical industry, we find three conditions imperative in explaining the degree to which alliance parties supplement their contract with contractual coordination platforms to support and guide the alliance process. The first condition refers to the nature of the alliance activity, in terms of both the number of activities to be performed under the alliance and the degree of inter-firm dependence between alliance parties. The second and third conditions refer to contractual commitment of alliance parties and partner-specific learning. In addition, we shed a light on the interrelationship between contractual commitment and partner-specific learning and the resulting influence on contractual coordination platforms.