42 Sixth, this paper suggests that the DAF can potentially increase alliance performance by decreasing monitoring costs and optimizing the benefits associated with a larger number of board members involved in alliance monitoring. Future research can study the relationship between DAF and monitoring costs in more detail, making it possible to generalize this conclusion more firmly. This potential research would complement the study carried out in this thesis and contribute significantly to the alliance literature.
Finally, despite the article’s potential contributions to the relationship between alliance function and alliance performance, this paper represents only a first step towards a deeper understanding of alliance capability development by means of a dedicated alliance function.
Future research can undertake further investigation into the role of the dedicated alliance function in the creation of alliance capability, by further examining other important factors in this process (Liu and Ravichandran, 2011; Russo and Vurro, 2019). More specifically, future research can complement the researched field of this study by exploring to what extent the experience accumulated through the DAF has an effect in the early steps of an alliance (such as the due diligence process, partner selection, and the construction of shared common goals), therefore making a comprehensive contribution to the alliance literature (Findikoglu et al.
2019).
43 companies can maximize their opportunities for success is through the establishment of a dedicated alliance function (Kale and Singh, 2007; Dyer et al., 2001). Companies with this function are able to centralize alliance management aspects in order to facilitate the exchange of knowledge and to assimilate the crucial notions for successfully managing an alliance (e.g., Findikoglu et al., 2019). To investigate whether this translates into a positive effect on alliance performance, this thesis posed the following research question: “Does the dedicated alliance function have a positive impact on the governance of the alliance, which, in turn, results in higher alliance performance?”. Using a 2014 dataset, created by researchers from a Dutch business school (Reuer et al., 2014), this thesis found that the dedicated alliance function has a positive impact on alliance performance and that this positive relationship can potentially be explained through the influence the DAF has on alliance governance.
In the alliance literature, it has been repeatedly demonstrated that alliance governance represents a critical factor determining the success of alliances, given its relevance for sustained inter-firm collaboration (Castro et al., 2016; Hoetker et al., 2009; Niesten et al., 2015).
Therefore, this thesis, in order to answer to the research question, used ‘board size’ and
‘contract completeness’ as representatives of alliance governance and as mediators of the impact of the DAF on alliance performance. However, contrary to other authors' claims (e.g., Parkhe, 1993; Mayer and Argyres, 2004), the results of this thesis showed that only one of these two elements has an impact on alliance performance, ‘board size’. Surprisingly, it emerged that ‘contract completeness’ does not have any significant influence on alliance performance and that, therefore, the impact of the DAF on the success of alliances cannot be explained by this factor. Practically, this means that companies that aim to maximize their chances of successful alliances could benefit by having more efficient and leaner boards of directors, capable of managing the partnership effectively, rather than having more complete contracts that impose strict guidelines and rules of conduct to inhibit opportunism and
44 contractual hazards. This finding led us to further study the relationship between DAF and board size. This relationship has been found to be significant, confirming that the DAF has an impact on board composition. However, it was found that the dedicated alliance function, instead of reducing the number of board members involved in monitoring activities, would increase the board size. This suggests that the DAF could potentially increase alliance performance by decreasing alliance monitoring costs, thereby increasing board efficiency and, consequently, the net benefits resulting from a higher board monitoring level. Board members would thus become less expensive, as by establishing a DAF, an organization would be able to pay the same monitoring cost for a larger board as a company with fewer board members and without a dedicated alliance function. Therefore, a company would have a greater advantage if it increased the size of its board of directors in order to have better monitoring and take full advantage of the benefits created by a DAF.
This finding extends the literature on JVs, making several relevant contributions. The main theoretical contributions of the paper lie in the concept of alliance performance and are as follows. First, this paper found that alliance performance can be optimised through the establishment of a dedicated function. By finding this, this thesis opens the black box between the dedicated alliance function and the performance of the joint venture, finally providing clarification on the potential effect of this function on alliance management. Second, this study found that alliance performance is significantly influenced by board composition. Therefore, companies aiming at fostering alliance success through the establishment of a dedicated alliance function should take this governance mechanism extensively into account in the process of managing joint ventures.
In summary, these results recommend a course of action to address the low alliance success rate observed in recent years, identifying the establishment of a dedicated alliance function as the means to a successful alliance.
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