The organization and performance implications of vertical interfirm exchanges at small and entrepreneurial firms

This dissertation aims to further advance our theoretical and empirical understandings of interfirm governance decisions among entrepreneurial or small firms and their large firm exchange partners. Entrepreneurial firms often establish relationships with large firm partners to gain access to critical resources. While these relationships can support the growth and even survival of the entrepreneurial firm, they can also present great risk if the large firm partner behaves in an opportunistic manner. Entrepreneurial firm managers must decide how to govern these relationships so the potential benefits can be realized and the risks minimized. Consisting of three related essays, this dissertation applies resource-based theory (RBT) and transaction cost economics (TCE) to empirically investigate the antecedents to and performance implications of exchange governance choice among entrepreneurial and small firms in exchanges with large firm partners.; The first essay develops and tests a model to provide simultaneous consideration of the benefits and costs associated with how entrepreneurial firms govern alliances with large partners. The empirical setting is alliances between entrepreneurial biotechnology firms and their large downstream partners. Primary and secondary data for this study was collected on 59 entrepreneurial firm-large firm dyads in a three-phase process.; The second essay presents a similar model and tests it using a sample of 365 relationships between small firms and their primary financial services supplier. Data for this study is taken from the Federal Reserve Board's 1998 Survey of Small Business Finances (SSBF).; Whereas the first two essays analyze the antecedents to and performance consequences of one governance device in each interfirm relationship, the third essay examines the tradeoffs among multiple governance devices that firms bundle together. A total of 796 small firm-financial institution relationships from the SSBF are used in this study. The study examines the relationships and tradeoffs among five different governance devices to determine how they tend to be bundled into effective and efficient governance mechanisms. The performance implications and possible prioritization schemes of different governance device combinations are compared and discussed.