| This study focuses on two major questions. First, how do firms choose their partners for strategic alliances when candidates are geographically dispersed? Second, what determines the level of commitment the initiating firm devotes to a given strategic alliance? Building on prior research from resource dependence theory, transaction cost economics and neo-institutionalism, I develop a benefit-cost-competition framework that yields a series of testable hypotheses about partner selection and commitment.; This empirical study is set in the market for specialized physician services in Iowa. Over time, some urban group practices have entered into strategic alliances with rural hospitals. Known as "visiting consulting clinics," these are arrangements in which specialists travel from an urban area to a rural hospital to provide a limited range of outpatient services and to influence future referrals of more complex cases for treatment in an urban tertiary care center. In the last 10 years, the number of these strategic alliances has doubled in many areas of specialty physician care.; Using a sample selection model, we model the selection of rural hospital partners as well as the intensity of the relationships for urban specialty practices in cardiology, orthopedic surgery, and medical oncology. We find that partner selection in a given year is influenced by the distance to the rural location, the presence of competition from other urban practices and past experience with this partner. The commitment by an urban practice to a given partner is driven by the size of the potential referral pool, prior commitments, proximity to other urban areas and the degree of competition for patients in the home market, i.e. the urban area where the specialist practice is located.; In addition to extending our knowledge to the under-researched area of professional services, this study has important implications for modeling the nature of strategic marketing alliances in spatially distributed markets. |
