Determinants of alliance longevity: An empirical examination of factors from transaction cost economics and the dynamic capabilities perspective

Alliance longevity is an important concept because of its relevance to alliance performance. Since partnering firms are more likely to continue with a better performing alliance than a poorly performing one, scholars have treated alliance longevity as a reflector of alliance performance. However, besides its treatment as a measure of performance, longevity of alliances has not been studied as a meaningful concept by itself. It is seldom recognized that alliance longevity marks the time partnering firms have to overcome relational hurdles and attain alliance-specific goals.; In this study, I develop a model that delineates the various relationships of alliance longevity with a set of antecedent factors. A review of the pertinent literatures on transaction cost economics and dynamic capabilities yields five antecedent factors: alliance type, hierarchy of alliance structure, alliance experience with partner, asymmetry-adjusted alliance experience, and number of partners with alliance unit. The direct and moderating relationships of alliance longevity with these five factors produce eight hypotheses. Two more hypotheses are developed, treating hierarchy of alliance structure as the dependent variable.; Both tobit and Cox regression techniques are appropriate to empirically investigate the eight hypotheses pertaining to alliance longevity. Ordered logit is used to analyze the last two hypotheses predicting hierarchy of alliance structure. The statistical tests use monthly data on 546 alliances. Results support seven of the ten hypotheses advanced by this research. The theoretical development of the research model and the empirical results advance the current state of knowledge on alliance longevity.