Empirical essays on relationships between alliance experience and firm capability development

In the context of interfirm alliances, this dissertation analyzes partners' alliance experience as a multi-dimensional construct, and examines the effects of experience dimensions on governance decisions and on market value creations. This dissertation focuses on the governance aspect of experience, or the extent to which a firm has managed focused or diverse alliance governance structures. A firm's experience of prior alliances can be characterized by the depth in a specific governance form and the breadth of diverse governance forms. In-depth experience creates governing capabilities that are specific to a focal structure and result in exploitation of the same structure. Diverse governance experience broadens the range of alliance-related knowledge, and lead to better informed governance decisions by the creation of selection capabilities. In the first empirical essay, I examine a model that integrates both contractual hazards and experience-based capabilities to predict governance decisions. The second essay takes a further step by examining how the stock market responds to experience factors when evaluating events of new alliance formation. In a sample of alliances formed by US software companies, I find strong empirical evidence for the argument of multi-dimensional experience in affecting strategic decisions and value creations.