The rise and fall of global network alliances

Abstract

The purpose of this article is to develop an evolutionary transaction cost economics approach capable of explaining the rise and fall of global network alliances once created to provide global services to multinational companies. In this global services market, market contracting and integrated corporations eventually replaced global network alliances. Both inefficiently designed or applied governance and efficiently realigned governance may explain why alliances failed and subsequently were replaced by more appropriate market contracting and integrated firms. The global alliance story also illustrates the point that economic actors initially may not have the requisite capacity to look ahead and recognize contractual hazards, but that such capacity and recognition may gradually evolve as a product of negative experience. Copyright 2008 , Oxford University Press.