Free‐riding in multi‐party alliances: The role of perceived alliance effectiveness and peers' collaboration in a research consortium
| Author | Fabio Fonti,Robert Whitbred,Massimo Maoret |
| Date | 01 February 2017 |
| DOI | http://doi.org/10.1002/smj.2470 |
| Published date | 01 February 2017 |
Strategic Management Journal
Strat. Mgmt. J.,38: 363–383 (2017)
Published online EarlyView 15 February 2016 in WileyOnline Library (wileyonlinelibrary.com) DOI: 10.1002/smj.2470
Received 3 September 2014;Final revision received15 July 2015
FREE-RIDING IN MULTI-PARTY ALLIANCES: THE ROLE
OF PERCEIVED ALLIANCE EFFECTIVENESS AND
PEERS’ COLLABORATION IN A RESEARCH
CONSORTIUM
FABIO FONTI,1†*MASSIMO MAORET,2†and ROBERT WHITBRED3
1ESC Rennes School of Business, Rennes, France
2IESE Business School, Barcelona, Spain
3School of Communication, Cleveland State University, Cleveland, Ohio, U.S.A.
Research summary: Multi-party alliances rely on partners’ willingness to commit and pool
their efforts in joint endeavors. However, partners face the dilemma of how much to commit
to the alliance. We shed light on this issue by analyzing the relationship between partners’
free-riding— dened as their effort-withholding— and their perceptions of alliance effectiveness
and peers’ collaboration. Specically, we posit a U-shaped relationship between partners’
subjective evaluations of alliance effectiveness and their free-riding. We also hypothesize a
negative relation between partners’ perceptions of the collaboration of peer organizations and
their free-riding. Results from a mixed-method study—combining regression analysis of primary
data on a major inter-organizational research consortium and evidence from two experimental
designs— support our hypotheses, bearing implications for the multi-party alliances literature.
Managerial summary: Free-riding is a major concern in multi-party alliances such as large
research consortia, since the performance of these governance forms hinges on the joint
contribution of multiple partners that often operate accordingto different logics (e.g., universities,
rms, and government agencies). We show that, in such alliances, partners’ perceptions have
relevant implications for their willingness to contribute to the consortium’s shared goals.
Specically, we nd that partners free-ride more— that is, contribute less— when they perceive
the effectiveness of the overall alliance to be either very low or very high. Partners also gauge
their commitment to the alliance on the perception of the effort of their peers—that is, other
organizations similar to them. These ndings provide managers of multi-party alliances with
additional levers to motivate partners to contribute fairly to such joint endeavor. Copyright ©
2015 John Wiley & Sons, Ltd.
INTRODUCTION
During recent years, the number of strategic
alliances has steadily increased, making them
Keywords: multi-party alliances; inter-organizational
networks; free-riding; research consortium; managerial
cognition
*Correspondence to: Fabio Fonti, ESC Rennes School of Busi-
ness, 2 rue Robert d’Arbrissel - CS 76522, 35065 Rennes Cedex,
France. E-mail: fabio.fonti@esc-rennes.com
†The rst two authors contributed equally to this work and are
listed alphabetically.
Copyright © 2015 John Wiley & Sons, Ltd.
one of the most popular forms of collaboration
among rms. Over time, such agreements have
also evolved from simple, dyadic arrangements to
structures that increasingly involve multiple parties
(Zeng and Chen, 2003), often fostering collabora-
tion not only among rms, but also other types of
organizations such as universities, research centers,
and governmental agencies (Kale and Singh,
2009; Mindruta, 2013). Research consortia are
clear examples of such multi-party alliances (Xia,
Zhao, and Mahoney, 2012), and their effectiveness
364 F. Fonti, M. Maoret, and R. Whitbred
in facilitating learning, knowledge transfer, and
joint problem-solving via the collaborative efforts
among rms and research institutions explains
their growing diffusion (Gulati, Wohlgezogen, and
Zhelyazkov, 2012).
Unfortunately, in many multi-party alliances,
these potential benets remain untapped. This
is because multi-party alliances are particular
forms of collective action, which “create economic
value that has a ‘common pool’ component, and
[their] lack of well-dened property rights invites
potential opportunistic behavior and free-riding”
(Agarwal, Croson, and Mahoney, 2010: 415).
Alliance partners thus often face the classic col-
lective action problem (Olson, 1965) of either
having to decide whether to commit their limited
resources to the joint endeavor— reducing the net
value they appropriate — or “free-ride” on other
actors’ activity by withholding their efforts toward
the joint endeavor. While maximizing their value
appropriation, the latter course of action increases
the likelihood of alliance failure, both directly, due
to the limited investments on part of the focal rm,
and indirectly, by discouraging other partners to
invest in the alliance (McCarter, Mahoney, and
Northcraft, 2011).
Earlier research on alliances has pro-
posed ex-ante structural and motivational
solutions— based on alliance design, partner
selection, and communication of cooperative
intent— to align partners’ private and public incen-
tives and suppress potential opportunistic behaviors
(Gulati et al., 2012).1However, no matter how well
designed, such solutions can at best only minimize,
but not completely eradicate, free-riding (McCarter
et al., 2011). So it is surprising to see the limited
attention (both theoretical and empirical) that the
strategic management literature has paid to the
problem of free-riding post-alliance formation. As
we know little about the behavioral mechanisms
underlying alliance partners’ actual free-riding
behaviors (Zeng and Chen, 2003), empirical
investigations of such phenomenon are particularly
1While management scholars havetypically associated free-riding
with opportunistic behavior, and thus, we refer to opportunism
as we discuss extant research, we are interested in free-riding as
effort-withholding behavior in general, and thus, not only limited
to opportunistic cases. Partners’ involvement in a multi-party
alliance may also be limited due to nonopportunistic reasons,
such as the lack of norms encouraging strong commitment to
the joint endeavor (i.e., normative conformity), or the lack of
identication with such endeavor (Knoke, 1990). We thank an
anonymous reviewer to bring this issue to our attention.
needed since “many behavioral assumptions [of
ex-ante approaches] may not hold in reality” (Agar-
wal et al., 2010) and given that it is “during actual
implementation of the alliance that partners may
begin engaging in opportunistic behavior that leads
to cooperation failures” (Gulati et al., 2012: 551).
Adopting a behavioral, ex-post theoretical approach
may be particularly valuable in multi-party
alliances, which differ from their dyadic counter-
parts due to their higher uncertainty, ambiguous-
ness, and opaqueness (Das and Teng, 2002; Fonti,
Maoret, and Whitbred, 2015), characteristics that
make specic partners’ attributions noisy (Zeng
and Chen, 2003) and increase the costs associated
with the effective monitoring and sanctioning of
free riders (Doz and Hamel, 1998; Luo, 2007).
Our work contributes to the investigation of
free-riding in multi-party alliances by offering
an empirical investigation of a large, heteroge-
neous research consortium composed of 40 major
universities, rms, and government agencies. We
propose that partners’ subjective interpretations of
inter-organizational relations and outcomes directly
relate to the likelihood of them free-riding (Gulati
et al., 2012), highlighting how “differential percep-
tions of other decision makers’ actions” (Agarwal
et al., 2010: 418) might affect a focal rm’s deci-
sion to allocate its efforts. Since partners often hold
idiosyncratic views about the multi-party alliances
in which they are embedded (McCarter et al.,
2011)— especially when alliances include both
for-prot and not-for-prot organizations (Kale and
Singh, 2009)— their perceptions are likely to play
prominent roles in affecting any effort-withholding
behaviors (Schoorman, Mayer, and Davis, 2007).
Thus, we theorize and empirically validate that
perceptions of alliance effectiveness—in this case,
the extent to which a research consortium performs
to its potential in accomplishing its goals— have a
U-shaped relationship with actors’ free-riding, as
partners’ perceptions of both low and high alliance
effectiveness might limit their motivation to con-
tribute to the joint endeavor due to considerations
of marginal efciency (McCarter etal., 2011).
Leveraging social comparison theories (Festinger,
1954), we also argue and provide empirical support
for the view that multi-party alliance members are
attuned to perceptions of their peers’ behaviors
(Kitts, 2006), where peers are dened as other
organizations belonging to their same institutional
sector (Thornton and Ocasio, 2008). Thus, we
show that partners gauge their involvement in the
Copyright © 2015 John Wiley & Sons, Ltd. Strat. Mgmt. J.,38: 363–383 (2017)
DOI: 10.1002/smj
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