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Hypothesis 1 predicted that new ventures with nonequity alliances would enhance sales growth when the alliance motives where related to resource dependency motives of either horizontal or vertical relationships. To test this hypothesis, the interaction terms MOT12ST1 representing new ventures with motives based on horizontal and vertical needs and an equity structure and MOT12ST2 representing new ventures with the same motives and a non-equity structure were created. This hypothesis suggests that alliances with resource dependency motives using an equity structures would have a negative impact on performance (MOT12ST1) and those with a non-equity structure would have a positive impact on performance. Neither coefficient was significant.

Interaction of Resource Dependency motives with governance structure

Variable B SE B Beta T Sig T
MOT12ST1 .326283 4.091739 .016706 .080 .4683
MOT12ST2 1.231475 3.787403 .130564 .325 .3778

Hypothesis 2 suggests that the interaction term of MOT3ST1 will be positively correlated with performance and MOT3ST2 will not be positively correlated with performance. Neither interaction was significant.

Reciprocal alliance with governance structure

Variable B SE B Beta T Sig T
MOT3ST1 17.84171 37.90464 0.053876 0.471 0.6384
MOT3ST2 -24.4232 36.55226 -0.07973 -0.668 0.5049


Hypothesis 3 suggested new ventures with transaction cost motives such as uncertainty, small numbers bargaining, asset specificity will prefer equity structures over non-equity structure. The theory also suggests that this should improve performance. The test of this theory found that neither of the interaction terms representing transaction cost motives with equity governance structures (MOTTCST1) or transaction cost motives with non-equity governance structures (MOTTCST2) were significant at the p < .05 level.


Interaction of transaction cost motives with alliance structures

Variable B SE B Beta T Sig T
MOTTCST1 38.41009 42.74991 0.079498 0.898 0.1851
MOTTCST2 17.07021 33.59316 0.049285 0.508 0.3060


Hypothesis 4 and 5 were related to strategic choice theory. This theory suggests that firms will choose the type of governance structure based on their strategy. New ventures should choose non-equity structures for alliances outside their core competence and equity structure within their core competence. I was unable to test the hypotheses dealing with equity alliances for several reasons. There was a much smaller number of equity alliances to begin with. Data was not always available as to which function the alliance was serving. When the information was available, these alliances usually had multiple functional purposes which made it difficult to determine the overriding purpose. I was able, though, to test the hypotheses related to non-equity structures.

Variables used to operationalize strategy and core competence included strategy variables represented by scost, stech and smkt. These were determined through the content analysis of the IPOs. These three variables represent four different strategies based on a modified Porter's typology. Scost represents cost leadership, stech represents technology differentiation, smkt represents marketing differentiation and the fourth is firms following both marketing and
technology differentiation.

The above hypothesis suggests that alliances outside the core competence with non-equity alliances should do better than those within the core competence and a non-equity alliance. This hypothesis was tested using interaction terms between strategy and non-equity alliances within functions. It was assumed that firm's following low cost strategy would need core competencies in production to be successful, marketing differentiation in marketing, and technical differentiation in R&D. The results were as follows when sales growth was the dependent
variable: interactions between a marketing alliance and new venture's with a cost strategy was significant and positive as predicted by theory. Also, new venture's with a marketing alliance and marketing strategy and was significant and negative, also as predicted. New ventures using a marketing alliance and following a technical strategy was significant and negativežthe opposite of predicted theory. These results are summarized in Table 5 and in Figure 1

Interaction of non-equity marketing alliances with new venture's strategy

Variable B SE B Beta T Sig T
MKTCOST 71.51443 41.55766 0.161703 1.721 0.0435
MKTMKT -113.204 39.9247 -0.25597 -2.835 0.0025
MKTTECH -85.3813 29.13182 -0.3233 -2.931 0.0019




Interaction of production non-equity alliances with strategy

Variable B SE B Beta T Sig T
COSTCOST -66.4514 42.76403 -0.13754 -1.554 0.0610
COSTMKT 236.6486 80.72564 0.221398 2.932 0.0019
COSTTECH 38.81062 35.7767 0.112053 1.085 0.1382

New ventures with a non-equity production alliance and a marketing differentiation strategy had better sales growth than those not using an alliance as predicted. Firms with a low cost strategy and employing a production non-equity alliance had less sales growth than those not using an alliance also as predicted.



We also looked at the interaction of technical alliances with the three possible strategies. There were no significant interactions when firms chose a technical alliance.

Interaction of technical alliance with strategy

Variable B SE B Beta T Sig T
TECHCOST 6.942016 62.75464 0.00916 0.111 0.4560
TECHMKT -21.3602 55.6702 -0.03965 -0.384 0.3509
TECHTECH 5.889121 39.29453 0.018522 0.15 0.4405


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