Odd Couples: Understanding the Governance of Firm-NGO Alliances

Abstract

We leverage insights and theories from the extensive inter-firm alliance literature to explore the effect of the sector of the partners on firm-NGO (B2N) alliance governance. Our analysis suggests that the sector of the partners has an important impact on alliance governance, not only because it constrains the availability of some governance mechanisms but also because it makes alternative mechanisms available or relevant to the partners. Specifically, we predict that B2N alliances will rely on contracts, a restricted scope, and non-equity hostages, such as reputational hostages and stakeholder involvement, rather than equity, leading to limited protection against opportunism. As a consequence, B2N alliance partners will need to rely on trust-based governance mechanisms to a greater extent than B2B alliance partners, although trust will be harder to build in B2N alliances.

Keywords: alliances, B2N alliances, NGOs, governance, opportunism, TCE, trust