External technology sourcing: The effect of uncertainty on governance mode choice

This study examines the effect of external and relational uncertainty on the governance choice for inter-organizational technology sourcing. We develop a number of hypotheses about the impact of environmental turbulence, technological newness, technological distance and prior cooperation on the choice between different governance modes. Data about external technology sourcing transactions in the pharmaceutical industry do not provide evidence for a continuum from less to more integrated sourcing modes. However, we find that the ranking depends on the type of uncertainty, indicating that firms tackle different types of uncertainty with different governance modes.

Keywords: Open Innovation, Corporate Venture Capital, Mergers and Acquisitions JEL classification: 032, 031

UNU-MERIT Working Papers ISSN 1871-9872