Practices of Governance and Leadership and Their Effect on Capability Development and Performance of Strategic Alliances: Results of an Empirical Study

In this study we aim to verify whether heterogeneity in alliance capability development and performance can be attributed to the use of certain intra-firm governance practices and associated leadership behaviors. We suggest that transformational leadership behavior has a significant influence on the development of dynamic capabilities and subsequent alliance performance when it co-occurs with stewardship governance, whereas transactional leadership behavior has a significant influence on the alliance when partnering firms choose principal-agent type governance. Data from 369 alliances show that the positive relationship between transformational leadership and the development of dynamic capabilities is stronger with stewardship governance, and weaker with agency governance. In the case of stewardship governance, transactional leadership behavior too is significantly associated with dynamic and operational capability development.