Choosing Equity Stakes in Technology-Sourcing Relationships: An Integrative Framework

Although there has been an explosion in the number of technology sourcing relationships between firms-including alliances, acquisitions, and all intermediate levels of equity ownership-managers lack a comprehensive framework to guide them in equity ownership decisions meant to access technology. Higher levels of equity ownership can provide benefits such as exclusive access to and control over critical resources, alignment of interests between partners, and better coordination and control of partner interaction. On the other hand, equity ownership also entails costs associated with implementing changes to organizational structures, in addition to lower employee motivation as well as commitment costs due to market or technological uncertainty.