Collaborative by Design? How Matrix Organizations See/Do Alliances

AbstractThis study develops and tests a conceptual framework that analyzes how and why a firm’s experiences with complex intraorganizational structures (i.e., matrix) will affect its propensity to enter into, and ability to manage, complex interorganizational structures (i.e., alliances that are multilateral, multifunctional, or involve diverse industry partners). We posit that managers of matrix firms’ greater familiarity with coordination, knowledge sharing, and conflict management challenges in intraorganizational collaboration gives them greater confidence in their ability to manage similar challenges in complex alliances. Using a combination of quantitative data analysis and semistructured interviews, we find support for our core prediction that matrix firms are more likely than nonmatrix firms to enter into complex alliances. Unexpectedly, we find that the stock market penalizes matrix firms that engage in multifunctional alliances, a phenomenon we suggest reflects a “double-complexity discount.” The double-complexity discount refers to reduced organizational outcomes incurred for the simultaneous complexity of intra- and interorganizational governance structures. This study raises questions about the benefits and costs of firms’ simultaneously engaging in complex intra- and interorganizational governance structures, with particular attention to the difference between managerial confidence and competence regarding complex collaboration challenges.The online appendices are available at https://doi.org/10.1287/orsc.2018.1220.