The more hard to describe the capabilities of a firm in an alliance,the greater the preference for an equity involvement.

Question

Quizplus · Accepted Answer

When the capabilities of a firm in an alliance are difficult to describe, there is a higher level of uncertainty and risk involved. In such cases, equity involvement (i.e., having ownership in the alliance) provides a higher level of commitment and control over the strategic direction of the alliance. Therefore, firms may prefer equity involvement over other forms of alliance partnerships.

The More Hard to Describe the Capabilities of a Firm