Today's paper:

Hanisch, M., Reuer, J. J., Haeussler, C., & Devarakonda, S. V. (2024). Hybrid Administrative Interfaces: Authority Delegation and Reversion in Strategic Alliances. Organization Science, 35(2), 550-572. The full text is here.

What was the question?

Question 1: In what types of alliances do steering committees make crucial decisions, and when do they address minor or symbolic ones?

Question 2: If the steering committee fails to reach a consensus, when do they delegate the final decision-making authority to one of the partners?

Why is this important?

Members of steering committees are expected to reach a consensus but often fail to do so. This situation, when they get stuck, is called a 'deadlock.' To address this issue, many alliances turn to external mediation or arbitration, but this process is time-consuming and expensive. An alternative approach is to delegate the final decision-making authority to one of the alliance members. Marvin Hanisch and his colleagues examine when alliances opt for this approach.

How did the researchers try to answer this question?

They did a statistical analysis using data from 632 alliances in the biopharmaceutical industry that had steering committees. 

What did they find out?

Answer 1. When do Steering committees can make really important decisions? They typically do this if a) alliance engages in a wide range of activities; or b) if companies in alliances depend a lot on each other. In such cases, if one person doesn't do their part, it affects everyone else (researchers call it "reciprocal interdependence.") In other situations, Steering committees do some minor functions, such as reviewing and monitoring.

Answer 2. When alliances allow one partner to make the final decision if the Steering committee get stuck? Typically, it happens a) if there are competitors in the alliance; and/or b) when the stakes of these decisions are high (involving higher dedicated investments).

What else should we know?

This study does not aim to tell us what is "good" or "bad" for alliances; only what happens in real life. We do not know whether these findings apply for:

• Alliances with 3+ partners. They may have more disagreement on who should make the final decision. The study only focused on alliances with two partners (dyadic partnerships).
  

• Other industries with high pressure to make decisions quickly (=one person in charge by default). In the biopharmaceutical industry, the delay in making decisions may be very, very expensive, and delegating it to one partner is a reasonable trade-off.

How can we use this information right away?

Grab a cup of coffee, pen and paper, and ask yourself: 

1. What is the role of the Steering Committee in our partnership? Do they make key decisions, or do they just oversee the project implementation? If they do not make key decisions, who does? Is everyone happy with this setup?
   

2. If more than one person is making key decisions (for example, the Committee), what happens when they do not agree? And if this never happened: can it be because it is more important to avoid disagreement than make a better decision?
   

3.  Do you have a plan in case these people cannot reach a consensus? If you don't, go ahead and make one before you have an actual conflict.
   

4.  Does it make sense in our situation to delegate the resolution to someone outside (mediator), or one of the partners? You might prefer to delegate it to the member of the alliance if you must make these decisions quick, and time = very big money.
   

5. If you are delegating this decision to the alliance partner, what is the role of this partner? The very influential, powerful partner might make decisions that exploit other members and make the conflict even worse.

The follow-up question was: how do we choose that member?

 The short answer is, it depends. If the partners are roughly equal and not competitors, you can save time and flip a coin (seriously, here is a cheat sheet to see when it is reasonable). However, such projects are very rare. For most cases, consider taking turns, using secret ballots, or dividing responsibilities based on expertise (e.g., financial issues resolved by the member with the best financial expertise).

 Two key points to remember:

1. Decide on the method before any disagreement arises (preferably right now).

2. The decision-maker should not benefit from the decision, so exclude such people if using secret ballots.

If in doubt, send me a question in reply to this email, and we will figure out how to handle it for your specific project