Int. J. Automotive Technology and Management, Vol. 6, No.

2, 2006 199

Towards a new form of governance for

inter-firm cooperation? Lessons from the
Renault-Nissan Alliance

Blanche Segrestin
Ecole des Mines de Paris, CGS
Service Financier
60, Bld St Michel – 75272
Cedex 06, Paris, France
E-mail: Blanche.Segrestin@cgs.ensmp.fr
Abstract: The Renault-Nissan Alliance is representative of forthcoming
challenges of inter-firm cooperation. Based on an in-depth case study on this
case, the paper expands the evolutionary perspective to examine the processes
through which the firms jointly investigate their potential partners to build
business opportunities. This exploratory process can either come to a standstill
or end up in a merger or in other form of alliance. In order to learn potential
common projects and the possible form of governance, firms need to manage
simultaneously the coordination and the cohesion mechanisms. The paper also
discusses the relevance of a special form of governance to provide firms with
an appropriate legal framework.

Keywords: inter-firm cooperation; innovation; platform; exploration;

coordination; governance; cohesion.

Reference to this paper should be made as follows: Segrestin, B. (2006)

‘Towards a new form of governance for inter-firm cooperation? Lessons from
the Renault-Nissan Alliance’, Int. J. Automotive Technology and Management,
Vol. 6, No. 2, pp.199–213.

Biographical notes: Blanche Segrestin is Research Assistant at the Research

Center for Management Science of Ecole des Mines de Paris. She has received
a Master’s of Engineering Program at the Ecole des Mines de Paris and a
Master’s Degree in Management at the Ecole des Ponts et Chaussées. She
received a PhD in Management Sciences at the Ecole des Mines de Paris and
was Research Fellow at Fenix (Stockholm School of Economics and Chalmers)
in 2002–2003. Her main research interests concern design activities and
innovation management, inter-firms cooperation, partnership development and
collaborative entrepreneurship.

1 Introduction

In the past years, there has been a growing interest for inter-firm relationships as a
result of their prominent role in business practices. The literature has outlined the
increasing number of agreements and partnerships of various kinds (Grandori and
Soda, 1995; Gulati, 1995; Jürgens, 2000). Strategic alliances, joint ventures, mergers
and acquisitions are alternative outcomes of integration mechanisms. Mergers and

Copyright © 2006 Inderscience Enterprises Ltd.

200 B. Segrestin

acquisitions are being particularly looked at as they deeply change the competitive
landscape and the firms’ identities. Most studies have analysed alliances and mergers for
their own sake, analysing extensively their patterns of formation and the variables
explaining their success or failure. However, little attention has been paid to the
processes which lead firms to switch from one mechanism to the other.
The Renault-Nissan alliance is a representative example of a systematic process to
build a common organisational entity. In October 2001, Renault and Nissan jointly
announced a new phase in their collaboration with the creation of a common strategic
partnership (Renault-Nissan BV). But this entity was the result of a long process. In
March 1999, Renault had become Nissan’s first shareholder. In the same year, several
projects had been developed jointly including a joint platform and several joint ventures
had been created, such as Renault-Nissan Purchasing Organisation (RNPO) and RNIS
to set up common information systems. We had the opportunity to follow in real time
the first phase of the alliance, from April 1999 until March 2000 and to analyse the
cooperation between the design teams on the development of the first joint platform.
This case is representative of more general questions for companies seeking to
explore new opportunities. How do firms learn on the potential synergies with different
actors? How do they identify the competencies they need and look for their partners?
Furthermore, to merge another company is not only a matter of bargaining or choosing
the appropriate governance structure: it requires deep investigations on the possible
partners, the potential synergies, the joint projects and the needed competencies. For
some years, firms have obviously looked for means to organise these investigations.
Firms need to explore new business opportunities together with other companies, before
committing themselves into larger projects. This paper explores these exploratory
processes and especially the form of governance which fits with such a group of actors.
In the first section, we present our theoretical framework to define what we assign to
as the cohesion of a group. Then, we will present the case study that will lead us
to examine the role of managers as the continuous adjustment between projects
and legitimate goals and structures. Finally, we will discuss the possibility and the
relevance of a new formal contract that could secure inter-firm cooperation for
exploratory situations.

2 An evolutionary and dynamic framework for exploratory cooperation

The growing literature on inter-firm cooperation is still dispersed, and no overarching

framework has yet emerged (Koza and Lewin, 1998). Roughly, different approaches can
be put forward. Economic analysis has emphasised the risks of cooperating in unsteady
situations where actors have limited rationality and opportunistic behaviour (Williamson,
1991); hence, contracts must be adapted to the type of transactions in order to
overcome contingencies and conflicting interests. Other authors have outlined various
and non-contractual mechanisms to reduce behavioural uncertainty. Self-enforcing
contracts (Dyer and Singh, 1998), relying on trust (Ring and Van de Ven, 1994; Ring,
1997), private authority (Ménard, 1997), reputation (Larson, 1992) or other social norms
can sustain cooperative efforts under uncertain conditions.
But cooperation does not solely refer to mutual safeguards. Another concern is about
coordination mechanisms of decentralised actions. Another approach has been developed
that explains cooperation with a ‘knowledge-based theory’ (Conner and Prahalad, 1996),
 Towards a new form of governance for inter-firm cooperation? 201

rather than with a transaction costs theory. This approach assumes that cooperation is a
means to acquire knowledge that is heterogeneous, distributed among actors and
embedded in organisational routines (Levitt and March, 1988; March, 1991). Given the
absorptive capacity of a firm (Cohen and Levinthal, 1990), an evolutionist perspective
has explained the limits of integration by constraints of coherence within a portfolio of
core competencies (Dosi et al., 1990). Thus, forms of partnerships are akin to the nature
of knowledge (Hamel, 1991) and organisational routines that enable effective transfer of
knowledge (Saxenian, 1994).
From these perspectives, different typologies have been derived, according to the
type of relationships (centralised or not, formal or not, etc.) or according to the type
of interdependencies (additive or complementary alliances, vertical or horizontal
partnerships (Dussauge and Garrette, 1998)). But these approaches, while referring to
given transactions or interdependencies, appear somehow static. Strategic analysis has by
far gone beyond the idea of given and predefined objectives to show that strategies are
mainly built in an iterative and adaptive way, especially in innovative and turbulent
environments (Burgelman and Doz, 2001).
A more recent approach aims therefore at studying processes of cooperation instead
of forms and factors of integration. Most interestingly, some authors have analysed these
processes as dynamics of revisions of initial conditions that effectively enable
convergence and mutual learning (Doz, 1996; Doz and Hamel, 1998). For these authors,
what matters is the dynamic evolution of the strategic purposes, the environment and the
nature of the relationships. Doz analyses successful alliance projects as projects that go
through a sequence of learning, re-evaluation and readjustment of the initial conditions.
In this evolutionary perspective, partners can progressively adapt and renegotiate their
expectations, the tasks to perform and the processes to reinforce mutual obligations. In
this view, the convergence process could go as far as merging different organisations.
In this paper, we wish to apply and expand this dynamic framework by focusing on
the process that may result to mergers. This focus is all the more important that firms’
connections touch upon more and more uncertain and upstream issues. As competition is
more and more driven by ‘intensive innovation’ (Hatchuel et al., 2001), competencies
(Prahalad, 1997) and capabilities (Fujimoto, 2001) have become critical to renew
products at an increased pace. Firms seek to share resources and risks to enhance their
innovative capabilities (Teece, 1992), to acquire new knowledge by taking part in
projects where they can learn (Kogut, 1988; Powell et al., 1996) and to coordinate
upstream technological strategies (Afuah, 1998; Sawhney and Prandelli, 2000).

A two-dimensional grid of cooperation: coordination and cohesion

Considering the pioneering work of Chester Barnard on ‘formal organisation’ (Barnard,
1938), an organisation is “a system of consciously coordinated activities or forces of two
or more persons”. This system depends on three elements:
1 the willingness to cooperate
2 the means to communicate
3 the existence of a ‘common purpose’ that is legitimate for each individual.
In his work, Barnard evokes explicitly two dimensions that executives have to take into
account: for simplicity, they will be hereafter assigned to as coordination and cohesion.1
202 B. Segrestin

Coordination
Most managerial studies have paid attention to coordination in the way Mintzberg
has defined it. Traditionally, managerial action refers to mechanisms of coordination to
achieve a common objective (Mintzberg, 1981). Basically, coordination refers to the
tasks and processes to be performed by the cooperation. It refers obviously to the related
knowledge and to the efficiency criteria needed to specify and concretise this object in a
collective way (Hatchuel, 1996). Organisational mechanisms that support coordination
relate to job sharing modalities, to prescription, reporting and control systems, as well as
to interactions and collective learning devices.
However, coordination itself is not sufficient. It neither takes into account the
willingness of the actors to involve themselves nor the legitimacy of the ‘common
purpose’. With coordination mechanisms only, it is not possible to distinguish a
centralised firm from a centralised network of suppliers or from a sports team. Therefore,
another dimension is necessary to apprehend the nature of relationships and what makes a
collective compared to a collection of individuals.

Cohesion
This second dimension, ‘cohesion’, has also received lots of attention in various
academic fields. Economists have studied governance structures as means to organise
incentives and align interests according to a common goal (Fama and Jensen, 1983b;
Fama and Jensen, 1983a; Jensen and Meckling, 1976). But more generally, as Barnard
noticed, an order or a governance structure is effective only as long as it is legitimate.
Socially legitimate systems have been also widely studied (DiMaggio and Powell, 1983).
We assume that cohesion refers to the system of legitimacy, as defined by Laufer (Laufer
and Burlaud, 1997; Laufer, 2000). It is the agreement on the means to settle possible
disputes. Cohesion is therefore the frame that enables collective action to take place. In
this respect, legal procedures play a prevailing role. Although there may be various
sources of cohesion within a group (Macaulay, 1963), the legal system transforms private
interests into legitimate rights and private regulation systems are not alternatives to the
legal system. On the contrary, they are allowed and organised within a legal system
(Serverin, 2000). Besides, from a methodological point of view, formal rules and legal
devices are most likely to be depicted and examined as tangible instrumentations of
cohesion. Later on, we assume that cohesion of a partnership can be schematically
described by the rules that define conditions to enter or to leave a partnership, the rules
that define results or opportunities to share procedures or risks assumptions and the rules
that define who is allowed to take what kind of decision.
At this stage, we can consider that any form of cooperation is likely to be analysed
according to these two dimensions:
1 Coordination refers to the objects, the problems and the tasks, the knowledge and
competencies and the efficiency criteria. It is instrumented by job sharing principles,
prescription, monitoring and reporting means, as well as collective learning devices.
2 Cohesion refers to the ‘common purpose’, the preferences and interests of
individuals and the system of legitimacy. It is instrumented by all kinds of
agreements on ways to settle disputes (agreements on conditions for entering and
leaving the group, on risks and results allocation procedures, on decision legitimacy).
 Towards a new form of governance for inter-firm cooperation? 203

The Renault-Nissan Alliance is instructive as both dimensions have evolved

simultaneously over time. At the beginning, the partners were uncertain about the
potential synergies, the risks of joint projects and their willingness to collaborate. Neither
the coordination nor the cohesion was specified in advance. Therefore, the challenge
was twofold:
1 On the one hand, they had to define joint projects that fit each other’s interests and
the common goal of the alliance.
2 On the other hand, they had to set up a cohesion framework that matched the
characteristics of the projects. In this case, the merger is the result of an intensive
upstream joint design work.

3 The Renault-Nissan case: a challenging but successful alliance

3.1 Research setting and methodology
The main empirical case involves the initial phase of the Renault-Nissan Alliance, from
April 1999 until March 2000. Case studies’ methodology is acknowledged as a way to
develop grounded theories (Glaser and Strauss, 1967). We had the opportunity to
collaborate with Renault and Nissan to analyse their cooperative setups and processes.
Our empirical analysis are therefore based on intervention-research methodology (David,
2001) to get the chance to follow in real-time the evolution, difficulties and changing
interpretations of cooperative processes. This methodology is especially helpful when the
difficulties cannot be evaluated from an external point of view. It is also helpful when
one needs to interact with the actors to analyse the problems, depict underlying logics and
follow the implementation of experimental solutions. In this perspective, this is quite a
unique way to challenge prevalent theories and to capture new trends and novelties in a
changing business environment, especially to capture the dynamic evolution of alliances
and of their governance structures over time. Case studies actually represent ‘unique
opportunities for empirical and theoretical interpretation, and a means of developing an
evolutionary understanding’ of inter-firm connections (Koza and Lewin, 1999).
The collaboration was studied from an engineering perspective and focused on the
development of the first common platform for both Renault and Nissan’s new vehicles.
Interviews were conducted with main managers, engineers and technicians in charge
of developing or prototyping common parts. Further series of interviews were
conducted with designers, architects and experts contributing to some critical parts of the
platform, where tensions appeared. Archival written material was also collected, and the
researchers attended meetings and strategic boards. French managers appointed in Japan
were also interviewed. Several intermediary reports were established to gather reactions,
check the validity of data and refine our interpretative framework. In the course of the
study, further and more detailed questions appeared as a result of an interactive process.
A Japanese team was asked to conduct additional interviews based on Nissan guidelines
in Japan. The final conclusions were discussed and validated with both hierarchies.
Once we gained a good understanding of the alliance processes, we started testing our
theory. Our emphasis was mainly on how coordination and cohesion dimensions evolved
over time, how they influenced each other, what the actionable tools for managerial
actions were and, finally, how difficulties could be interpreted within our framework.
204 B. Segrestin

Before going into a detailed presentation of the case, we shall briefly summarise the main
results. The results of the research outlined that the platform development had to be
evaluated as an exploratory project, to investigate the synergy opportunities between both
manufacturers. Here, not only the scope and the specifications of a joint platform had to
be designed, but also the common organisation and the conditions for a lasting alliance
were to be defined.

3.2 The first platform development within the Renault-Nissan Alliance

In the spring of 1999, Renault and Nissan’s Chief Executive Officers (CEOs) negotiated
a possible acquisition by Renault of the Japanese manufacturer. For Nissan, this became
crucial as the company lost its competitiveness and its production rate had decreased by
20% since 1992. For both companies, bringing their teams together meant much more
than an acquisition: the alliance, not yet a legal entity, was created to give birth to joint
projects. The vision was promising: not only did it open the possibility to major
rationalisation in the manufacturing system of both companies, but also sales networks
were very complementary and each manufacturer could benefit from the technical
expertise and the organisational know-how of its partner. Moreover, Renault was willing
to implement a strategy commonly adopted by most manufacturers: the development of
common platforms (roughly the wheel base systems) can allow substantial economies
in development costs (design studies, prototyping, validation protocols), industrial
equipment and purchasing. It also allows preserving the brand’s identity and the diversity
of the vehicles. Besides, a common project was seen as a means to gather the engineering
teams and to create a common spirit.
In reality, the collaboration between Nissan and Renault constituted a real challenge:
the companies did not know each other, and they had very different corporate
cultures and strategies (Boyer et al., 1998). They were not used to working with their
former competitors. The stability of the alliance was far from being established. The
communication of the new group emphasised strongly the idea of a multicultural and
balanced group, with two autonomous companies.
In these conditions, when the engineering departments were asked to develop a
common platform, the project appeared highly ambitious and everything was to be done.
With very short time lines, the teams needed to draw a rough sketch of the common
architecture of the wheel base and to define a work plan. What would be the perimeter of
the common system? What was feasible and what was interesting? Uncertainties came
both from coordination and cohesion dimensions.
The objectives were therefore twofold.
1 From a coordination perspective, build the objects of the cooperation and define the
opportunities and the related capabilities by identifying efficiency criteria, needed
resources and learning processes required.
2 From a cohesion perspective, initiate action and therefore build a collective
agreement and gather the conditions of a ‘common purpose’.
 Towards a new form of governance for inter-firm cooperation? 205

3.3 Coordination processes shaped by uncertain cohesion

Regarding the coordination, a list of potential common components was rapidly
established; but it was too early and too difficult at this stage to merge the design teams.
Therefore, the development of some common parts (the ones used worldwide) was
delegated to Nissan, whereas Renault was in charge of the development of the common
parts specific for the European market.
The simple but cautious coordination plan mirrored a very open cohesion system:
• Regarding the cohesion, top managers kept emphasising the importance of brand
autonomy; they were anxious to preserve each other’s freedom of operation. They
decided to postpone the creation of any formal decision structure. It was only in
January 2000 that a Platform Management Team was introduced.
• For the same reason, no cost sharing rules were discussed. Job sharing was assumed
to be fair, and information was lacking on provisional costs. In other words, any
attempt to define ex ante a more specified governance scheme would have strongly
hindered the action and the teams’ motivation. It would have been too risky to define
targets and mutual obligations.
Looking more into the details of the design process, it appears that the tasks were first to
gather the specifications for each component and then to develop technical solutions that
could meet both companies’ expectations. For some parts, such as the cooling system,
the specifications were so different that only a very innovative technical concept
could achieve both requirements. Most of the time, the development task has revealed
itself much more complicated than specific development and the value added of
commonalisation was debatable. Moreover, when a team could not find a satisfying
solution, the other one often took an active part in the development, studying alternative
technical concepts. The overall work was probably intensified: the coordination
principles have moved either towards joint studies or independent work.
Besides, although the platform was supposed to improve the interests of each
manufacturer, some problems appear that came in opposition to other interests. For
instance, the fuel tank was almost developed jointly with Renault, but the choice of the
supplier clashed with the institutional interests of each manufacturer. For other parts, as
an innovative concept was suggested by a supplier, both manufacturers wanted to
develop the components separately to better assimilate the technology and to be able to
replicate the innovation for other vehicles of the brand. The commonalities across
segments within a brand appeared sometimes more important than the commonalities
between Renault and Nissan. Finally, both the job sharing and the scope of the platform
have evolved: many parts have been ‘decommonalised’. In other words, coordination has
been changed to take into account the cohesion; but at the same time, the joint project
was a way to map each partner’s interests and to identify critical issues as new strategic
purposes surface for the collaboration.

3.4 Cohesion structures resulting from learning processes

Simultaneously, the coordination influenced the dynamics of the cohesion framework.
All these unexpected problems show how much any technical choice and any decision
relative to coordination mechanisms have influenced the perceived interests of each
manufacturer to collaborate on the platform. But more importantly, the interests and the
206 B. Segrestin

preferences of each one could not be predicted or evaluated beforehand: the preliminary
studies were in that sense a means to map the difficulties as well as the opportunities for
each partner. The learning processes of each other’s interests lead to acute tensions:
without any real legitimate arbitrator and without any formal liability, the only way to
solve a problem was most of the time to renounce to the commonality. But that was
obviously not an easy decision to make. When renouncing to commonality, the study has
to be started all over again, and the costs that were engaged in prototyping, tooling or
purchasing are lost. It comes sometimes to very harsh discussions, especially when the
renunciation of one of the partners occurs late.
It was only late April 2000 that a pre-contractual agreement was signed to specify the
scope of the platform and the cost sharing. The willingness to collaborate in an open and
fair environment was clear, and partners agreed to share the development costs on an
equal basis. But how could they evaluate the costs? What were the design studies that
were related to the common parts and what were the ones to be excluded? Besides, how
could they evaluate the benefits gained by each party? For instance, how could the
transfer of know-how be evaluated in this process? The pre-contract outlined many
uncertainties and created a list of new issues.
Here again, we can emphasise the fact that any formal obligation would have limited
contribution from both parties. But conversely, the openness of the cohesion system has
been highly problematic, too. Apart from the costs of late defection, the lack of mutual
obligation has different drawbacks: there are no incentives to develop the best possible
solutions and there are no levers to control the partner’s effort to achieve the
requirements. In other words, cohesion has to be adjusted to take into account the
coordination. At the same time, the joint project is a way to strengthen the common
purpose: the platform development helped identify what was not relevant for the alliance
and specify its legitimacy.

3.5 The management at the interplay between coordination and cohesion

The analysis of difficulties encountered by the design teams revealed the interaction
between coordination and cohesion as a critical element of managing collective
exploration. Thus, it appears that managing effective collective exploration is a matter of
both coordination and cohesion. Both dimensions need to be present to maintain a mutual
consistency despite each dimension’s dynamics.
The role of the Platform Management Team was not to control the contribution of
each party. There were two different tasks:
1 First, the management has to revise the coordination dimension – to adjust the scope
of the common platform and the job sharing according to the legitimacy of the
cooperation and to its evolutions. The learning process is further stimulated by
depicting risks of late renunciation and by comparing methods, standards and
validation protocols. In this respect, we interpret the platform development as a way
to explore the potential common interests and to identify potential for shared
learning and new (research) projects that could benefit each partner.
2 Second, the management has to adapt the cohesion dimension according to the
progress of the studies. Whereas predefined rules of mutual commitment or cost
sharing could be blocking beforehand, it occurred that these rules were necessary as
learning processes were taking place. When Nissan was in charge of common parts’
 Towards a new form of governance for inter-firm cooperation? 207

development, it invested more and more resources to achieve the requirements of

both Renault’s and Nissan’s cars. After a while, Renault could not withdraw without
causing troubles. Then, the lack of clear cohesion became a problem for the
evolution of the coordination dimension. The difficulty was not only to define the
conditions that enable collective action to take place but also to allow each team to
revise step by step its own strategic intents and commitments, according to the
learning processes.
The main issue was to monitor a dynamic management to continuously adjust
coordination and cohesion. It seems that Renault and Nissan, apart from scarce crises,
succeeded in managing this temporal evolution and to adapt both the scope of the
platform and the governance structure in a consistent way. For instance, once the parties’
interests were better known, supplier selection rules were clarified. New structures were
created (e.g., RNPO and RNIS in 2001). Finally, it came out naturally that the partners
jointly announced on 30 October 2001 a new phase of their collaboration. They decided
to strengthen their mutual involvement (Renault increased its share from 36.8% to 44%
and Nissan acquired 15% of Renault). The manufacturers were keeping their complete
autonomy regarding their operations; but strategic management was reinforced with the
creation of Renault-Nissan BV, a joint equity venture that constitutes the center of
strategic commandment of the alliance and of the global coordination.

4 The first platform development as an exploratory partnership

4.1 Precariousness of coordination and cohesion: the interdependencies
between both dimensions
This case shows how the dynamics of the relationships become a process to
simultaneously build a ‘common purpose’ and to enable collective actions. The choices
made at the coordination level influence the potential common interests and,
consequently, the cohesion. Conversely, the choices made at the governance structure
level also influence the tasks and the possible common projects. Hence, both dimensions
are variable and need to be managed simultaneously by taking into account the effect of
any possible decision on one dimension or the other.
The case is illustrative of major challenges that companies meet when they explore
new business opportunities.2 According to the above discussion, it is possible to
characterise those exploratory partnerships. From a coordination perspective, partners
initiate actions around ill-specified objects and try to learn in order to guide further
actions. From a cohesion perspective, partners start the collaboration without being sure
of their interests. Concretely, cohesion rules are very ill defined at the beginning. The
situation is very different, for instance, from a legal partnership, where cohesion is based
on a clear intent of parties to cooperate (the French law relates to affectio societatis to
designate existing relationships). Here, the intent to merge does not pre-exist, but would
rather be a possible result of the cooperation process.
In these conditions, an exploratory partnership is bound to move towards either new
fields of action or other forms of partnerships. Partners can either stabilise their
relationships by creating a joint venture or agree on a joint development. They can come
to a standstill, end up in a merger or an acquisition. But we can also notice that
exploratory partnerships may also diverge by giving birth to new fields of exploration or
by integrating new partners.
208 B. Segrestin

Consequently, what must be managed are the richness of the openings and the value
of coming out opportunities. The analysis of difficulties encountered by Renault and
Nissan highlights the interaction between coordination and cohesion as a critical element
of management of collective exploration. Thus, it appears that managing collective
exploration is neither a matter of coordination alone nor a matter of cohesion only. To be
effective, it has to organise the coupling between both dimensions so that a mutual
consistency is maintained despite the dynamics of each dimension. Each dimension has
to be designed taking into account the impact and the possible evolutions of the other
dimension. We suggest qualifying the management as ‘critical’ as the problem is to make
sure that no distortion occurs during the cooperation process. In other words, the critical
management has to organise the paths of exploration with the successive repositioning of
coordination and cohesion mechanisms.
Therefore, two types of instrument can be needed:
1 On the one hand, partners need some procedures to organise a recursive process. The
more circumscribed the experiments are and the more specific they can be, the less
risky it will be for the partners and the easiest the cohesion will be. More generally,
it is necessary to grant each partner a control of their involvement at any time of the
collaboration process. Actions must be therefore defined in a recursive way, with a
stepwise reassessment of what partners agree to pursue and with whom. Any change
on one dimension must induce a revision on the other one. For instance, after each
experimentation, partners can agree to revise the partnership’s logic and provisions;
they can also revise the partners themselves. They can agree upon a mutual duty of
alert when the design regime changes, when the experiments do not refer anymore to
the exploration field or when their interests no longer fit with the coordination
mechanisms. Renault and Nissan have, for instance, changed the job sharing
principles many times in order to maintain equilibrium in the contribution of
each partner.
2 On the other hand, to be able to depict the distortions of the coupling, partners also
need some procedures to evaluate the consistency of the link between the two
dimensions. Some visual means could be interesting to develop to actually map the
field of exploration and to state the shared uncertainty and their evolutions. But other
investigation means can be considered. When Renault asks researchers to
analyse mutual perception of the development process, it is a way to lead such
an investigation.
Several managerial tools could be developed. But at this stage, how do we characterise
the form of governance of such a collaboration? What kind of cohesion framework can
enable collective action and at the same time regulate relationships, maintain openness
and organise its own mutation?

4.2 A new legal structure to organise connectivity?

In the cases mentioned above, the legal structures were as open as possible. We pointed
out that an open cohesion framework may be necessary to let partners leave the
cooperation based on their learning processes. But partners actually need a minimal
framework to involve them in the cooperation. They need to agree on the scope of
exploration and the conditions for leaving the cooperation. And they need to assess
 Towards a new form of governance for inter-firm cooperation? 209

uncertainties and conditions to revise their early agreement. But, is it possible that no
cohesion framework and no legal devices regulate these partnerships? Why does no
existing structure seem adapted?
Legal business aspects are often heavily criticised for their formal and rigid features.
It is argued that firms prefer alternative cohesion framework (Macaulay, 1963) and that
contractual arrangements where parties are free to stipulate their status are preferred to
equity joint ventures. Hagedoorn (2002) has shown the rapid decrease of equity joint
ventures among newly established R&D partnerships.
However, the law is still prevailing and conflicts are still settled by legal means. The
parties are free to design their contracts but they are bound to them (Kirat and Serverin,
2000). Besides, the law has also deeply evolved to take into account actual business
needs. There are numerous evidences of the dynamism of the law.3 Any legal evolution is
said to increase flexibility (Deards, 2001). However, most of the time, flexibility refers to
the possibility to choose between given alternatives (Sealy, 2000): “both before and after
the deal is concluded, the parties should be willing to consider alternative structures that
are consistent with the objectives of the alliance” (Graham, 1998). This definition is
nevertheless restrictive since the objectives of an alliance can be ill defined, and since
new alternatives can be designed.
In these conditions, the increased flexibility is almost synonymous with autonomy of
firms when the law does not provide any framework. Certainly, the flexibility has
improved with these new arrangements. But one can wonder if that is of any help for
managers. From a legal point of view, flexibility lets firms decide on their own the type
of provisions they want and their statutes. But, the contractual freedom is not really
helpful when partners do not clearly know what they should collaborate on and what they
can expect.
Without being too speculative, we can identify different arguments in favour
of a formalisation of a special contract for collective exploration. Such a contract
could ask partners to explain the field they intend to explore jointly. It would have
several advantages:
• a clarification of the purpose, avoiding quiproquos and conflicting break-offs of the
relationships
• a simplification that would enable small firms to initiate exploration without
worrying about the confusion of complex contractual arrangements (Young, 2000)
• a didactic role to spread out good practices and also to explain to third parties (such
as competitors or stakeholders) that co-exploration is not equivalent to mutual
commitment but can lead to various revisions.
Naturally, these suggestions are only proposals that need further investigation and that
only result from the characterisation of exploratory partnerships we submitted above. In
our mind, one of their advantages is that they open various research perspectives. We will
conclude on these perspectives to be carried out together with jurists.
210 B. Segrestin

5 Conclusion

In the Renault-Nissan Alliance, targets and specifications are not clearly known, nor are
the contractual provisions and norms about benefit allocation or burden sharing. Neither
the achievement of predefined goals nor the stability of relationships is an accurate
criterion to evaluate whether the cooperation was a success or a failure. The issue
is to learn about potential synergies and obstacles, to map the field of opportunities
and to reframe accordingly the scope of the platform and/or the type of partners to
collaborate with.
Thus, we argue that merging does not consist of bargaining, but of generating
capabilities for further collaboration. It is about ‘expanding’ the scope or the content of
connections (Hatchuel, 2001). In this paper, we suggest a new framework where
cooperation is described, following the pioneering work of Barnard, according to two
dimensions. The coordination dimension refers to the efficiency criteria and the way
partners define and perform common tasks. The cohesion dimension refers to the
conditions that enable partners to commit themselves in collective action and eventually
to merge. These conditions rely on joint interests; but more importantly, they depend on
the legitimate rules that enable partners to solve potential disputes.
Whereas in most networks, one of these dimensions is sufficiently stabilised to define
the other, we show that simultaneously ill-defined coordination and cohesion dimensions
characterise exploratory partnerships. Then, one dimension has to be specified by taking
into account the evolutions and the uncertainty of the other one.
This framework needs to be validated with other cases studies. It also needs to be
refined according to contingency criteria. It has important managerial implications that
call for further research. The management of the interdependencies between coordination
and cohesion is crucial for the success or the failure of the overall exploration. Thus,
exploration needs an intensive reflexive and self-critical activity from the partners.
Techniques certainly need further research to be specified and experimented.
However, is self-critical activity a reasonable hypothesis from a legal point of view?
Can different actors follow the same reflexive path and agree upon the means to monitor
it? This paper invites further research on a new legal form for exploratory partnerships.
Some authors have already outlined the recursive feature of contractual agreements that
enable learning dynamics. But rather than allowing expectations revisions or fair
negotiations, our analysis suggests that a legal formalisation of this type of collaboration
would be useful to enable firms to jointly explore new fields, while recognising and
managing the mutual liabilities generated by this process. Whether this can be obtained
by emerging new management practices or whether it needs a new legal form of
cooperation is the central discussion brought up by this research.

Acknowledgements

I am very grateful to Armand Hatchuel, Professor at Ecole des Mines. I also thank
Jean-Claude Monnet and Philippe Doublet of Renault.
 Towards a new form of governance for inter-firm cooperation? 211

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Notes
1 This framework is neither new nor exclusive. Other authors have suggested quite similar
dimensions (e.g., Sobrero and Schrader, 1998). Salbu distinguishes similarly legal functions
between coordination functions and control functions (Salbu, 1997).
2 Other case studies present similar exploratory partnerships. For instance, Midler has
studied collaboration between Renault and VDO to explore future on-board telematics
devices (Kesseler, 1998; Midler, 2001). Similarly, C. Marshall has studied alliances in
telecommunication to explore joint opportunities in the field of mobile internet in 1999
(electronic commerce, IP-telephony, etc.) (Marshall and Segrestin, 2002).
3 Options contracts, pre-contractual arrangements and new structures have been recently
introduced. Limited Liability Companies (LLC) and Limited Liability Partnerships (LLP)
in the USA and in the UK, Groupement d’Intérêt Economiaue (GIE) and Société
Anonyme Simplifiée (SAS) in France are some examples that provide legal frames where
partners’ liability is limited and where the governance structure is mainly defined by the
statutes themselves.