An empirical taxonomy of technology alliance contracts

Although contracts are characterized by a certain logical and artifactual unity, the typical approach of economic and organizational studies focuses on particular contract clauses. Another common perspective, that addresses contracts as unitary entities, directs the attention to the choice between axiomatically defined alternative governance forms, with little or no investigation of empirical types. This state of things reflects the lack of an accepted framework for the development and testing of hypotheses about contract design. This study tries to redress this situation by analyzing actual contracts as configurations of a wide array of elements. In developing an analytical framework, this study develops a perspective that considers contracts as an organizational phenomenon, expands the set of mechanisms considered beyond incentive provisions and pricing structures, and includes procedural elements inspired both by organizational theory and by the empirical literature on contracting. The constructs so identified are applied to the analysis of a set of pharmaceutical biotechnology agreements. We employed categorical principal component analysis to determine underlying dimensions that differentiate among different contracts. Cluster analysis then produced an empirical taxonomy of these technology agreements