The effect of strategic alliances on transaction costs: A study on civil aviation sector

Airline firms are aimed to create alliances for the purpose of decreasing operational costs and increasing flight network in order to benefit from economies of scale, scope and density. However most of the firms which are involved in airline alliance on the one hand decrease the flight costs but on the other hand they have to deal with unpredicted transaction costs. In this scope, in this study 59 airline business which are involved in one of the global airline alliances have been investigated through transaction cost approach. Research is conducted with 85 middle and top level managers of global airline alliance businesses and data collected through online survey. Theoretical model which is framed with partner trustworthiness, contractual safeguards, mutual equity investment, opportunistic behavior, alliance age, asset specificity and alliance outcome variables analyzed through PLS-SEM and SPSS statistical programmes. Constructed hypothesis are tested either structural equation model, independent samples t-test, one way anova test or regression analysis. As a result of analysis it is found that all theoretical assumptions of transaction costs approach is supported. Partner trustworthiness, mutual equity investment and contractual safeguards variables are statistically significant at predicting opportunistic behavior while opportunistic behavior is also statistically significant at predicting alliance outcome. Similarly it is found that alliance age is statistically significant at predicting both opportunistic behavior and alliance outcome. Moreover it is also found that asset specificity is statistically significant at predicting opportunistic behavior and alliance outcome