Think about basic economics — when you specialize in one skill and your neighbor specializes in another, you’re both better off when you collaborate and trade amongst each other, rather than relying on your own advantages.

Firms are increasingly recognizing this principle holds true when it comes to research and development (R&D) information sharing among firms.

Businesses form research and development alliances when developing new products. An R&D alliance is a formal relationship between two or more firms to pursue mutually beneficial goals. The firms remain independent entities, but enter into an agreement to combine their knowledge bases in order to expand and refine innovations. “It’s simple,” says Lorraine Eden, a management professor at Mays Business School. “Two brains are better than one.”

R. Duane Ireland

Michael Hitt

Lorraine Eden

Many industries are involved in R&D alliances, including pharmaceutical, automotive, electronics and chemical companies. When the costs and risks of developing new products are both high, these firms are more likely to enter into an R&D alliance, says Michael Hitt, a University Distinguished Professor in management and Joe B. Foster ’56 Chair in Business Leadership.

Dan Li ’05, now teaching at Indiana University, worked at Texas A&M with Eden, Hitt and R. Duane Ireland, Distinguished Professor in management, Conn Chair in New Ventures Leadership and AMJ Editor, on a recent study to examine which type of governance structure is most effective for these alliances. They focused their research on multilateral alliances (three or more firms) and compared them with bilateral alliances (a joint venture between two firms).

“Very few have studied multilateral alliances,” Hitt said in describing the research’s uniqueness. Eden adds: “People have been researching bilateral firms for the past 20-30 years, but there’s been not much written on multilateral ones.”

Hitt describes information sharing between firms as “a real balancing act.” Individual firms must manage the information they share and the information they protect. “In a joint venture,” says Hitt. “If everyone invests money, there’s an incentive to share information and be fair.” They wanted to learn if this remained true when the number of partners increases.

According to Eden, much of the intended knowledge sharing within the alliances involves “tacit information” — information that must be thoroughly explained and demonstrated by one firm to another. She argues that selecting the type of governance (equity-based or contractual) structure can be critical to the success of the R&D alliance since equity ownership, where one firm owns a piece of the other firms, can help facilitate planned knowledge sharing among them.

At the same time, however, sharing knowledge often leads to “unintended information leakages,” which causes problems among the R&D alliance partners. “There’s a real hesitancy,” Hitt says. “When you’re in an alliance, you have to trust your partners, who are potential competitors, to be fair.”

Their study examined 2,500 alliances — 1,700 bilateral and 750 multilateral. The researchers also compared governance structures in two types of trilateral R&D alliances: chain and net. The study found that 18 percent of trilateral alliances use a chain-based approach, which involves a passing of information from one firm to another, and 82 percent of alliances use net-based approaches, or group sharing.

As the complexity of the alliance increases, the probability of cheating also increases. For example, the alliance between pharmaceutical companies becomes more complex if the companies are from different countries, mainly because intellectual property rights vary internationally. Additionally, the more firms involved in an alliance, the more likely there will be a “free-rider,” or a firm that wants information from other companies without sharing any of its own. This is more likely the case in net than in chain trilateral alliances, notes, Eden, because it is “easier for the cheater to hide.”

The research found that equity governance structures, rather than contractual structures, combat the uncertainty of information-sharing firms face as complexity escalates in multilateral alliances. Equity ownership can help compensate for complexity and free-rider problems, while also helping to facilitate intended knowledge transfers. The greater the emphasis on equity share, the smoother the facilitation and transfer of information, the research notes.

The authors found that, for both knowledge sharing and knowledge protection reasons, firms were more likely to use an equity governance structure in multilateral than in bilateral R&D alliances. Similarly, net trilateral alliances were more likely than chain ones to use equity governance structures.

Eden suggested that the study offers a confirmation for firms interested in governance mechanisms. “Companies will be able to look at the findings and determine what type of governance is best for their alliance.”

Categories: Research Notes

Sometimes “perfectly good” is the best outcome that can come from negotiations, instead of either side getting its ideal solution, Andrew Card recently told students at Mays Business School.

“I believe very, very strongly that perfection is never the result of a democracy, except by accident,” says Card, acting dean of The Bush School of Government and Public Service at Texas A&M. “I want it to be perfectly good — for both sides. That’s what I think we need more of.”

Andrew Card

Card speaks from experience drawn from a lengthy career as a Republican politician and business leader. He was White House Chief of Staff under President George W. Bush, U.S. Secretary of Transportation under President George H.W. Bush and a former U.S. Cabinet member.

He also served in the Massachusetts Legislature for eight years and sought the governor’s seat in 1982.

A report Card co-chaired with former Democratic Senate Majority Leader Tom Daschle, “U.S. Trade and Investment Policy: Independent Task Force Report,” was the central topic of Card’s discussion with students of management professors Lorraine Eden and Michael Pustay.

Card calls the report released in September “a roadmap for rational thinking in trade. It’s pro-American, and says the federal government should step up and be the enforcer once in awhile and defend fair trade.”

International trade policy has been on hold “for quite awhile, for 10 years,” due to political divisions. He said the task force urged the creation and sustenance of a trade policy that yields greater benefits for Americans in job and wage growth. “I think America should have a very, very strong trade policy because I want America to be loved and respected and feared,” he said. “And the U.S. Patent Office and International Patent Convention should enforce it, not individuals.”

At the Bush School, Card works with students pursuing master’s degrees in public administration and international affairs. He says politics and economics are intertwined. “We focus on economics and how to keep our engine churning so we can continue to grow as a nation. In the world of economics, you need political scientists to help with that.”

Categories: Executive Speakers, Texas A&M

On Valentine’s Day 2008, Lorraine Eden, professor of management at Mays, became a U.S. citizen. Here are excerpts from the speech she gave at the naturalization ceremony.

The dictionary defines “citizen” as “a person owing allegiance to a state where sovereign power is retained by the people and where the person shares in the political rights of the people.” (( A citizen is a member of a community. Citizens “belong to”, “are part of”, “are accepted as”; in other words, citizenship is all about “belonging”. Citizens are insiders.

Eden at ceremony
Mays professor Lorraine Eden became a U.S. citizen on Valentine’s Day 2008.

The Department of Homeland Security’s most recent Yearbook of Immigration Statistics states that 702,589 people became naturalized citizens of the United States in 2006 (the newest available data). Almost three-quarters of a million people chose membership in the U.S. community—to become insiders.

They came from—I counted!—192 different countries. In other words, there were new naturalized U.S. citizens in 2006 from every country that is a country in the world.

I am from Canada. As you might expect, given its small population, there weren’t a lot of Canadians in the group — about 1% of the total. The top five sending countries were: Mexico (12% of the total), India, Philippines, China and Vietnam.

Where do these new U.S. citizens live? In every state in the union. The top five receiving states were: California, New York, Florida, New Jersey, and Texas (5% of the total).

Immigrants are applying for U.S. citizenship in record numbers. Almost 1.5 million legal immigrants applied for U.S. citizenship in fiscal year 2007. More than one million applications are still pending. ((Houston Chronicle, Jan 28, 2008.

While the naturalization ceremonies in Bryan/College Station are small, this is not the case in larger cities. In Los Angeles, naturalization ceremonies are running almost monthly. On February 21st two ceremonies are scheduled—for 6,000 people each! Website instructions warn new citizens and their families to set up specific locations for meeting after the ceremony because of the huge crowds. ((“Due to the large size of the naturalization facilities and the fact that applicants and guests are separated during processing, it is a good idea to have the applicant and guest designate a specific location to meet after the ceremony. Too often, individuals cannot locate each other at the conclusion of the ceremony.” See )) In Houston, almost 4,000 immigrants were naturalized in January 2008 and over a dozen more ceremonies are scheduled through September. A Houston radio station compared the mass ceremonies to basketball games: “a full parking lot, 5,000 people in the seats, ushers, security guards and even music playing over the public address system”. ((

What is clear from these statistics is the overwhelming desire of people from all walks of life, across all countries, races and ethnicities, to migrate to the United States and become naturalized U.S. citizens. Some individuals came here fleeing from persecution in their home countries; others simply looking for a better life. Some (like me) came here through marriage to a U.S. native-born citizen.

“Physically, mentally and emotionally, we have moved to the United States and put down roots. Our allegiance is here.”

Let me tell you a bit about my own personal journey to becoming a U.S. citizen.

I am a “border child.” My father was Canadian and my mother was British. They met in London during the Blitz and married after the war. Both of my parents spent part of their childhoods in orphanages so I know little about my own roots. I am the eldest of three children. I was born and raised in St. Stephen, New Brunswick, a small town of 3,000 people on the Canadian side of the U.S.-Canada border. Many of my childhood memories involve crossing the bridge to visit Calais, Maine on the U.S. side of the border. ((

The United States was ever present when I was growing up. My earliest TV memories are of Roy Rodgers and Dale Evans, The Mickey Mouse Club, Spanky and Our Gang, The Lone Ranger, Laurel and Hardy, the Three Stooges, The Ed Sullivan Show—all American shows. I loved Walt Disney movies and Warner Brothers cartoons, and devoured Nancy Drew, The Bobbsey Twins and Zane Gray books. As a teenager, I listened to New York radio stations (WPTR, WABC, Wolfman Jack), spent my allowance on teen movie magazines, and listened to Top 40 Hits (the Beach Boys) while dreaming about what it would be like to live in California.

Many years later, I was a professor of international affairs at Carleton University in Ottawa when I met a professor of political science at Ohio State. We fell in love, commuted for a couple of years, and then went on the market together. Texas A&M hired both of us and that changed everything. My husband, Chuck Hermann, became the founding director of the George Bush School of Government and Public Service; I became a faculty member in the management department at Mays. We arrived here in July 1995 to a Texas summer—over 100 degrees outside—and a house with the air conditioning off.

Eden at ceremony
More than 700,000 people became naturalized citizens of the United States in 2006 alone.

Over the past 13 years, Bryan/College Station has become our home and Texas A&M our university. We have many friends here and have put down roots. We have a good life. Our three children are now all married, and we have our first grandson. The Bush School is a thriving institution with dozens of faculty and hundreds of graduates. My department is ranked one of the best in the country.

In June 2007, I applied for U.S. citizenship, with the help of Esther Del Toro, my immigration lawyer. My reasons for moving from a “permanent resident” (or, as my husband calls me, his “resident alien”) to a naturalized U.S. citizen were simple. There were two primary ones:

First, I had become “Americanized”, but was not an American. I have been physically inside the United States since 1995, but still internally saw myself as an outsider. I couldn’t vote. I couldn’t serve in jury duty. I couldn’t run for elective office. It was time to assume these citizenship responsibilities. It was time to show my allegiance to the community by pulling my own weight as a citizen. It was time to become an insider. It felt right.

Second, November 2007 was the 10th anniversary of the opening of the Bush School and the Bush Library/Museum. Applying for U.S. citizenship in June 2007 was my own personal way of marking this overwhelmingly important event in Chuck’s and my life. The 10th anniversary was time. It felt right.

Canada will always be the country where I was born and raised. Canada gave me a wonderful education. My side of the family all live in Canada. Canada is a beautiful country. However, I do not see myself ever returning to Canada to live. Physically, mentally and emotionally, I have moved to the United States and put down roots. My allegiance is here. It is time for me to assume my new identity as an American citizen, to become an insider.

Categories: Perspectives

Mays Business School has long been known for the quality of its management research, but the stakes just got higher: the management department now houses two more top-rated academic journals and a new entrepreneurship journal.

Management Department Head R. Duane Ireland was just named editor-elect of the prestigious Academy of Management Journal. International business expert Lorraine Eden, a management professor, will start vetting manuscripts this summer as editor-in-chief of the Journal of International Business Studies. And Distinguished Professor Michael A. Hitt is serving as founding co-editor of a new journal in the field of entrepreneurship: the Strategic Entrepreneurship Journal. The trio of journal editors joins Fouraker Professor Richard W. Woodman, who is already editing the Journal of Applied Behavioral Science from his office at Mays.

Hitt also previously served as editor of Academy of Management Journal, making Mays one of only three schools in the 50-year history of that journal to have had two Academy of Management Journal editors on faculty. The University of Washington and University of Oregon are the only other schools to hold that distinction.

Ireland, also Bennett Chair in Business, served as associate editor of the Academy of Management Journal for three years. No stranger to the research management role that an editor must fulfill, Ireland has also been associate editor for Academy of Management Executive and consulting editor for Entrepreneurship Theory and Practice. He is a Fellow in the Academy of Management, has published more than 70 scholarly articles and is a co-author of 10 books.

Eden will assume editor-in-chief duties for the highly rated Journal of International Business Studies in January 2008, making her the first woman and second Canadian to take on the role for the Academy of International Business.

Hitt’s Strategic Entrepreneurship Journal is a new creation sponsored by the Strategic Management Society. That’s the same society that publishes the Strategic Management Journal, one of the most prestigious journals in the management field. Hitt’s emphasis on the strategy of new ventures and the management of innovation are guaranteed to produce important academic results that will advance knowledge of entrepreneurship. The new journal is scheduled to publish its first issue in 2007.

Management faculty members are also associate editors and members of editorial boards for some 35 other scholarly publications, including Organization Science, Personnel Psychology, Journal of Management and Journal of Business Venturing.

“The Mays management faculty has long been dedicated to the importance of giving back to the scholarly community through editorial service,” Ireland says. “People are asked to serve as members of editorial review boards and are selected as editors on the basis of the quality of their published research and in light of their ability to provide constructive and timely feedback to others when reviewing manuscripts for journals. Our management faculty remains widely recognized for the high quality of its research and for its skills in handling editorial responsibilities.”

Categories: Departments, Faculty, Research Notes

Houston Astros Baseball Club owner Drayton McLane — an international businessman and food importer and exporter for four decades — told students in Lorraine Eden’s management class that businessmen should adopt their attitudes from baseball. Baseball mirrors life’s ups and downs; with more than 160 games a season, the team might lose one game but has to remain unfazed to face the next game less than 24 hours later.

So his advice? “Move forward, get off the past, and think about what you’re going to do tomorrow.”

That lesson is in part a new one for McLane, who faced a group of ballplayers during spring training in 1993 and attempted to inspire them about teamwork — a businessman’s mantra — before he realized the players’ focus was first on their own performance. “In business, a lot of times we hide behind teams and say that the team failed,” he said. “Well, the team didn’t fail; that pitcher lost the game. We don’t take enough personal responsibility.”

McLane, a third-generation grocery wholesaler and entrepreneur, is chairman of family-owned holding company McLane Group, based in Temple, which has owned and operated the Astros since 1992. The group also oversees Minute Maid Park; MC-McLane International, involved in global imports and exports; software solutions company McLane Advanced Technologies; McLane International, Inc., which provides wholesale food distribution overseas; Classic Foods and LoneStar Plastics, both based in Fort Worth; Hometown Favorites, a nostalgic candy company; and CSP Magazine, the leading publication in the convenience store industry.

McLane’s businesses grew an average of 30 percent a year from 1966 to 1990, a testament to a leadership style in which he told students to “find the future” and direct employees toward it.

Expounding on the international aspect of his work and the networking that put him in business in such countries as Spain and Poland, McLane cautioned students to maintain their ethical standards no matter what other governments’ policies are.

“If you have a better idea, better plans and a better product,” he said, “it may be more complicated, but you’ll win.”

Categories: Departments, Executive Speakers, Students

A testament to the work ethic and quality of Mays faculty, Lamar Savings Professor of Finance Arvind Mahajan received the 2003 Bush Excellence in International Teaching Faculty Award.

Last year, the George Bush Presidential Library Foundation established awards in teaching and research to recognize exemplary contributions to students’ international education. Management Professor Lorraine Eden received the 2002 Research Award. Recipients receive a $2,500 gift.

Mahajan, who specializes in international and corporate finance, has taught for 24 years, serving at Mays for 22 of those years. He says the effects of globalization demand that future decision-makers understand other cultures, as well as the interaction between the domestic and foreign markets in which businesses operate.

“The opportunity to positively impact another person’s development and future makes teaching a profoundly serious, but incredibly exhilarating, activity,” says Mahajan, who has also received the Association of Former Students’ Distinguished Teaching Award during his tenure at Mays.

Categories: Departments, Faculty

Charles Dhanaraj, assistant professor of management at Indiana University’s Kelley School of Business, will visit Mays in late March to collaborate with Management Professor Lorraine Eden. They are researching the legitimacy and survival of foreign subsidiaries, along with Stewart Miller, assistant professor of management at the University of Texas’ McCombs School of Business. Dhanaraj was awarded the 2001 Barry Richman Dissertation Award at the Academy of International Business for his Ph.D. dissertation, “Legitimacy and Stability of Japanese Overseas Subsidiaries.”

Categories: Departments, Faculty

Associate management professor Lorraine Eden was recently named a University Faculty Fellow at Texas A&M. The designation is offered to a select number of individuals throughout the university after a highly competitive selection process.

Eden joined the college in 1995 and teaches both graduate and undergraduate courses in international business.

Categories: Departments, Faculty

A core issue brought about by the Sept. 11 terrorist attacks centers around trade, particularly with our neighbors to the north and south. How do we encourage trade with Canada and Mexico while keeping terrorists and other unwanted evils out?

That issue was recently addressed by a panel of experts on international trade and intelligence. Canadian Counsel General Allen Poole, Canadian Counsel Peter Price and Dr. James Olson, senior lecturer and CIA officer in residence at the Texas A&M Bush School, spoke to Mays undergrads in management professor Lorraine Eden’s International Environment of Business course.

“The immediate impact of September 11 was devastating,” says Poole, whose career has been devoted to international trade and investment. “I believe we have to deal with the security dimension, such as keeping out illegal activity and terrorists, without throwing business interaction and trade out the window.”

Olson agrees that encouraging trade and keeping the borders safe should be of top concern. But the U.S. government shouldn’t overlook the important of in-country security, he adds.

“We have to improve intelligence in the United States and toughen our procedures to let people stay and visit,” Olson says. “We can’t pick on the U.S.-Canada and U.S.-Mexico borders as a culprit of terrorism because we shouldn’t slow down or stop our rich trade with them. “

Categories: Departments, Faculty

Lorraine Eden, associate management professor, was recently named one of the first recipients of the Bush Excellence in International Research Faculty Award.

The award program was established by the George Bush Presidential Library Foundation to recognize excellence in international teaching and research. Recipients of the awards received a $2,500 gift.

An economist, Eden specifically focuses on multinational enterprises, particularly in the areas of transfer pricing and international taxation. Prior to joining the college in 1995, she was a tenured professor in the School of International Affairs at Carleton University in Ottawa, Canada.

Categories: Departments, Faculty