Cooperation among airlines

This thesis investigates the explanatory power of Transaction Cost Economics concerning hybrid governance types in transportation. Therefore, an empirical case study has been conducted, examining airline cooperations of the German airline Lufthansa between 1995 and 2005. In order to test the TCE theory, a model of cooperation types is being presented which entails five different types of cooperation. These align on a continuum from loose to tighter cooperative arrangements. Under what circumstances, which cooperation types are most transaction cost economizing is being described and hypotheses are derived accordingly. The cooperation types are discussed in more detail as the rank ordered dependent variable. Types of uncertainty and asset specificity, as well as, the concept of brand name capital serve as the independent variables. The performed ordinal regression reveals that external uncertainty and dedicated assets, particularly have a positive relationship with cooperation types. All other hypotheses had to be rejected or could not be corroborated. The author finds, that overall, TCE can only very limitedly explain cooperation types in the airline industry. She identifies several other factors, such as the membership in the Star Alliance, and past experience that act as relational safeguards in hybrid relationships. Furthermore, market power is being discussed as a possible moderator of transaction costs. Several managerial implications are being drawn from these findings.