Abstract
We analyze the announcement-period returns of 4315 two-party, non-equity alliances undertaken by US-based firms between 1986 and 2015 in 11 industries and find positive returns for all of the 11 sa...
Highlights
Strategic alliances serve as an important vehicle by which firms seek to strengthen their position in the global marketplace (Albers, Wohlegezogen, & Zajac, 2016; Kale & Singh, 2009; Kumar & Das, 2007; Lavie & Rosenkopf, 2006; Majchrzak, Jarvenpaa, & Bagherzadeh, 2015)
We find that the average CAR (ACAR) around the announcement of strategic alliances are positive and statistically significant for all the 11 industries we study in this paper, with Drugs posting the highest return (2.69%) and Wholesale trade for non-durable goods the lowest (0.84%)
Hypothesis 1B: Alliances in industries based on both exploration and exploitation motives will be awarded with the most value benefit measured by the ACARs over the announcement period due to the incremental short-term as well as the long-term benefits arising out of the alliances
Summary
We analyze the announcement-period returns of 4315 two-party, non-equity alliances undertaken by U.S based firms between 1986 and 2015 in 11 industries and find positive returns for all of the 11 industry samples. The returns are higher than reported in prior studies pertaining to alliances. We stratify the industry samples whether the alliances in the specific industry are motivated by Exploration, Exploitation, or a combination of both Exploration and Exploitation motive. We find strong evidence that the alliances motivated by the dual motive of both Exploitation and Exploration yield the highest returns, followed in declining order by alliances motivated by the Exploitation motive and the Exploration motive. Results emanating from our cross-sectional regressions can be utilized to design industry studies on alliances and confirm structural parameters of individual industries, especially as it pertains to the cost of capital of the alliance firms. Exploitation motives is the highest at 2.2%—thereby, creating the most value— followed by Exploitation motivated at 1.58% and Exploration motivated at 1.23%
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
