How Do Strategic Alliances Affect Suppliers, Customers and Rivals?

Abstract

Previous research found that strategic alliances are generally beneficial to partnering firms. However, none of the research discussed the influence of strategic alliances on the rivals, suppliers and customers of partnering firms. This study examines the stock price reaction of partnering firms' rivals, suppliers and customers to the announcement of strategic alliances. We find that the technological alliances on average create positive effect on partners' suppliers and customers' stock prices, and negative effect on rivals'. In contrast, the influence of non-technological alliances is insignificant. The evidence further indicates R&D alliances significantly and positively influence the stock returns of suppliers, while licensing alliances has an important effect on the share price of customers. Finally, the results shows that for partners operating in more concentrated industries, strategic alliances create stronger negative effect on stock price reaction of customers that rely more on the partnering firms, but have a positive influence on the stock price reaction of customers that are the main buyers of the partnering firms. Similar evidence is found for suppliers.