Responses to alliance partners’ misbehavior and firm performance in China: the moderating roles of Guanxi orientation

Abstract

How can firms respond when their partners conduct misbehaviors? This study identifies two types of strategy: identity- and event-based, which can reduce either identity or efficiency uncertainty and take effect within different social contexts. Based on 457 events of misbehavior from Chinese equity-based alliance 2001–2013, we find that identity accommodation positively while event defense negatively affects firm performance. In regions with higher Guanxi orientation (i.e., more efforts on building and maintaining public relations), such effects become much stronger. These findings advance an event-based view of alliance dynamics and shed light on how firms manage uncertainty from partners and its effectiveness.