To ally or not to ally and why high-reputation firms can gain reputation from selecting lower-reputation partners

Abstract

This article addresses a dilemma in strategic alliance partner selection. Prior research has shown that traditionally prospective partners with higher or equal reputations are preferred. Yet, firms can have simultaneously high and low reputations, for different attributes. When key reputations are satisfactory, but others are inadequate, how does the higher-reputation focal firm decide on whether to ally? An exploratory multiple case study utilising managing directors (MDs) - the main decision makers - as unit of analysis, and an inferior environmental reputation, exposes a sequence of considerations. Implications for the focal firm's own environmental credibility are theoretically explored, leading to the proposition that higher-reputation firms can gain reputation from allying with lower-reputation partners. Hence, this study challenges assumptions on reputational consequences of allying with lower-reputation firms.