Alliances and exogenous shocks

Asgari, Navid; Singh, Kulwant

doi:10.4337/9781783479580.00020

Cited by 1 publication

(1 citation statement)

References 0 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Second, we also contribute to the scholarship on alliances (e.g., Asgari & Singh, 2017; Ghosh, Ranganathan, & Rosenkopf, 2016), where extant studies have assumed that the firms which initially form the alliance are the same ones deciding its renewal or dissolution (e.g., Asgari et al, 2018; Greve et al, 2010). This assumption has driven much of the theorizing on what causes or prevents alliance termination, such as the competitive tensions between firms in a network (e.g., Polidoro et al, 2011), within a portfolio (e.g., Asgari et al, 2018) or in overlapping product‐markets (e.g., Greve et al, 2010).…”

Section: Discussionmentioning

confidence: 99%

Divestment of relational assets following acquisitions: Evidence from thebiopharmaceuticalindustry

Tandon

Asgari

Ranganathan

2022

Strategic Management Journal

Self Cite

View full text Add to dashboard Cite

Research Summary We examine whether acquisitions affect the divestment of firms' alliance‐based relational assets. Using data from the biopharmaceutical industry and a matched case–control research design, we find that alliances are more likely to be terminated following acquisitions compared to alliances not subject to acquisitions. This higher termination likelihood is driven by acquisitions where the acquirer's alliance management capacity is stressed, and by alliances inherited from targets. The inherited alliance effect is attenuated by the target's partner's common connections with the acquirer but amplified by the target's partner's unique connections outside the merging firms' alliance portfolios. These findings are consistent with our relational view‐based theorizing on the post‐acquisition challenges of retaining alliance‐based assets, contributing to corporate strategy scholarship on alliances and acquisitions. Managerial Summary In many industries, firms' portfolios of interorganizational alliances enable them to realize novel complementarities and, thereby, enhance their performance. In such sectors, managers also frequently acquire other organizations to obtain access to critical resources. However, what managers may overlook is that acquisitions can destabilize existing alliance relationships. In this study, we show that the acquiring firm's capacity to effectively manage alliance‐based assets is stressed once it inherits the target firm's alliances. In general, target firm alliances become more challenging to sustain, and, in particular, those that hold a higher potential for novelty become more unstable. Consequently, when evaluating acquisitions, managers should look beyond obvious measures of a target alliance's value and assess the post‐acquisition integration challenges that may threaten its stability.

show abstract