Complementarity, status similarity and social capital as drivers of alliance formation

Abstract

Using data on U.S. investment banking firms’ syndication in underwriting corporate stock offerings during the 1980s, this study explores the factors that drive alliance formation between two specific firms. We compare resource complementarity, status similarity, and social capital as a basis of alliance formation. The findings indicate that the likelihood of investment banks’ alliance formation is positively related to the complementarity of their capabilities, as well as their status similarity. Social capital arising from banks’ direct and indirect collaborative experiences also plays a very important role in alliance formation. The number of deals given by a lead bank to a potential partner over the past three years has an inverted U‐shaped relationship to the probability that the lead bank will invite the potential partner to form an alliance. Our findings indicate that status similarity and social capital have a stronger effect on alliance formation in initial public offering deals than in secondary offering deals, as the former are more uncertain than the latter. Using these findings, we discuss the role of complementarity, status similarity, and social capital in alliance formation. Copyright © 2000 John Wiley & Sons, Ltd.

Financial Health and Partner Attractiveness in the Market for Inter-Firm Collaboration

“…The argument that alliances will involve partners with similar leverage is consistent with the broader literature on alliance homophily, which suggests that firms end up partnering with others that are similar along some dimension in order to reduce collaboration hazards (Ahuja, Polidoro, & Mitchell, 2009;Chung, Singh, & Lee, 2000;Gulati, 1995;Gulati & Gargiulo, 1999;Kumar & Park, 2012;Podolny, 1994;Stuart, 1998). For instance, Podolny (1994) suggests that although alliances are formed to reduce market uncertainty, they also expose the firm to greater uncertainty about the quality and behavior of prospective partners.…”

Interorganizational Collaboration Explored Through the Bona Fide Network Perspective

“…Figures 2 and 3 indicate that international organizations are more likely to partner with other international organizations rather than local organizations. There are several reasons why these partnerships are likely to occur, including privileges that come with resources (Powell & Seddon, 1997) and the tendency for organizations with similar status to cooperate (Chung, Singh, & Lee, 2000). However, smaller organizations on the edge of the network struggled to meet their collaborative aspirations.…”

The antecedents and consequences of local embeddedness: A framework based on the rice industry in Taiwan

“…At the dyad level, locally embedded collaborative partners tend to possess a high willingness to risk-share, and bargaining and adaptation costs and goal incongruence and conflict are low, while they expect win-win value creation over a considerable period of daily interactive collaboration, not just concerning job-/taskbased activities but also everyday social interactions in local venues. These dyadlevel consequences imply more 'face-based' reciprocal relations over a long time in locally embedded collaborations where spatial and temporal dimensions are contextually crucial, compared with most relational-and structural-embedded collaborative relations studied in the past (Podolny, 1994;Gulati, 1995b;Uzzi, 1996Uzzi, , 1999Saxton, 1997;Gulati and Singh, 1998;Mowery et al, 1998;Chung et al, 2000;Rowley et al, 2000;Koka and Prescott, 2002;McFadyen and Cannella, 2004;Echols and Tsai, 2005;Villalonga and McGahan, 2005;Gnyawali and He, 2006). Locally embedded actors do not just know who they are collaborating with, they also know who their related families are and were.…”

“…Embedded ties are found to relate to partner selection (Gulati, 1995b;Mowery et al, 1998;Chung et al, 2000). Based on previous ties, the choice of collaborative mode demands a lower level of hierarchical control (Gulati and Singh, 1998;Villalonga and McGahan, 2005).…”