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The moderating effect of corporate reputation on inter-firm alliance impact on company performance

The moderating effect of corporate reputation on inter-firm alliance impact on company performance PurposeThe purpose of this paper is to untangle the impacts of a firm’s corporate reputation and its alliance partners’ social capital on its financial performance, drawing on the relational and the network points of view.Design/methodology/approachThis paper explored the moderating effect of corporate reputation on the relationship between partners’ social capital (e.g. resource heterogeneity, structural relations and partners’ social ties) and a focal firm’s performance. An OLS three-step regression model (controls, main effects and interaction effects) was used to test the proposed hypotheses based on 265 US joint ventures.FindingsThe influence of partners’ social capital on a focal firm’s performance is negatively moderated by the focal firm’s reputation at the firm and network levels; larger and more prestigious firms listed in Fortune database tend to choose partners with a higher level of resource heterogeneity, whereas smaller firms tend to choose partners in similar industries to increase economies of scale. The social capital factors of the partners will have different effects on the focal firm performance.Originality/valueThe value of this paper is in providing insight into the importance and nuances of corporate reputation in offsetting the advantages of inter-firm alliances and their impact on firm performance. In particular, the performance benefits of inter-firm alliance partners’ social ties and heterogeneous resources are negatively affected by the corporate reputation of a firm. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png European Business Review Emerald Publishing

The moderating effect of corporate reputation on inter-firm alliance impact on company performance

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0955-534X
DOI
10.1108/EBR-12-2017-0232
Publisher site
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Abstract

PurposeThe purpose of this paper is to untangle the impacts of a firm’s corporate reputation and its alliance partners’ social capital on its financial performance, drawing on the relational and the network points of view.Design/methodology/approachThis paper explored the moderating effect of corporate reputation on the relationship between partners’ social capital (e.g. resource heterogeneity, structural relations and partners’ social ties) and a focal firm’s performance. An OLS three-step regression model (controls, main effects and interaction effects) was used to test the proposed hypotheses based on 265 US joint ventures.FindingsThe influence of partners’ social capital on a focal firm’s performance is negatively moderated by the focal firm’s reputation at the firm and network levels; larger and more prestigious firms listed in Fortune database tend to choose partners with a higher level of resource heterogeneity, whereas smaller firms tend to choose partners in similar industries to increase economies of scale. The social capital factors of the partners will have different effects on the focal firm performance.Originality/valueThe value of this paper is in providing insight into the importance and nuances of corporate reputation in offsetting the advantages of inter-firm alliances and their impact on firm performance. In particular, the performance benefits of inter-firm alliance partners’ social ties and heterogeneous resources are negatively affected by the corporate reputation of a firm.

Journal

European Business Review – Emerald Publishing

Published: Jun 10, 2019

References

  • Corporate reputation: the definitional landscape
  • Firm resources and sustained competitive advantage
  • Equity joint ventures and the theory of the multinational enterprise
  • Pricing forward contracts in power markets by the certainty equivalence principle: explaining the sign of the market risk premium