Status and international alliance formation

Abstract

Purpose

Evidence suggests that “single-market” alliances are more likely to form between firms in similar socially determined status positions. However, in international alliances, firms come from different status interfaces and foreign partners may become status competitors. Hence, the preference for partners with similar socially derived status positions in their respective markets, or status homophily, is unclear in ‘international’ partner selections. This analysis aims to better understand this issue.

Design/methodology/approach

This research explores status homophily in international alliance formation using a database of hand-collected tombstone announcements for US initial public offering syndicates involving Japanese securities firms from 1975 through 1984.

Findings

Results suggest that firms are attracted to partners who occupy similar socially derived status positions in their own home markets. Additionally, high-status host-country firms may signal status differences within alliances to reduce status competition from high-status foreign partners.

Originality/value

This research indicates that “international” alliance research needs to consider socially derived status positions. Additionally, academics and practitioners alike can benefit from the knowledge that status signaling within alliances can be a type of competitive behavior between cooperating firms.

Citation

Powell, K.S., Takahashi, H. and Roehl, T. (2017), "Status and international alliance formation", Multinational Business Review, Vol. 25 No. 2, pp. 110-127. https://doi.org/10.1108/MBR-12-2016-0044