Share the Fame or Share the Blame? The Reputational Implications of Partnerships

FEUNL Working Paper No. 539

39 Pages Posted: 11 Mar 2009

See all articles by Luis Almeida Costa

Luis Almeida Costa

Nova School of Business and Economics, Universidade Nova de Lisboa

Luis I. Vasconcelos

New University of Lisbon - Faculdade de Economia

Date Written: September 1, 2008

Abstract

We use an adverse selection model to study the dynamics of firms reputations when firms implement joint projects. We show that in contrast with projects implemented by a single firm, in the case of joint projects a firm's reputation does not necessarily increase following a success and does not necessarily decrease following a failure. We also study how reputation considerations affect firms' decisions to participate in joint projects. We show that a high quality partner may not be preferable to a low quality partner, and that a high reputation partner is not necessarily preferable to a low reputation partner.

Keywords: reputation, partnership, joint project, project performance, Bayesian updating

JEL Classification: L14, L15, L24, D82, D85

Suggested Citation

Costa, Luis Almeida and Vasconcelos, Luis I., Share the Fame or Share the Blame? The Reputational Implications of Partnerships (September 1, 2008). FEUNL Working Paper No. 539. Available at SSRN: https://ssrn.com/abstract=1357327 or http://dx.doi.org/10.2139/ssrn.1357327

Luis Almeida Costa (Contact Author)

Nova School of Business and Economics, Universidade Nova de Lisboa ( email )

Lisbon
Portugal

Luis I. Vasconcelos

New University of Lisbon - Faculdade de Economia ( email )

Campus de Campolide
Lisboa, 1099-032
Portugal
+35121380172 (Phone)

HOME PAGE: http://docentes.fe.unl.pt/~lipv064/

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