What Goes Around Comes Around: The Impact of Marketing Alliances on Firm Risk and the Moderating Role of Network Density

Journal of Marketing, Vol. 79 (September 2015), 63-79

17 Pages Posted: 13 Sep 2015

See all articles by Felipe Thomaz

Felipe Thomaz

University of Oxford - Said Business School

Vanitha Swaminathan

University of Pittsburgh

Date Written: September 11, 2015

Abstract

Although the value gained from partnership formation (through alliances) or through the firm’s position in a network has received significant research attention, little is known about the risks that can accompany this increasing reliance on partners. The authors investigate the change in firm idiosyncratic and systematic risks after the announcement of marketing alliances and analyze whether the density of the firm’s network of alliance partners moderates the risk exposure, demonstrated through investors’ expectations of a firm’s risk or the equity risk of a firm. The results indicate that marketing alliances reduce firm risk, so long as the alliance is a novel connection between the partnering firms. Furthermore, at high levels, the interconnectedness of partners or density of a firm’s network can cause idiosyncratic risk to increase, and the density of a partner’s network can also result in increases in systematic risk of a firm after alliance formation.

Keywords: Marketing, Strategic Alliances, Firm Risk, Networks, Hierarchical Models

JEL Classification: M31, L1

Suggested Citation

Thomaz, Felipe and Swaminathan, Vanitha, What Goes Around Comes Around: The Impact of Marketing Alliances on Firm Risk and the Moderating Role of Network Density (September 11, 2015). Journal of Marketing, Vol. 79 (September 2015), 63-79, Available at SSRN: https://ssrn.com/abstract=2659128

Felipe Thomaz (Contact Author)

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain
07850514010 (Phone)
OX2 7QG (Fax)

Vanitha Swaminathan

University of Pittsburgh ( email )

135 N Bellefield Ave
Pittsburgh, PA 15260
United States

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