More resources are better? Strategic alliance involvement and cost stickiness

Wenrui Chen; Yun Hong; Xinghe Liu; Cheng Xu; Jun Gao

doi:10.1016/j.frl.2023.104813

More resources are better? Strategic alliance involvement and cost stickiness

Wenrui Chen, Yun Hong, Xinghe Liu, Cheng Xu, Jun Gao^*

^*Corresponding author for this work

Department of Strategic Management and Organisations

Research output: Contribution to journal › Article › peer-review

5 Citations (Scopus)

Abstract

Utilizing a sample of Chinese listed firms from 2007 to 2020, we document that cost asymmetry behavior is amplified when firms engage in alliance activities. The main effect is more pronounced for firms facing higher adjustment costs, pronounced agency problems, and those led by particularly optimistic managers. Additional analyses suggest that the presence in alliances augments cost stickiness, especially when alliance members come from diverse industries, are significantly larger in scale, or are situated in different geographical regions. The results offer fresh insights into how strategic alliances influence firms’ resource adjustment decisions.

Original language	English
Article number	104813
Journal	Finance Research Letters
Volume	59
DOIs	https://doi.org/10.1016/j.frl.2023.104813
Publication status	Published - Jan 2024

Keywords

Adjustment costs
Agency problem
Cost stickiness
Managerial expectation
Strategic alliance

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10.1016/j.frl.2023.104813

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title = "More resources are better? Strategic alliance involvement and cost stickiness",

abstract = "Utilizing a sample of Chinese listed firms from 2007 to 2020, we document that cost asymmetry behavior is amplified when firms engage in alliance activities. The main effect is more pronounced for firms facing higher adjustment costs, pronounced agency problems, and those led by particularly optimistic managers. Additional analyses suggest that the presence in alliances augments cost stickiness, especially when alliance members come from diverse industries, are significantly larger in scale, or are situated in different geographical regions. The results offer fresh insights into how strategic alliances influence firms{\textquoteright} resource adjustment decisions.",

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AU - Hong, Yun

AU - Liu, Xinghe

AU - Xu, Cheng

AU - Gao, Jun

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AB - Utilizing a sample of Chinese listed firms from 2007 to 2020, we document that cost asymmetry behavior is amplified when firms engage in alliance activities. The main effect is more pronounced for firms facing higher adjustment costs, pronounced agency problems, and those led by particularly optimistic managers. Additional analyses suggest that the presence in alliances augments cost stickiness, especially when alliance members come from diverse industries, are significantly larger in scale, or are situated in different geographical regions. The results offer fresh insights into how strategic alliances influence firms’ resource adjustment decisions.

KW - Adjustment costs

KW - Agency problem

KW - Cost stickiness

KW - Managerial expectation

KW - Strategic alliance

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U2 - 10.1016/j.frl.2023.104813

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SN - 1544-6123

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JO - Finance Research Letters

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ER -

More resources are better? Strategic alliance involvement and cost stickiness

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Keywords

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