More resources are better? Strategic alliance involvement and cost stickiness

Wenrui Chen, Yun Hong, Xinghe Liu, Cheng Xu and Jun Gao

Finance Research Letters, 2024, vol. 59, issue C

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.

Keywords: Cost stickiness; Strategic alliance; Adjustment costs; Agency problem; Managerial expectation (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:59:y:2024:i:c:s1544612323011856

DOI: 10.1016/j.frl.2023.104813

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