Is a powerful rival a right partner?

Yi-Ju Lo () and Tung M. Hung ()
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Yi-Ju Lo: Yuan Ze University
Tung M. Hung: Rutgers University

Review of Managerial Science, 2017, vol. 11, issue 3, No 6, 690 pages

Abstract: Abstract This paper explores why powerless firms are faced with the dilemma of whether or not to collaborate with other powerful firms. Two natures of power, competitive and cooperative natures, are compared to study such an imbalance between firms in market power and social power. Testing the syndicated underwritings in the U.S. from 1998 to 2009, we find that egos of low market power are less likely to partner with alters of high market power. In contrast, egos of low social power are more likely to collaborate with alters of high social power. Moreover, the results show that collaborations with powerful partners are not necessarily beneficial or detrimental for the performance of powerless focal firms; only when the high power partners possess a high network constraint which constrains opportunism and facilitates trust, do collaborations with such partners help the performance of powerless focal firms.

Keywords: Power; Inter-firm collaboration; Partner selection; Market share; Network status (search for similar items in EconPapers)
JEL-codes: L10 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1007/s11846-016-0200-5

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