Performance Effects of Strategic Alliances An Event Study of Alliances Announcements

The alliance paradox identified by Kale & Singh (2009), namely the fact that modern organizations engage in a rising number of strategic alliances in spite of the high failure ratio of such collaborations, has driven a significant body of knowledge focusing on elucidating the impact of strategic alliance on firm performance, especially on abnormal returns. In an event study of 338 alliance announcements made in the pharmaceutical industry between 2003 and 2012, this thesis investigates the stock market reaction to strategic alliance announcements, through considering different aspects of alliance experience as well as accounting for alliance type and internationality. Consistent with previous research, we find strategic alliances to induce significant positive abnormal returns in the pharmaceutical industry. Furthermore, we find previous partner experience to positively impact the stock market reaction. In contrast, industry experience, dyadic and multi-partner experience as well as a dedicated alliance function are identified to be insignificantly related to abnormal returns. Furthermore, the results also suggest an insignificant impact of the presence of an international partner on alliance performance. Finally, we find no differences in the stock market response between R&D, marketing or manufacturing alliances.