Alliance Formation with New Partners as a Reaction to Acquisitions by Current Alliance Partners

Firms can access tangible and intangible resources from both acquisitions and alliances. Drawing insights from the literature on the interplay between acquisitions and alliances, we examine how acquisition activities of a firm’s partners influence this firm’s subsequent alliance formation. We suggest that partners’ acquisitions of targets that are in the same industry as the focal firm may reduce these partners’ commitment to the focal firm and trigger opportunistic behaviors because of potential competition. We predict that, in reaction to these, the focal firm’s subsequent alliance formation with new partners will increase. We also theorize how the focal firm’s network status compared to its partners can mitigate its resource dependence on these partners and how the focal firm’s ego network density could alleviate the incidence of its partners’ practices that go against its benefits. Accordingly, we hypothesize that these two factors will weaken the relationship in our main prediction. Our analysis of US listed firms from 2000 to 2020 largely supports our framework. We emphasize the role of third parties (i.e. partners’ acquisition targets) to research on the interplay between acquisitions and alliances, and expand our knowledge of the antecedents of alliance formation.