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Share the fame or share the blame? The reputational implications of partnerships

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  • Luis Almeida Costa e
  • Luis Vasconcelos

Abstract

We use an adverse selection model to study the dynamics of firms' reputations when firms implement joint projects. We show that in contrast with projects implemented by a single firm, in the case of joint projects a firm's reputation does not necessarily increase following a success and does not necessarily decrease following a failure. We also study how reputation considerations affect firms ' decisions to participate in joint projects. We show that a high quality partner may not be preferable to a low quality partner, and that a high reputation partner is not necessarily preferable to a low reputation partner.

Suggested Citation

  • Luis Almeida Costa e & Luis Vasconcelos, 2008. "Share the fame or share the blame? The reputational implications of partnerships," Nova SBE Working Paper Series wp539, Universidade Nova de Lisboa, Nova School of Business and Economics.
  • Handle: RePEc:unl:unlfep:wp539
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    References listed on IDEAS

    as
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    23. Jeon, Seonghoon, 1996. "Moral hazard and reputational concerns in teams: Implications for organizational choice," International Journal of Industrial Organization, Elsevier, vol. 14(3), pages 297-315, May.
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    Cited by:

    1. Enrico Sette, 2009. "Sorting, reputation and entry in a market for experts," Temi di discussione (Economic working papers) 727, Bank of Italy, Economic Research and International Relations Area.
    2. Marc-Arthur Diaye & Nathalie Greenan & Sanja Pekovic, 2014. "Sharing the " fame " of ISO standard adoption : quality supply chain effects evidence [Partager la « réputation » de la certification qualité : l’identification d’un effet de chaîne d’app," Post-Print halshs-01362467, HAL.
    3. Chao Fu & Xiuyuan Deng & Hongfei Tang, 2023. "Who cares about corporate fraud? Evidence from cross-border mergers and acquisitions of Chinese companies," Review of Quantitative Finance and Accounting, Springer, vol. 60(2), pages 747-789, February.

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    More about this item

    Keywords

    Reputation; partnership; joint project; project performance; Bayesian updating;
    All these keywords.

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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