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Reputation for cooperation: contingent benefits in alliance activity

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  • Richard J. Arend

Abstract

We model the two‐firm alliance as an iterated prisoners' dilemma game with an exit option and test several theoretical predictions in experimental studies regarding the effect of reputation information. Following the literature, we hypothesize that reputation benefits cooperation; however, our experimental results instead show that reputation decreases cooperation. A contingency explains this result while remaining consistent with the general proposition of reputation as beneficial in games of incomplete information. Implications include a recommendation for when to invest in reputation and whether the lemon's market story is applicable to alliance‐related inefficiencies. Copyright © 2009 John Wiley & Sons, Ltd.

Suggested Citation

  • Richard J. Arend, 2009. "Reputation for cooperation: contingent benefits in alliance activity," Strategic Management Journal, Wiley Blackwell, vol. 30(4), pages 371-385, April.
    • Handle: RePEc:bla:stratm:v:30:y:2009:i:4:p:371-385
    DOI: 10.1002/smj.740
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    Cited by:

    1. Michael Fritsch & Muhamed Kudic, 2022. "Micro dynamics and macro stability in inventor networks," The Journal of Technology Transfer, Springer, vol. 47(2), pages 353-382, April.
    2. Sánchez de Pablo González del Campo, Jesús David & Peña García Pardo, Isidro & Hernández Perlines, Felipe, 2014. "Influence factors of trust building in cooperation agreements," Journal of Business Research, Elsevier, vol. 67(5), pages 710-714.
    3. Fong, Cher-Min & Lee, Chun-Ling & Du, Yunzhou, 2013. "Target reputation transferability, consumer animosity, and cross-border acquisition success: A comparison between China and Taiwan," International Business Review, Elsevier, vol. 22(1), pages 174-186.
    4. Cristiano de Oliveira Maciel & Camila Camargo, 2016. "Coproduction Factors in Strategic Networks," Brazilian Business Review, Fucape Business School, vol. 13(1), pages 24-46, January.
    5. Anne Norheim-Hansen, 2015. "Are ‘Green Brides’ More Attractive? An Empirical Examination of How Prospective Partners’ Environmental Reputation Affects the Trust-Based Mechanism in Alliance Formation," Journal of Business Ethics, Springer, vol. 132(4), pages 813-830, December.
    6. George Mofulu & Ancheng Pan & Pengfei Li, 2016. "Indirect reciprocity: Its antecedents and consequences in social entrepreneuring," Rationality and Society, , vol. 28(1), pages 105-138, February.
    7. Jean Beuve & Stéphane Saussier, 2012. "Interfirm cooperation in strategic relationships: the role of formal contract," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 21(4), pages 811-836, August.
    8. Inyoung Hwang, 2020. "An Agent-Based Model of Firm Size Distribution and Collaborative Innovation," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 23(1), pages 1-9.
    9. Iurkov, Viacheslav & Koval, Mariia & Misra, Shekhar & Pedada, Kiran & Sinha, Ashish, 2024. "Impact of ESG distinctiveness in alliances on shareholder value," Journal of Business Research, Elsevier, vol. 171(C).
    10. Pi-Hui Chung, 2020. "How Does Partner Selection Affect IPO Performance?," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 10(4), pages 1-5.
    11. Delgado-Verde, Miriam & Martín-de Castro, Gregorio & Cruz-González, Jorge & Navas-López, José Emilio, 2021. "Complements or substitutes? The contingent role of corporate reputation on the interplay between internal R&D and external knowledge sourcing," European Management Journal, Elsevier, vol. 39(1), pages 70-83.
    12. Kwangsoo Shin & Minkyung Choy & Chul Lee & Gunno Park, 2019. "Government R&D Subsidy and Additionality of Biotechnology Firms: The Case of the South Korean Biotechnology Industry," Sustainability, MDPI, vol. 11(6), pages 1-22, March.
    13. Uzea, F. Nicoleta & Fulton, Murray E., 2014. "Mechanisms for Effective Alliance Management: Insights from a Federated Cooperative Marketing System," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 17(1), pages 1-32, February.
    14. Norheim-Hansen, Anne, 2023. "Green supplier development: What’s in it for you, the buyer?," Business Horizons, Elsevier, vol. 66(1), pages 101-107.

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