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International alliance formation and stock market responses:: Industry globalization as an environmental contingency

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  • Park, Jong-Hun
  • Kim, Kwangsoo

Abstract

This study examines the effects of the degree of industry globalization on international alliance formation in terms of the type of alliance chosen by partner firms and stock market responses to the chosen type of alliance. Using a sample of 244 international alliances formed between U.S. and non-U.S. firms for the 1992-97 period, we find that nonjoint venture (joint venture) alliances take place relatively more frequently in global (multidomestic) industries than in multidomestic (global) industries. We also find that in global industries, abnormal returns to nonjoint venture partners are relatively greater than those to joint venture partners, whereas in multidomestic industries, abnormal returns to nonjoint venture partners are relatively smaller, though insignificant, than those to joint venture partners. Our findings suggest that the degree of industry globalization plays an important role in explaining which type of international alliance is likely to be chosen by partner firms when entering an alliance and how stock markets tend to respond to the chosen type of alliance.

Suggested Citation

  • Park, Jong-Hun & Kim, Kwangsoo, 1999. "International alliance formation and stock market responses:: Industry globalization as an environmental contingency," Journal of International Management, Elsevier, vol. 5(4), pages 267-284.
    • Handle: RePEc:eee:intman:v:5:y:1999:i:4:p:267-284
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    References listed on IDEAS

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    Cited by:

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    2. Oum, Tae H. & Park, Jong-Hun & Kim, Kwangsoo & Yu, Chunyan, 2004. "The effect of horizontal alliances on firm productivity and profitability: evidence from the global airline industry," Journal of Business Research, Elsevier, vol. 57(8), pages 844-853, August.

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