The moderating effect of corporate reputation on inter-firm alliance impact on company performance

Abstract

Purpose The purpose of this paper is to untangle the impacts of a firm’s corporate reputation and its alliance partners’ social capital on its financial performance, drawing on the relational and the network points of view. Design/methodology/approach This paper explored the moderating effect of corporate reputation on the relationship between partners’ social capital (e.g. resource heterogeneity, structural relations and partners’ social ties) and a focal firm’s performance. An OLS three-step regression model (controls, main effects and interaction effects) was used to test the proposed hypotheses based on 265 US joint ventures. Findings The influence of partners’ social capital on a focal firm’s performance is negatively moderated by the focal firm’s reputation at the firm and network levels; larger and more prestigious firms listed in Fortune database tend to choose partners with a higher level of resource heterogeneity, whereas smaller firms tend to choose partners in similar industries to increase economies of scale. The social capital factors of the partners will have different effects on the focal firm performance. Originality/value The value of this paper is in providing insight into the importance and nuances of corporate reputation in offsetting the advantages of inter-firm alliances and their impact on firm performance. In particular, the performance benefits of inter-firm alliance partners’ social ties and heterogeneous resources are negatively affected by the corporate reputation of a firm.