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Working with Rivals: The Impact of Competitor Alliances on Financial Performance
Xueming Luo, Aric Rindfleisch and David K. Tse
Journal of Marketing Research
Vol. 44, No. 1 (Feb., 2007), pp. 73-83
Published by: American Marketing Association
Stable URL: http://www.jstor.org/stable/30162455
Page Count: 11
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To survive and prosper in today's highly competitive environment, firms are increasingly engaging in cooperative alliances with their rivals. However, the impact of these competitor alliances on financial performance is largely unknown. This research examines this issue. Using both survey and archival data, the authors conduct two studies that reveal that the intensity of a firm's alliances with its competitors has a curvilinear (inverted U-shaped) influence on return on equity. In addition, the authors find that a firm's competitor orientation, as embodied in its strategies and objectives, can strengthen or weaken this curvilinear effect. Overall, these findings indicate that both competition and cooperation have dark sides that a firm must carefully manage when working with rivals.
Journal of Marketing Research © 2007 American Marketing Association