New product alliances and shareholder value: A network perspective

Understanding the relationship between new product alliances and shareholder value is important given the increasing popularity associated with the development of new product technology through interfirm collaboration. The extant research primarily focuses on new product alliances and value creation from a dyadic perspective by analyzing the partners directly partnered together in the alliance and how each benefits from the partnership. Missing from the extant literature is consideration of the economic value associated with the indirect ties that also arise with the formation of a new product alliance. Focusing on indirect ties responds to a growing body of literature in marketing and management strategy emphasizing a network approach to the study of interfirm relationships and expands our understanding of the financial consequences associated with new product alliances.; A model is developed in the dissertation whereby indirect ties are argued to present a tradeoff relative to shareholder value. According to the model, the key to whether or not an indirect tie creates value for a focal firm depends upon the degree to which the focal firm can take advantage of the learning opportunity and avoid the threat of imitation posed by an indirect tie. Evidence based on an analysis of abnormal returns identified using the event study methodology provides support for the hypothesized model. The dissertation concludes by discussing how the research presented in the dissertation provides an early demonstration of the economic value associated with networks of interorganizational relationships while also illuminating a heretofore unidentified externality associated with interorganizational product development strategies.