The Consequences Of Strategic Alliances

The alliances become important sources of competitive advantages for related companies(Das and Teng,2000)[1].However,the literature is still rare in discussing the economic consequences of alliances,especially in the emerging markets(Hitt et al.,2004)[2].What are the costs and benefits of establishing alliances?What impact will alliances have on firms in the same industry and analysts?To answer the questions,the paper uses Chinese listed companies from 2014 to 2019 as sample to investigate the economic consequences of strategic alliances,and draw the following conclusions:First,the performance of listed companies has declined significantly after the establishment of strategic alliances,and trust can reduce the impact of hold-up problems.The mechanism analysis finds that supply chain transactions between alliances make the profitability decline more obviously.Further analysis finds that strategic alliances have improved the corporate earnings persistence and reduced firm risks.Secondly,after companies established strategic alliances,the number of analysts covering the company increased,while the accuracy of forecasts decreased.After the establishment of strategic alliances,and analysts cannot identify the negative impact of strategic alliances on corporate profitability,leading to a decline in forecast accuracy.Finally,after the establishment of alliances,the investment of peer companies has declined significantly.While companies established alliances to improve market competitiveness,the peer companies’ market share declined and profit margins declined.The main contributions of the paper are as follows:First,this article enriches the literature on the cost and benefit analysis of strategic alliances.Second,this paper expands the research on the economic consequences of strategic alliances.Finally,the paper enriches the literature on analysts’ forecast behavior and corporate investment behavior from the mid-level perspective of cooperation between enterprises.