Status Quo Bias and Poaching Avoidance in Selecting Strategic Alliance Partners

66 Pages Posted: 3 Feb 2013 Last revised: 5 Dec 2023

See all articles by Mark Ratchford

Mark Ratchford

Tulane University - A.B. Freeman School of Business

Dipankar Chakravarti

affiliation not provided to SSRN

Atanu R. Sinha

University of Colorado at Boulder - Department of Marketing

Date Written: November 27, 2023

Abstract

In a set of novel lab experiments we show that the mere presence of an existing alliance at the onset of coalition formation may lead managers to form economically suboptimal alliances. Study Set 1 considers alliance formation when a focal firm is already embedded in an existing coalition. These studies show evidence of a status quo bias: participants managing the focal firm tend to include the current partner in alliance offers and thus are less successful in forming optimal alliances compared to those in an unattached control condition. Study Set 2 examines the extent to which an unattached focal firm attempts to “poach” away attractive coalition partners from their embedded alliances. Our results show evidence of poaching avoidance: participants make fewer offers to, and are less likely to partner with, an attractive firm already in an alliance. However, this tendency to avoid poaching can be mitigated if the existing coalition is perceived as a powerful threat and/or alternate partners are unavailable. These findings provide behavioral insights into how judgmental biases can constrain alliance formation decisions.

Keywords: Strategic alliances; embedded coalitions; cooperative games; judgmental biases

JEL Classification: C71, C91, D74

Suggested Citation

Ratchford, Mark and Chakravarti, Dipankar and Sinha, Atanu R., Status Quo Bias and Poaching Avoidance in Selecting Strategic Alliance Partners (November 27, 2023). Vanderbilt Owen Graduate School of Management Research Paper No. 2210709, Available at SSRN: https://ssrn.com/abstract=2210709 or http://dx.doi.org/10.2139/ssrn.2210709

Mark Ratchford (Contact Author)

Tulane University - A.B. Freeman School of Business ( email )

7 McAlister Drive
New Orleans, LA 70118
United States

Dipankar Chakravarti

affiliation not provided to SSRN

Atanu R. Sinha

University of Colorado at Boulder - Department of Marketing ( email )

Boulder, CO
United States

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