Status Quo Bias and Poaching Avoidance in Selecting Strategic Alliance Partners
66 Pages Posted: 3 Feb 2013 Last revised: 5 Dec 2023
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: Suggested Citation