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Research Summary
Managerial Summary
Recent research has shown that firms encountering each other in multiple markets are more likely to form strategic alliances, but it is unclear whether these firms are likely to stick together. Our theory suggests that the threat of broad retaliation limits opportunism and increases the likelihood of alliance survival when partners encounter each other in multiple markets. Nonetheless, in settings where partners have similar technologies, or in alliances involving R&D activities, their ability and incentives to copy each other’s technological resources offsets the positive effect of multimarket contact on alliance survival. We study strategic alliances in the global semiconductor industry and find evidence consistent with these arguments.
