Strategic Broadcasting of Strategic Alliances: Which firm(s) would broadcast their alliance formation?

Abstract

Interorganizational ties such as strategic alliances function not only as a conduit through which resources flow but also as a prism through which audiences make their inferences about firms’ quality. Existing research on network ties as market signals, however, relied on the assumption that formation of network ties ensures visibility to audiences. This paper investigates the assumption by studying the extent to which formed alliances can be strategically broadcasted by firms as a purposeful attempt to affect how their alliances are perceived. Specifically, this paper studies which of the two firms – or none or both - would broadcast its alliance once it is formed. Broadcasting network ties is defined as a purposeful choice of which ties to be publicized to audiences in this paper. Building on the vast literature on how network ties function as status signals, this paper introduces status of a focal firm and its partner firm as two main factors that affect a focal firm’s decision of whether to broadcast the alliance. This paper shows that firms are more likely to broadcast their networks as their partners’ relative status increases. Furthermore, the paper shows that the result holds mostly for low- and middle-status firms but not for high-status firms. This paper contributes to the literature by providing a novel perspective that benefits of social network ties can come from how network ties are broadcasted by social actors.