RESEARCH ARTICLE
Strategic alliance, trust and accounting performance stability
Yanyan Wang,
Liwei Fan,
Ran An, Lisheng Yu,
Yanyan Wang
School of Management, Xiamen University, Xiamen, China
Search for more papers by this authorLiwei Fan
School of Management, Xiamen University, Xiamen, China
Search for more papers by this authorCorresponding Author
Lisheng Yu
Business School, Sun Yat-Sen University, Shenzhen, China
Correspondence
Lisheng Yu, Sun Yat-sen University, Shenzhen, China.
Email: [email protected]
Search for more papers by this authorYanyan Wang,
Liwei Fan,
Ran An, Lisheng Yu,
Yanyan Wang
School of Management, Xiamen University, Xiamen, China
Search for more papers by this authorLiwei Fan
School of Management, Xiamen University, Xiamen, China
Search for more papers by this authorCorresponding Author
Lisheng Yu
Business School, Sun Yat-Sen University, Shenzhen, China
Correspondence
Lisheng Yu, Sun Yat-sen University, Shenzhen, China.
Email: [email protected]
Search for more papers by this authorFirst published: 19 December 2024
Abstract
In this paper, we document tension in the effects of strategic alliances on partner firms' profitability and stability in China in that the formation of strategic alliances decreases partner firms' short-term profitability but increases their operating stability. However, the unique institutional features of the Chinese market, namely, relational networks and the stakeholder-driven governance model, can relieve this tension. We also find that societal trust, a remedy for weak formal governance and legal protection, helps mitigate the deterioration of profitability and strengthens the positive relationship between strategic alliances and stability. Lastly, we document a positive effect of strategic alliances on partner firms' Tobin's Q, suggesting that the market values a powerful network of stakeholders related through alliances. Our study emphasises the distinct mechanisms of value creation through strategic alliances in emerging markets and the role of market institutions, governance, and socio-economic structures in shaping these mechanisms.
Open Research
DATA AVAILABILITY STATEMENT
All the data used in the study were acquired from public data sources described in the paper. Liwei Fan collected the data. Yanyan Wang, and Lisheng Yu had access to the data. Ran An and Liwei Fan handled the data and conducted the analyses. Ran An, Liwei Fan, Yanyan Wang, and Lisheng Yu vouch for the raw data obtained from these data sources.
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