Exploring the Relationship between Repeated Partnerships and the Growth Rate of Focal Firm from the Social Exchange Perspective

Abstract

Exploring the Relationship between Repeated Partnerships and the Growth Rate of Focal Firm from the Social Exchange Perspective Author: Nai-Tzu Chen Advisor: Chiung-Hui Tseng Institute of International Business National Cheng Kung University SUMMARY The purpose of this thesis is to understand how the different number of cooperation between the repeated partners before focal alliance and the factors of trust will affect the profit growth rate of the focal firm after the focal alliance This thesis proposes a set of hypotheses based on the Social Exchange Theory and includes the proportion of equity-based alliance and the time of the cooperation between the repeated partners as moderators that represent the factors of trust to test whether they affect the relationship between prior cooperative experience and the profit growth rate of the focal firm after the focal alliance This thesis collects the cases of repeated partnerships established by at least one US partner in the pharmaceutical industry from 1990 and 2019 Also from each case the US companies are selected as the final sample to observe the net profit growth rate after the focal alliance In order to better understanding the concept of repeated partnership so that providing crucial insights to future researchers and managers this thesis calls for more future research to investigate this important topic INTRODUCTION In a highly competitive environment more and more companies choose to cooperate with other firms to achieve strategic alliances to accelerate their goals Cooperate with prior partners is advantageous In this case coordination processes are more effective and adaptability and flexibility are greater because of prior cooperate experience For example NIKE and POU CHEN have already cooperated for several years so that POU CHEN could response any NIKE requirement at the first time and forms a win-win situation According to the Social Exchange Theory economists often ignore trust and power in economic model assumptions and exaggerate the impact of opportunistic behavior So Many scholars believe that the social exchange theory is a more appropriate theoretical viewpoint to explore repeated partnerships This research mainly discusses the relationship between the number of cooperation of repeated partnership and Profit growth rate of focal firm after focal alliance By knowing the research results CEO could know how to choose the appropriate alliance partners between old or new partners MATERIALS AND METHODS The development of research hypotheses is based on Social Exchange Theory These hypotheses are mainly testing the relationship between the number of cooperation of repeated partnership before focal alliance and the profit growth rate of focal firm after focal alliance Besides the moderator effect of proportion of equity-based alliance and the time of cooperation of repeated partnership are also consider to test whether they affect the relationship between prior cooperative experience and the profit growth rate of the focal firm after the focal alliance This thesis collects the alliance activities cases that are happen in pharmaceutical industry during 1990 to 2019 from SDC database The alliance event should include at least one US partner After collect all eligible data this thesis selects the US partners as the final sample to observe the relationship between the number of cooperation of repeated partnership before focal alliance and net profit growth rate of focal firm after the focal alliance RESULTS AND DISCUSSION The empirical results show that the number of cooperation of repeated partnership has significant positive affect on the net profit growth rate of focal firm after the focal alliance However the moderating effects of both the proportion of equity-based alliance and the time of cooperation of repeated partnership are not supported CONCLUSION The research empirical results have some different insights from recent research Recent research suggest that firm should keep searching for new partners to gain new knowledge so that firm could maintain a better firm performance but this research finds that if firms try to cooperate with prior partner they will experience a better net profit growth rate This result could give some suggestion to CEO whether they should choose the prior partner or not Choosing to cooperate with prior partner might be the most suitable strategy to confront the turbulent environment Although the main effect of this research has been supported this research still have some limitations First because of the research condition we are hard to find the cases of repeated partnership that have already cooperated above three times so the final number of sample of each group is disparity This might interfere the final regression results Secondly because this research is based on Social Exchange Theory so our moderators setting would be limited by the theory Last but not least although this study attempts to use two variables that could collect secondary data to represent the two trust factors which is different from the prior research the final empirical results show that the two moderators have no significant impact on the relationship between prior cooperative experience and the profit growth rate of the focal firm after the focal alliance Future researchers could try to find another factor to represent trust so that provide the useful explanation of how trust affect the company performance Besides in order to collect the data more completely we also suggest that researchers could find a more appropriate industry that involve more repeated partnership cases or expend the research period

Date of Award	2020
Original language	English
Supervisor	Chiung-Hui Tseng (Supervisor)