Reputation for cooperation: contingent benefits in alliance activity
Article first published online: 16 JAN 2009
Copyright © 2009 John Wiley & Sons, Ltd.
Strategic Management Journal
Volume 30, Issue 4, pages 371–385, April 2009
How to Cite
Arend, R. J. (2009), Reputation for cooperation: contingent benefits in alliance activity. Strat. Mgmt. J., 30: 371–385. doi: 10.1002/smj.740
- Issue published online: 29 JAN 2009
- Article first published online: 16 JAN 2009
- Manuscript Revised: 14 OCT 2008
- Manuscript Received: 12 JUN 2008
- contingent benefits
We model the two-firm alliance as an iterated prisoners' dilemma game with an exit option and test several theoretical predictions in experimental studies regarding the effect of reputation information. Following the literature, we hypothesize that reputation benefits cooperation; however, our experimental results instead show that reputation decreases cooperation. A contingency explains this result while remaining consistent with the general proposition of reputation as beneficial in games of incomplete information. Implications include a recommendation for when to invest in reputation and whether the lemon's market story is applicable to alliance-related inefficiencies. Copyright © 2009 John Wiley & Sons, Ltd.