Discovering Valuable Growth Opportunities: An Analysis of Equity Alliances with IPO Firms

Authors:
Jeffrey J. Reuer;Tony W. Tong
Affiliations:
Krannert School of Management, Purdue University, West Lafayette, Indiana 47907;Leeds School of Business, University of Colorado, Boulder, Colorado 80309
Venue:
Organization Science
Year:
2010

Citing 10
Cited 0

Joint ventures and the option to expand and acquire

Management Science
Principles of Corporate Finance with Cdrom

Principles of Corporate Finance with Cdrom
Learning From Failure: Towards An Evolutionary Model of Collaborative Ventures

Organization Science
The Co-Evolution of Strategic Alliances

Organization Science
Real Options Analysis and Strategic Decision Making

Organization Science
Getting Off to a Good Start: The Effects of Upper Echelon Affiliations on Underwriter Prestige

Organization Science
The Institutional Effects on Strategic Alliance Partner Selection in Transition Economies: China vs. Russia

Organization Science
Using Multivariate Statistics (5th Edition)

Using Multivariate Statistics (5th Edition)
Continual Corporate Entrepreneurial Search for Long-Term Growth

Management Science
Survival analysis using sas®: a practical guide

Survival analysis using sas®: a practical guide

Quantified Score

Hi-index	0.00

Visualization

Abstract

Firms often use alliances to access external resources and explore new market or technological opportunities, yet they also can face obstacles to discovering these opportunities in the first place. In this paper, we examine how firms can overcome these obstacles and form equity alliances with newly public companies to obtain valuable growth opportunities. Specifically, we build on real options theory and develop the argument that the visibility of firms having an initial public offering (IPO) can shape investors' recognition of the embedded growth opportunities and therefore channel their alliance activities. The evidence shows that firms are more likely to partner with IPO firms possessing more valuable growth opportunities. Furthermore, this relationship is magnified for IPO firms that have obtained more visibility, either through various interorganizational relationships or media coverage on going public.