DECISION MAKING IN STRATEGIC ALLIANCES: AN EXPERIMENTAL INVESTIGATION

This paper experimentally investigates the determinants of the deviation between potential and realized value creation in strategic alliances. To better understand how decision making in alliances may influence success, we use an experimental design that juxtaposes two important factors that affect alliance members ’ decisions: economic incentives and communication. The evidence derived from our experimental design sheds light on the relative impact of each, and importantly, how both factors interact to explain the probability of successful outcomes in an alliance. These empirical results are robust to the use of undergraduates, MBAs and seasoned executives who averaged over 20 years of work experience. We thank the University of Illinois at Urbana−Champaign (UIUC) Research Board for their financial support. Shravan Gaonkar provided able technical assistance for the creation of the experiment programming code. We appreciate the support provided b