REAL OPTIONS AND THE COOPERATION-COMPETITION TENSION IN

The cooperation−competition tension in strategic alliances creates a social dilemma where member and alliance interests are in conflict. Because social dilemmas have significant negative implications for strategic alliance and member success, understanding the psychological mechanisms underpinning the cooperation−competition tension and ways to navigate this tension holds important theoretical implications for strategic alliance research. This paper proposes a real options approach to navigating strategic alliance social dilemmas. Acquiring a real option at the alliance level provides alliance members access to achieving a small win of mutual cooperation, and, when the small win is realized, members are more likely to cooperate in the larger strategic alliance. The increase of cooperation is because alliance member’s perceived vulnerability is reduced. The level of exposure when acquiring the real option may influence the effect of a small win on perceived vulnerability through th