THE EFFECT OF REPUTATION ON THE DECISION TO JOINT VENTURE

TLDR

The study examines how a firm’s reputation influences a CEO’s decision to enter a strategic alliance. Using adapted Fortune Corporate Reputation Survey constructs, the authors experimentally manipulated target firm reputation and asked participants, acting as partner CEOs, to decide on alliance participation. Results show reputation is multidimensional, with personal information‑processing characteristics mediating its effect; decision makers may compensate weaker reputation aspects with stronger ones, and product and management reputation are the most influential factors regardless of the target’s role as supplier or competitor. © 1997 John Wiley & Sons, Ltd.

Abstract

This paper focuses on the impact that reputation has on the decision to proceed with a strategic alliance. Employing reputation constructs adapted from the Fortune Corporate Reputation Survey, we manipulated a target firm's reputation in an experimental design. The subjects were placed in the role of CEO of the partner firm and asked whether they would engage in the alliance. Findings indicate that (1) reputation is a multidimensional construct, (2) the personal information-processing characteristics of the decision-maker mediate the reputation effect and may suppress the reputation information, (3) subjects may compensate weaker elements of reputation for stronger ones when making decisions, (4) product and management reputation are the most important factors, and (5) reputation is a factor affecting the decision regardless of whether the proposed target is a supplier or a competitor. © 1997 by John Wiley & Sons, Ltd.