The role of family ownership on alliance formation

Many studies in strategy and organization have explored the factors affecting the formation of alliances. However, this literature has largely neglected the role of corporate ownership and the related literature on family firms. Filling this void, we submit that family ownership makes firms less likely to be selected or accepted as a partner for an alliance. More specifically, we develop arguments that concern trustworthiness and informational opaqueness for family firms that can hinder alliance formation. In order to examine the influence of such mechanisms, we also hypothesize that the overall negative effect of family ownership on a firm’s alliance intensity/likelihood is mitigated by (a) the presence of institutional investors, (b) analyst coverage, and (c) financial transparency. We provide support for our hypotheses using a dataset of US listed firms both at the firm and the dyadic level of analysis. Additional analyses also show that the negative influence of family ownership on alliance formation might vary depending on the type of alliance.