Selection in Strategic Alliance Activity:

An analysis of the impact of alliance activity during the period 1989-1993 on the performance of organizations in the US computing industry reveals that: (1) the distribution of alliance activity is skewed to firms with greater market power, capacity, as well as greater technical, commercial, social and organizational capital; (2) self-selection is significant in explaining the effects of alliance activity on firm performance; and, (3) controlling for self-selection alliances creates value for the firms choosing them but they do so at a lower rate of return than do the firms' core activities alone. We establish that without such controls, the effects of alliance activity are greatly underestimated.