A Matching Theory of Alliance Formation and Organizational Success: Complementarity and Compatibility

Abstract

This study advances understanding of network dynamics by applying matching theory to the formation of interorganizational alliances. We introduce market complementary and resource compatibility as two critical matching criteria of alliance formation and argue that good matches increase firm performance. Using data from liner shipping, we found effects of matching on alliance formation. But contrary to our expectations, alliances by networked firms, rather than isolate firms, exhibited better match quality, suggesting that networks facilitate matching rather than sacrifice it. We also found evidence that alliances with matched partners improve firm performance and survival chances.