Summary
This article investigates share price responses to strategic alliances in Taiwan's high-tech industry from 1996-1999. Taiwan's high-tech industry plays an important role on the international stage, but there is nothing in the literature studying the impact of strategic alliances on Taiwan's high-tech industry. This study can fill up the gap. Our empirical findings how the wealth effect for a strategic alliance is positive, with no evidence of wealth transfer between alliance partners. In addition, same-industry equity alliances and non-equity alliances both have significantly positive abnormal returns; and Taiwanese firms have significantly positive abnormal returns versus foreign firms in global alliances. Our empirical findings are consistent with the argument that the organizational flexibility offered by alliances is variable to the island's high-tech industry which needs to cope with a fast-changing environment.
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Extract
The Wealth Effect of Strategic Alliances in Taiwan's High-Tech Electronics Industry
Introduction
A strategic alliance is a planned relationship in which two or more independent firms share common goals and pursue a common benefit, but their operations are kept highly independent of each other (Mhor and Spekman, 1994). The principle behind a strategic alliance is that each partner contributes its own expertise to the relationship and gains access to some special resources or competence that it lacks. This enables a firm to focus on its core skills or competencies while acquiring some special resources that it lacks from the partnering firms, but it will not produce some costs that incur from a merger or a joint ven...See the full content of this document
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