Friends and Profits Don’t Mix: The Performance Implications of Repeated Partnerships

Firms use repeated partnerships to gain benefits of shared experience such as improved coordination, collaboration, and adaptation. However, there are downsides to partnering repeatedly, including vulnerability to opportunistic partners upon whom the firm becomes dependent, muted efficiency incentiv...

Full description

Saved in:
Bibliographic Details
Published in:Academy of Management journal 2016-04, Vol.59 (2), p.460-478
Main Authors: Holloway, Samuel S., Parmigiani, Anne
Format: Article
Language:English
Subjects:
Construction contracts
Correlation analysis
Highway construction
Partnering
Profitability
Profits
Revenue
Studies
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Firms use repeated partnerships to gain benefits of shared experience such as improved coordination, collaboration, and adaptation. However, there are downsides to partnering repeatedly, including vulnerability to opportunistic partners upon whom the firm becomes dependent, muted efficiency incentives, and overlooking better options. This paper unpacks the effects of repeated partnerships by investigating their impact on two distinct types of performance: revenue and profitability. To understand repeated partnerships, we analyze a unique dataset of 580 partnerships that completed 144 bridge construction projects. Controlling for project attributes that affect the level of outsourcing, we posit that a greater proportion of repeated partners and deeper relationships with these partners will result in greater revenue through winning bids, but that the prime contractor will not necessarily garner higher profits. We find support for these predictions, highlighting the trade-offs of repeated partnerships.
ISSN:0001-4273
1948-0989
DOI:10.5465/amj.2013.0581