Resources Access Through International Alliances and Firm Value: A Test of Resource Effects in the International Airline Industry

The resource-based view argues that firm performance will be stronger when the resources available to the firm are simultaneously high in revenue enhancing or cost-reducing potential, rareness, and inimitability. However, this central prediction of the resource-based view itself has not been the target of rigorous empirical tests due to inherent methodological challenges. We present a framework to test the central argument by applying the event study method. We discuss the benefits of examining stock price reactions when firms access new resource increments, in particular through international alliances. Empirically, we analyze 225 international codesharing alliance announcements made by 23 international airlines between 1986 and 1998. We show that the market value of a focal firm increases significantly more when the resources available through its international alliance partner are simultaneously high in revenue/cost potential, rare and inimitable, than if the resources are deficient in any of the three characteristics.