What is the effect of legal origin and ownership dispersion on the relationship between equity alliances and firm performance?

Abstract

This study investigates how legal origin and ownership dispersion moderate the relationship between equity alliances and firm performance. A dataset of 1,681 publicly listed companies across 15 countries between 2019-2024 has been used. Drawing on the Resource-Based View, Transaction Costs Economics, and Institutional theory, this study constructed three main hypotheses. The hypotheses of this study were tested using linear regression models. The analysis showed that equity alliances significantly and positively affect firm performance (ROA) for firms in common-law countries. Equity alliances do not significantly affect firm performance for firms in civil-law countries. Moreover, ownership dispersion does not significantly moderate the equity alliance- performance relationship. The findings are consistent across industries. Notably, stronger effects were found in the healthcare sector. The results led to theoretical contributions by bridging institutional theory with strategic alliance research. Practical implications are given for managers and policymakers that can gain from optimizing equity alliance strategies.