Introduction
The business school market is changing as students prefer to study in multiple locations throughout the program (M.S., 2012) for broader exposure (Chambliss, 2011; M.S., 2012) at the same time keeping in touch with potential employers in their home countries (2019a), many business schools respond to the trend by building oversea campuses and offering programs running in multiple locations (2002; M.S., 2012). However, setting up campuses is costly and the results are sometimes disappointing (2003a). Hence, strategic alliances between schools have become the popular alternatives (2003a; B.R., 2014; Friga et al., 2003) which allow them to offer differentiated programs with international exposure via exchange and dual degree running on multiple locations by utilizing partners’ campuses, faculties and resources (Asgary et al., 2010; Bank, 2015).
Among partner selection criterions, reputation and status are reported to be the most concerned factors: forming alliances with prominent partners is a sign of good reputation (2003a; Chambliss, 2011; also argues Stuart, 2000); status gap is the main concern while evaluating potential partnerships (an article from the Economist (2003a) describes the concern by “reputation gap” although itsmeaning is aligned with “status gap”; also argue Lin et al., 2009). However, not all alliances between famous schools succeed. Columbia Business School and Berkeley Haas, both of high prestige, discontinued their joint EMBA program after ten years (due to low enrolment, according to J.L.H.D, 2012); Yale University and Peking University, another alliance of distinguished schools, ended their joint undergraduate program within eight years (due to low enrolment, cited Yale, as reported by the Economist 2013a; YaleNews, 2005). Despite many scholars argue that reputation leads to better performance (Roberts et al., 2002) and alliances formation (Dollinger et al., 1997; Jarillo, 1988; Shah et al., 2008; Weigelt et al., 1988), or that status leads to alliances formation (Lin et al., 2009; Stern et al., 2014), a lack of empirical supports on this question fails to give a proper insight to schools with whom they need to work.
Therefore, this report aims to investigate the role of reputation and status in the alliance formation among business schools. This report not only provides managerial implications for practitioners (i.e. school rectors) in seeking for partnerships, but also contributes to the literature of partner selection, reputation, status and alliance formation.
Literature Review
The most discussed criterions of partner selection are reputation (Arend, 2009; Dollinger et al., 1997; Gu et al., 2014; Stern et al., 2014; Weigelt et al., 1988), status (Lin et al., 2009; Stern et al., 2014), and trust (Hagedoorn, 1993; Jarillo, 1988; Shah et al., 2008). The report focuses on reputation and status as independent variables. The report does consider trust as a variable due to its dependency upon partners’ reputations (Jarillo, 1988), long-term relationships (Hagedoorn, 1993), process manageability, and outcome interpretability (Shah et al., 2008). While the effects of reputation have been debated by many, their conclusions are inconsistent: on the one hand, Dollinger et al. (1997); Stern et al. (2014); Weigelt et al. (1988) argue reputation leads to alliance formation, on the other hand, Arend (2009); Gu et al. (2014) postulate the effects are contingent.
The earliest examination of reputation’s economic rationale is carried out by Dollinger et al. (1997) in an experimental setting, who conclude that firm reputation is an important resource that is capable of attracting other resources in the form of an alliance partner; reputation is a factor affecting the decision regardless of whether the proposed target is a supplier or a competitor. Empirically, firms in service sector building reputations have been reviewed by Weigelt et al. (1988). Also, business schools are building reputations by advancing their global rankings (2007; 2015; 2018) notwithstanding higher ranking may not lead to cooperation (i.e. alliances formation) (2003a).
Yet, some other scholars suggest the effects of reputation is contingent. Experiment results by Arend (2009) conclude that cooperation rate, length and overall payoff are lower for subjects provided with reputation information, comparing to the others whom such information wasn’t provided. The only circumstance that reputation increases cooperation is when the population mean reputation is lower than the critical level needed to induce cooperation by the firm. (i.e. one builds reputation in order to stand out from its inferior counterparts) Similarly, Gu et al. (2014) postulate an inverted U-shaped relationship between a firm’s reputation and its likelihood of alliances formation, based on empirical analysis of China’s venture capital industry. They argue the mechanism of need (to get reputation, i.e. intangible resource) outweighs the mechanism of opportunity after the threshold. Therefore, a firm of intermediate reputation is most likely to form an alliance, because it has both the need and the opportunity to do so. In brief, whether reputation leads to alliance formation requires further investigation.
In addition, status has been addressed in recent literature (Lin et al., 2009; Stern et al., 2014). Lin et al. (2009) integrate the resource-based view of alliances and institutional perspective of status-seeking, concluding that status leads to alliances formation. The results are justified by an analysis of 325 alliances in four industries, and is in accordance with previous investigation by Stuart (2000) who argues that firm enhances its reputation by forming alliance with a well-known partner, because it signals the focal firm’s quality that has survived the due diligence of its prominent strategic partner. Furthermore, Stern et al. (2014) conclude that the congruence of reputation and status signals has amplified effects on alliances formation, larger than the summation of their individual effects while discussing the effect of founders’ scientific credentials on alliances formation decisions between pharma and biotech firms. In a few words, status along with reputation may have positive effects to alliances formation notwithstanding further research is necessary.
Nevertheless, the idea of partner selection is rejected by Mindruta et al. (2016) who instead argue the formation depends upon market sorting. Based on matching model analysing 614 biopharmaceutical alliances, they conclude that firm size and research capabilities are the two main sorting dimensions, rather than complementarity. Due to market sorting, firms scoring low in these dimensions may have to settle with the best available partners, regardless of their preferences. Thus, the question whether reputation or status lead to alliances formation needs further research.
Given the literature gap and the lack of empirical supports from business school on this question, the report addresses both theoretically and empirically whether reputation and status lead to alliance formation.
Theoretical Model
With the purpose of fully illustrating the empirical settings of business school alliances where previous study does not exist, the report refers to articles from the Economist (2003a; Chambliss, 2011) that reputation and status are reported as the most concerned factors. However, as Stern et al. (2014) point out, reputation and status independently have distinct effects. Thus, the report investigates the individual powers of reputation and status by adopting the theoretical model of Stern et al. (2014) to the empirical context of business school.
Hypotheses
The earliest models that explain the organizational behaviours of cooperation include the strategic network by Jarillo (1988) and the strategic alliances by Hagedoorn (1993) although it was not until the experiments by Dollinger et al. (1997) that the economic rationale of reputation has become theoretically grounded. Afterward, the empirical supports from Stern et al. (2014) justify reputation positively associates with alliance formation.
Nonetheless, experiment results by Arend (2009) uncover a contingent effect of reputation. Empirically, Gu et al. (2014) provide support for this contingency. Given the inconsistency in literature, it is not clear to what extent reputation leads to alliances formation. Furthermore, Mindruta et al. (2016) propose market sorting rather than partner selection as the mechanism of alliances formation. Then, it is necessary to investigate if reputation matters for business school in attracting partners.
Hypotheses 1: Business school of higher reputation tends to have more strategic alliances
Furthermore, recent literature of alliances formation discusses the effects of status separately from reputation. Both offering empirical supports, Lin et al. (2009) and Stern et al. (2014) argue status positively associates with alliances formation. In addition, some other studies (Jarillo, 1988; Shah et al., 2008) indicate trust as a positive factor toward collaboration. By investing the power of status which Washington and Zajac (2005: 284) (as cited in Stern et al. (2014)) define as a “socially constructed, intersubjectively agreed-upon and accepted ordering or ranking […] in a social system”, the reports provide empirical evidence to the trust literature.
Hypothesis 2: Business school of higher status tends to have more strategic alliances.
Reference
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A normal international exchange program would last a minimum of one semester. That’s 25% of the the curriculum. HBS’s style and teaching methods are such that this would leave a big hole in an HBS student’s experience and make for a difficult adjustment for any visiting exchange students.
Unlike many top-ranked business schools, Harvard does not offer a part-time program or an Executive MBA program (though it does have resident executive education programs). It feels pretty strongly that its MBA program, with its emphasis on the case study method, offers a unique experience that can only be fully realized through a 2 year full-time residency. The heavily international mix of students as well as the FIELD program, which sends students to various countries around the world to experience different business challenges and environments, make up for any exchange opportunities., Quora.
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You can certainly disagree that they are the two best business schools by a significant margin, but you’re not the person making the decision, they are, and it’s a decision that just doesn’t make any sense given their position., Quora.
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Acknowledgement
The author would like to thank Professor Jin-Su Kang for reviewing, revising and commenting on the initial drafts, and Professor Limei G Lin from the Language Teaching and Research Center, who proofread and suggested revisions during numerous video consultation sessions.