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It has been established that one firm's misconduct can have reputational consequences for alliance partners, as well as whole industries. Whilst responses to the latter have been examined, strategies to limit negative spillovers from an alliance partner's reputational crisis have received little prior consideration. This article identifies two preliminary alternative response strategies; advocacy or adversary. Using the context of an environmental scandal, and drawing on theory around the notion of escalation of commitment, we formulate hypotheses on when each is employed. Empirical verification is pursued through a policy capturing method, with a sample of Norwegian CEOs. Among the study's contributions is extending literature on the influence of third parties on reputation damage repair. [ABSTRACT FROM AUTHOR]

Strategic alliance partner selection is a complex process, where trade-off decisions on prospective partners' attributes must be made. This paper uses the context of environmental reputation asymmetry to explore trade-off dynamics, scarcely dealt with in the literature. More specifically, I examine how CEOs (the main decision makers) reason on whether to decide to ally with a lower-reputation partner, and facilitating factors. Through a multiple-case approach, I find that initiating firms to alliances anticipate changes in partner firms' reputations. The prospective partner's propensity to improve is introduced as a core construct; it is proposed to significantly affect the focal firm's trade-off willingness in the alliance formation situation. My data also reveal some determinants and dynamics in contrast with the 'learning race' perspective, suggesting that firms underutilize alliances as a means to enhance their environmental performance at lower cost. [ABSTRACT FROM AUTHOR]

Strategic alliances between firms with different reputation levels are not uncommon. Whilst prior studies have identified private incentives and disincentives of allying with higher or lower reputation partners, we know little about the extent to which the size of the reputation asymmetry affects alliance performance. This paper contributes to filling this research gap by focusing on one type of reputation that has become increasingly salient, namely environmental reputation. Through an extensive theoretical analysis, where I examine effects on key performance indicators in several alliances phases, I derive that there is an inversely J-shaped relationship between environmental reputation asymmetry size and alliance performance. The analytical approach is, in itself, considered a contribution to the literature; it can equally be applied to other studies linking partner selection criteria to alliance performance, which should allow for enhancing their theoretical robustness. [ABSTRACT FROM AUTHOR]