Exogenous shocks and interfirm collaboration: an empirical investigation of the global airline industry

Over the past decades, alliances have become one of the preferred modes of growth in a variety of industries. Their popularity can be ascribed to their lower costs and effort required compared to organic growth, and to the lower complexity and capital requirements compared to mergers and acquisitions. In the airline industry, alliances have become the preferred mode of expansion given that strict regulatory rules often prevent cross-border mergers and acquisitions. The most widespread form of bilateral cooperation between airlines is code-sharing which allows carriers to expand their route networks, optimizing the use of resources and fleets, while providing benefits to their customers such as access to more destinations and easier airport connections. While the reasons behind alliance formation are well understood, less is known about how alliances evolve. This book addresses this important topic for both alliance managers and scholars interested in alliances by focusing on a central yet understudied driver of alliance evolution, namely exogenous shocks. Using a network perspective, this book predicts and finds that the September 11, 2001 terrorist attacks are an important triggering event for alliance evolution in the airline industry.