The Effect of a Firm's Resource Characteristics on Strategic Alliance Formation in the Airline Industry

The purpose of this research is to explain why airlines should form a strategic alliance (SA). Based on the resource-based view theory, we develop three predictors: firm’s size, number of hubs, and number of destinations, and analyze their effect on alliance formation. We also included two moderator effects based on firm experience: the firm’s codesharing experience besides the alliance, and the firm’s age. We tested our model through a binary logistics regression to assess what resource characteristics of the firm affect the formation of an SA. The data was collected from the top 200 passenger airlines for the year 2012 according to the International Civil Aviation Organization (ICAO) classification. The findings suggest that the firm’s size, number of hubs, and number of destinations all have a positive effect on the formation of strategic alliances. However, our moderating variable was just partially supported. This paper offers two theoretical contributions. First, it shows empirically which resource characteristics affect alliance formation in the airline industry. Secondly, it helps to solve the theoretical dilemma that larger firms are more willing to join an SA compared to smaller firms.