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Disruption in the Business Environment and Business Models: Trade Wars and International Strategic Alliances

• Alexander Krasnikov, Loyola University Â鶹APP
• Kelly Hewett, University of Tennessee
• Satish Jayachandran, University of South Carolina
• Kiwoong Yoo, University of Tennessee

Abstract:

The United States-China trade war’s impacts have been described as more severe and far-reaching than expected, with some estimates suggesting that U.S. companies lost more than $1.7 trillion in their stock prices within the first two years after the U.S. first increased tariffs on Chinese imports. In response to this significant shift in trade policies toward one of the U.S.’s largest trading partners, U.S. firms that see the Chinese market as a major draw have had to rethink their approaches to operating in that market. While U.S. firms might have primarily viewed partnerships with Chinese firms as their main approach to accessing a large and growing market, the trade war may make such partnerships more challenging.

his study investigates disruptions’ impact in global trade agreements on firms' use of strategic alliances in efforts to grow (value creation) and leverage (value appropriation) their market-based assets. Using alliance data from SDC Platinum and employing a difference-in-difference model after using natural language processing, we find that after the tariff announcement, alliances between U.S. and Chinese firms focused on value appropriation decreased while those focused on value creation increased. We offer implications for both managers and policy makers.

All Illinois Tech faculty, students, and staff are invited to attend.

The Friday Research Presentations series showcases ongoing academic research projects conducted by Stuart School of Business faculty and students, as well as guest presentations by Stuart alumni, Illinois Tech colleagues, business professionals, and faculty from other leading business schools.