Can Experience with International Alliances Help Firms Navigate Jolts? A Study of Resilience Amid the Dot-Com Bubble Burst

Environmental jolts, which are unanticipated and disruptive changes in the external environment, can render firms’ strategies ineffective. Despite their frequency, research examining how firms become resilient to this negative impact of jolts remains scarce. Drawing on the knowledge-based view of international alliances, the authors propose that international alliances are a source of novel knowledge and resources, and in learning the routines and processes to assimilate them, firms acquire dynamic capabilities that enable them to overcome the lack of strategic fit with the environment triggered by jolts. Using a quasi-experimental research design and data from firms exposed to the dot-com bubble burst, the authors find that emphasizing value creation in international alliances attenuates the negative impact of jolts on sales growth. Additionally, for sales and profit growth, international alliance partner diversity positively influences resistance to jolts, while market diversity shows no effect. This study contributes to the literature by demonstrating (1) how international alliances enhance the knowledge, resources, and dynamic capabilities of the firm, (2) the impact of international alliances on firm performance in the face of severe environmental turbulence, and (3) the importance of obtaining competencies from value creation activities and collaborating with diverse partners as resilience-building strategies.