The Effect of Competitor Alliances on New Venture Milestone Achievement Through Cox Proportional Hazards Modeling

New entrants, primarily because they are startup or early-stage organizations, are usually confined in the market and struggle to gain a footing and sometimes their survival depends on alliances formed by rivals. When competitors enter into strategic alliance, the nature of competition may change, especially when forming a new alliance poses threat to new entrant or increases the levels of competition between competing alliances. To examine this, we use the Cox Proportional Hazards Model, an appropriate statistical technique for studying time-to-event data with regard to how competitor alliances influence the timing of critical events for new ventures, including, for example, fund raising, product introduction, or attaining profitability. Our findings suggest that competitors’ alliances influence the rate of completion of the milestones in new ventures and raise the likelihood of failure. Companies that undertook their competition in mature and highly related industries with considerable inter-organizational rivalry reported the highest levels of delay and risk in the initial phases. These findings imply that market forces especially through competitor alliances can dramatically shift growth and survival probabilities of new ventures, information useful to both new venture managers and public policy makers aiming at supporting innovation and entrepreneurship.