DO STRATEGIC ALLIANCES CREATE VALUE

We investigate share price responses to the formation of 345 strategic alliances spanning 1983-1992. The average stock price response is pos itive, with no evidence of wealth transfers. This is true for horizont al alliances (involving partner firms in industries with the same thre e-digit SIC codes) as well as non-horizontal alliances. For horizontal alliances, more value accrues when the alliance involves the transfer or pooling of technical knowledge than with nontechnical alliances. F inally, partnering firms tend to display better operating performance than their industry peers over the five-year period surrounding the ye ar in which an alliance is formed.