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Although previous research has reached an agreement that finding appropriate alliance partners and reducing selection uncertainty are important for achieving high alliance performance, it has not explored (1) how organizations reduce selection uncertainty, (2) what mechanism enables organizations to do so, and, more generally, (3) how organizations form alliances. This research examined these research questions by conducting fieldwork at 20 biopharmaceutical organizations in the Untied States. I identified three mechanisms for reducing selection uncertainty, including the (1) relational, (2) internal, and (3) contextual mechanisms. One of the findings implies that alliances do not always emerge out of embedded ties, and that there exist variations in organizational usage and reliance on ties and personal rapport in constructing interorganizational networks.

Using data from securities analysts, who are awarded status by the third-party organization Institutional Investor magazine, we examine the emergence of competition and articulate a model of competitive response among actors aware of the importance of status and some of the dimensions on which it may be gained. We predict analysts’ initiating or ceasing coverage of stocks in response to other analysts initiating coverage on stocks they cover. We find that competition can emerge because of status seeking rather than as a response to own capabilities or market needs, with compelling, and potentially negative, market implications for overt status seeking.

The purpose of this paper is to examine the effects of political risk on firms' likelihood of foreign market entry and performance by adopting a strategic view of political risk and drawing upon the arguments of multimarket contact theory.

This study estimates the location choice and performance of Japanese auto parts‐makers using panel regression models.

The study finds that firms with low multimarket contact in the home country and high multimarket contact in the host country are less likely to avoid politically risky host countries and that firms which entered politically risky host countries exhibit greater performance when the degree of multimarket contact with prior entrants is high.

Although the research design raises a concern about the generalizability of the findings, this study highlights the strategic importance of politically risky markets and suggests the importance of considering competitive interactions with rivals in examining interdependent behavior in foreign direct investments.

Instead of consistently avoiding politically risky markets, managers should actively consider the potential strategic importance of these markets. A post‐entry strategy suggested by the findings is taking positive steps to leverage the benefits of multimarket contacts for managing subsidiaries in politically risky host countries.

Unlike previous studies, this study emphasizes the strategic potential of politically risky markets and takes a view that firms have variable political risk tolerance. Furthermore, the authors' adoption of multimarket contact theory allows a novel approach to benchmarking against rivals for foreign entry decisions.

The purpose of this paper is to examine how firms with multimarket contacts in both product and geographic markets make foreign direct investments (FDI) location choices and to advance the understanding about how managers with cognitive limits cope with opportunities to take the advantage of mutual forbearance in two types of markets.

Drawing upon the literatures on multimarket contact and decision making, the authors develop original hypotheses on how multimarket contacts in two types of markets influence firms’ choice of destination for foreign investments. The authors test the hypotheses using longitudinal archival data on foreign market entries of Japanese auto parts makers.

The authors find that when choosing FDI locations, firms reduce the cognitive burdens of coping with multimarket contacts in the two types of markets by focussing exclusively on what is perceived as relevant to the decision at hand. The authors also find that this propensity is particularly significant for large firms, whereas small firms use different decision rules and avoid entering markets with the greater degree of multimarket contact with prior entrants, whether in product or national market.

Although heuristics simplify competitive environments and reduce managers’ cognitive burdens, such a cost-saving orientation could increase the risk associated with international entry that may end in severe counterattacks from prior entrants, wasteful foreign investments, and substantial entry failures.

This study contributes to the literature by adopting multimarket contact theory to foreign market entry, jointly analyzing two types of multimarket contacts, testing three alternative hypotheses about how boundedly rational managers cope with multimarket contacts in two markets, and demonstrating that managers focus on multimarket contacts only in one type of markets when making entry decisions.