Earnings Pressure and Exploration and Exploitation in Cross-Border Strategic Alliances

Despite the growing prevalence and recognized strategic importance of cross-border strategic alliances, prior research has not fully explored how these decisions are driven by financial market influences. This study bridges this gap by examining how financial analysts’ earnings pressure influences firms’ motivations to form cross-border strategic alliances, specifically differentiating between exploration and exploitation types. Analyzing data from leading global biopharmaceutical firms, we find that earnings pressure reduces the announcements of cross-border exploration alliances, but increases those of exploitation alliances. Furthermore, we find that the negative impact of earnings pressure on cross-border exploration alliances is mitigated when chief executive officers (CEOs) possess expertise in science or technology. These findings not only broaden the understanding of the drivers behind cross-border alliances but also highlight the intricate relationships between economic financialization and corporate strategic decision-making.