Prestige and Collaboration Patterns

How do concerns about prestige affect patterns of collaboration among competing firms? Firms often need to collaborate with some competitors for a variety of reasons including: sharing risks; combining complementary resources; limiting competition and developing standards. Which competitors a firm chooses as collaboration partners also influences how potential clients and other stakeholders view that firm. In effect, the prestige of collaborating firms ‘rubs off’ on one another since potential clients (and other interested parties) may use the identity of a firm’s partners as an indication of a firm’s prestige. Most research on prestige has assumed, and several industry studies have found, that firms try to bolster their own prestige by eschewing collaborations with less prestigious rivals and pursuing collaborations with firms of similar or greater prestige. While this is a logical behavioral heuristic for a firm that wants to boost its absolute prestige, absolute prestige may not be as critical to success as relative prestige. This paper looks at how differences among contexts in the rewards firms receive from prestige may lead to different collaboration patterns and different distributions of prestige. In doing so, the paper tries to open a broader discussion about how prestige affects collaboration patterns among competing firms and how closely prestige will reflect firms’ underlying abilities.