UNCERTAINTY, ALLIANCES, AND OVERPAYMENT IN OFFSHORE OIL AUCTIONS

摘要

Firms participate in strategic alliances for a variety of reasons, including enhancement of economic performance, learning effects, legitimacy, reduction of financial exposure, and management of resource dependencies. In this paper, I examine whether these benefits are realized in the context of firm performance in offshore oil and gas auctions. In this paper, I propose that in some circumstances, strategic alliances may actually harm performance in the very circumstances in which they are intended to help. Specifically, in the auction context, I posit that there is a positive relationship between the uncertainty regarding the value of an opportunity and the price for that opportunity. Second, I posit that the relationship is mediated by the size of the strategic alliance submitting the winning bid; that is, the size of the alliance is positively related to uncertainty, and the price paid is positively related to the size of the alliance. Regression analysis of a large data set from a blind auction bidding format (offshore oil and gas leases) shows that, as predicted, the size of the winning alliance is positively related to overpayment. However, no relationship was found between either the degree of uncertainty and overpayment or the degree of uncertainty and the size of the winning alliance.