Brand Alliances: Growing Your Pie or Stealing Your Slice? Examining Field Evidence Using Causal Methods

Abstract

This research examines whether brand alliances increase the brand equity of the primary brand. The decision to enter a brand alliance is observed, but not entering is unobserved (i.e., self-selection of one outcome). Propensity score matching brand alliances with non-brand alliances allows causal inference of whether entering a brand alliance increases brand equity. The data uses aggregate consumer panel purchases over a fourteen-year period to examine 1,757 brand alliances across 138 primary brands in 83 consumer packaged goods categories. On average, brand alliances result in decreased brand equity of the primary brand, counter to the conventional wisdom.