Cooperative Strategies in Retailing: A Premonitory Assessment

In the past two decades, the retailing industry has participated in a number of types of cooperative strategies, primarily very large numbers of corporate mergers and acquisitions. Emerging quickly has been the joint venture activity which is just beginning to noticeably impact the structure, conduct and performance of the industry in the United States and promises to be quite significant internationally. Retailers are striving hard to meet the challenges of today’s highly volatile marketplace. The purpose of this study is to begin to determine the conditions within the firm which might indicate the form of cooperative strategy into which a retailer will likely enter when confronted with these challenges. Selected financial and market characteristics of firms participating in joint venture activity were compared with acquiring firms and firms which became the target of an acquisition. The firm size, market-to-book value, price-earnings ratio, and sales growth were all found to significantly differ among firms dependent on the type of strategy in which they participated. Additionally, a discriminant function was derived which enables the prediction of the type of activity a firm would participate in with accuracy rates of up to 64.29%. Given the growing and potentially critical role of joint ventures in the future, above and beyond mergers and acquisitions, the ability to predict cooperative strategies based upon a set of firm characteristics is a most valuable tool for researchers as well as decision makers.