The Effect of Cross-Industry Cooperation on Performance in the Airline Industry

Summary Airline services are one part of the inter-connected network of travel services. Brandenburger and Nalebuff (1995, 1996) suggested that firms may add value to their offerings by cooperating with other members of a firm's value net (competitors, substitutors, customers, and suppliers). In a 14-year longitudinal study, this paper explores the evolution of cooperative relationships between members of the U.S. domestic airline industry and other firms outside the U.S. domestic airline industry, with the goal of identifying performance effects associated with such cooperative alliances. Results of the pooled, cross-sectional time series regression indicate that cooperative alliances outside the U.S. airline industry contribute positively to performance when environments are rapidly changing and variable. Key Words: Cooperationperformanceairline industrycompetition