Market Change and Alliance Portfolio Configuration: Evidence from the Global Airline Industry

2020 Fiscal Year Research-status Report

• Project/Area Number: 20K13584
• Research Institution: Hitotsubashi University
• Principal Investigator: Lee Jinju (リジンジュ) 一橋大学, 大学院経営管理研究科, 講師 (30870224)
• Project Period (FY): 2020-04-01 – 2022-03-31
• Keywords: Alliance Portfolio / Strategic Alliance / Competition Strategy / Airline Industry / Competitive Dynamics

Outline of Annual Research Achievements

This study aims to investigate behavioral and competitive dynamic perspectives of alliance strategies under different types of market change: demand shock and competitive structure change. In the context of the global airline industry, I investigate how alliance portfolio configurations occur under two types of demand shock: 911 terror attack and COVID-19. I collected annual reports, industry data, and press releases of six airlines in Korea, Japan and China to compare alliance formation patterns before and after the COVID-19. The preliminary results suggest differential impacts of business diversification, unexpected financial loss, speed of decision-making, business group ownership, and belief structures about COVID-19 on resource reallocation and alliance configuration decisions.

Current Status of Research Progress

2: Research has progressed on the whole more than it was originally planned.

Reason

I have completed the following four tasks: (1) Literature review of alliance portfolio studies for 2016-2020, (2) Collect data on twenty-two LCC (Low-Cost Carriers)s in three countries (Korea, Japan, China), (3) Annual reports and press releases of six airlines (JAL, ANA, KAL, Asiana, Air China, China Eastern Airline) to compare before and after COVID-19 behaviours, (4) global airline industry analysis after COVID-19 event.
I am in the process of drafting a manuscript titled, “The importance of strategic flexibility and resilience: Evidence from the global airline industry”. This study compares different business models for six airlines in North-East Asia after COVID-19. I look at factors such as financial slack, business diversification, ownership, and cognitive belief structures.

Strategy for Future Research Activity

First, I plan to submit one paper to SSCI -indexed journal to complete my first research. Second, I plan to conduct two quantitative studies. One will be examining how the demand and supply shock resulting from COVID-19 have impacted global airlines’ strategic behaviors (e.g., alliance formation, resource reallocations, route configuration). For this project, I will continue to use my research budget to hire two RAs to collect and manage archival data. The other one will be examining the impact of demand shock (911 terror attack) on global airlines’ alliance portfolio strategies. I will apply difference-in-difference method to see the causal relationship between demand shock with different performance indicators as well as alliance formation strategies (e.g., traffic data).

Causes of Carryover

This will be used for purchasing stationery products (e.g. A4 paper).