Alliance Learning Decisions and Firm Performance: The Effects of Business Relatedness and Market Legitimacy

Abstract

Firms seeking to sustain competitive advantage in the marketplace through synergy in alliance formations are influenced by both their inter-organizational resource profiles and legitimacy requirements in selecting appropriate learning behavior. Linking the exploration-exploitation framework to the standard industrial classification (SIC) measures of business relatedness and market legitimating function, this study provides a multi-theoretical perspective bridging organization learning theory with the resource based view of the firm and institutional theory. These antecedents and their interactions not only determine learning behavior choices within alliances but may also have performance implications. The integrative framework provided herein suggests that the internal considerations of business similarity and external market legitimacy factors are consequential for understanding a firm’s alliance learning behaviors and their effects on firm performance. Moreover, this study also suggests but finds no support that ambidextrous firms successfully attend to balancing learning behavior choices within inter-firm alliance structures outperform counterparts that focus exclusively on exploration or exploitation. This study analyzes strategic alliance formations of Taiwanese publically listed firms over a period of 13 years from 1996-2008.