Alliance portfolio diversity, radical and incremental innovation: The moderating role of technology management

Abstract

In this paper we test whether the use of a set of technology management tools (TM-tools), a specification of alliance portfolio capability, influences the relationship between alliance portfolio diversity and a firm's innovation outcomes. With this model, we add to the theoretical literature on the performance effects of alliance portfolio diversity and specific contingencies allowing to appropriate benefits from this diversity. Based on a sample of South African firms, we first confirm the inverted U-shaped relation between alliance portfolio diversity and a firm's innovation outcomes found by earlier research. We also show that the shape of this inverted-U differs for incremental and radical innovation outcomes. Subsequently, we test the moderating effect of the use of TM-tools on this relationship, for which find a strong positive moderating effect. In particular, for firms intensively using TM-tools, the negative effect of high levels of alliance portfolio diversity on innovation outcomes turns into a positive effect. This suggests that the use of formal technology management practices is beneficial to manage highly diverse alliance portfolios.