Impact of Alliance Partner Diversity on Level and Reliability of Firm Performance

Abstract

Management researchers emphasize the prevalence and importance of firms’ strategic alliance portfolios in determining various firm outcomes. We extend this literature by examining and empirically testing how different aspects of alliance portfolio partner diversity (defined here as industry and organizational type diversity) affect both the level and reliability of firm performance. Using the multiplicative heteroscedasticity estimation technique on a sample of 178 of the largest multinational firms in the automobile and telecommunications industries across the twenty-year time period (1995 to 2014), we demonstrate that firms with greater partner industry diversity in their strategic alliance portfolios enjoy greater levels of performance coupled with greater reliability. In contrast, firms with greater partner organizational type diversity in their strategic alliance portfolios have lower levels and lower reliability of performance.