Industry–university–research alliance portfolio size and firm performance: the contingent role of political connections

Abstract

Nowadays firms often collaborate with multiple universities and research institutes simultaneously, thereby forming portfolios of industry–university–research (IUR) alliances. To study this, we go beyond the dyadic level that has been the dominant theme in prior research on IUR alliances to examine IUR alliances at the alliance portfolio level. Using the dataset of Chinese manufacturing firms, we investigate the influence of IUR alliance portfolio size on focal firms’ innovation and financial performance. Our findings indicate that IUR alliance portfolio size has an inverted U-shaped effect on firm innovation performance, while political connections weaken the negative effect of IUR alliance portfolio size, thus making the inverted U-shaped relationship become flattened. In addition, we find that IUR alliance portfolio size exerts a negative effect on firm financial performance, while political connections weaken the negative effect of IUR alliance portfolio size. This study contributes to previous research on the relationships between IUR alliances and firm performance, extends prior research on alliance portfolios, and adds to the ongoing debate on the value of political connections to firms. Besides, this study suggests firm managers should consider IUR alliance portfolio size and actively seek government support, that academic institute managers should strengthen IUR collaborations and reduce conflicts and costs in cooperation, and that policymakers should offer more support for firms and shape a better market environment.