The evolution of alliance portfolio orientation: a niche theory perspective

Abstract

Managers often use their alliance portfolios to learn. Learning generally involves balancing exploration and exploitation. However, within the alliance portfolio context, literature suggests that balancing exploration and exploitation alliances is problematic, and a focus in either exploration or exploitation alliances is more beneficial for learning. However, it is not clear which conditions favour one approach over the other, and how these conditions may change over time. Drawing from niche theory, I offer an evolutionary approach which suggests that, with respect to a focus on exploration or exploitation alliances, the correct choice depends on the environment. I propose two types of alliance portfolio orientations - generalist, where the firm develops general-alliance capabilities and engages in exploration and specialist, where the firm develops domain-specific capabilities and engages in exploitation. I compare the two orientations' strategic implications and theorise how and why an alliance portfolio orientation evolves over time.