Alliance Portfolio Configuration Research Articles

Configuring alliance portfolios for digital innovation

We examine how firms configure alliance portfolios—that is, networks of partnering firms—in order to exchange, share, or codevelop the capabilities they require to engage in digital innovation. We analyze data from 550 U.S. firms and the strategic alliances they formed within and across industrial sectors to study how the configuration of alliance portfolios in terms of size, degree of exploration, internationality, and competition affects the volume and quality of digital patents. We find that alliances appear to be an effective means, yet alliances for digital innovations require a different configuration when compared with alliances for non-digital innovations. Large and explorative alliance portfolios help with the creation of digital innovations while international alliances and alliances involving competitors do not. We discuss the implications of these findings for research on digital innovation and alliances. We also distill practical advice to executives charged with making strategic decisions about inter-firm partnerships.

Boundedly Rational Decisions on Exploration Versus Exploitation in Alliance Portfolios: Problemistic and Slack Searches Under CEO Overconfidence

AbstractHow do firms configure exploration versus exploitation in alliance portfolios under the premise of bounded rationality? From the behavioural perspective, problemistic and slack searches can be used as behavioural explanations for their configurations. Furthermore, the boundedly rational decision‐maker's limited cognitive capability in the form of CEO overconfidence also causes the subjective interpretation of information. This study investigates the links between below‐aspiration performance, slack, and firms’ boundedly rational decisions under the influence of CEO overconfidence in alliance portfolio configurations. A feasible generalized least‐squares regression is performed to test the model empirically using data from 224 publicly traded high‐tech firms in the United States. We find that below‐aspiration performance and slack both play roles in emphasizing exploration relative to exploitation in alliance portfolios. Further, CEO overconfidence intensifies the positive roles of below‐aspiration levels and slack in preference for exploration alliances. This study contributes to the bounded rationality literature by extending the implications of the behavioural theory of the firm to firms’ preference in alliance portfolio configurations in terms of the exploration‐to‐exploitation ratio. Furthermore, our findings deepen the understanding of the role of overconfidence in CEOs’ subjective interpretations, thus filling a critical research gap in extant behavioural research.

Prior partnering experience and preferred alliance partner diversity of small firms

PurposeThis study investigates how small firms develop preferences for varying levels of alliance partner diversity by applying a behavioral perspective.Design/methodology/approachData were collected via an original survey administered by the Swedish National Bureau of Statistics (SCB) of 1,026 Swedish firms with 50 employees or less. Hypotheses were tested by specifying a series of fractional response regressions.FindingsThe results show a U-shaped relationship between experienced and preferred alliance partner diversity in small firms and further show moderating effects of firm age, prior growth and environmental dynamism. The findings suggest that preferences towards diverse alliance portfolios in small firms may arise, not only from well-informed deliberate strategic thinking based on prior experience, but also as a consequence of cognitive bias.Practical implicationsThe findings suggest that (1) small firms considering a wide variety of alliance partners should carefully investigate whether they are, in fact, capable of mastering a highly diverse alliance portfolio or if they are overconfident novices. (2) Holders of homogenous alliance portfolios should recurringly investigate whether homogeneity is due to informed strategy or inertia.Originality/valueThis study contributes to the literature on alliance partner diversity and behavioral alliance portfolio configuration by shedding light on the learning mechanisms that shape alliance portfolio strategies of small firms by explicating the complexity of how different experience levels of partner variety affect current alliance portfolio preferences.

A Boundedly Rational Perspective on the Role of Above-Aspiration in Ambidextrous Aliances Choices

This study investigates an unexplored issue: how firms make boundedly rational decisions in response to above-aspiration performance when configuring exploration and exploitation in an alliance portfolio. We employ behavioral heuristics to explore the role of above-aspiration performance and the influence of a CEO’s cognitive bias towards overconfidence. We also argue that the role of a CEO’s overconfidence in an alliance strategy depends on the degree of attention s/he pays to the latter, and how the attention allocation process is influenced by environmental factors. Three hypotheses are tested using a sample of U.S. high technology firms during 1992-2015. Our results establish that above-aspiration performance motivates firms to engage in exploration rather than exploitation alliances when configuring an alliance portfolio, and that a CEO’s overconfidence strengthens this relationship. The moderating effect of a CEO’s overconfidence decreases with environmental munificence and dynamism. Our study contributes to the literature on the behavioral theory of the firm by adopting a consistent capacity-based logic to examine a firm’s response to above-aspiration performance, and makes an additional contribution to the alliance portfolio literature by deconstructing the alliance portfolio configuration in terms of exploration versus exploitation alliances as a product of bounded rationality.

Alliance choices: A Behavioral Theory of Problemistic and Slack Searches under CEO Overconfidence

How do firms configure exploration versus exploitation in alliance portfolios when facing behavioral heuristics? Based on the behavioral perspective, this study uses problemistic and slack searches as the behavioral explanation for exploration versus exploitation configurations in alliance portfolios. Simutaneously, it takes into account the moderating role of CEO overconfidence by considering the influence of decision makers' subjective interpretations on performance feedback and slack, during the decision-making process. It employed a feasible generalized least squares approach to regression to empirically test the model using data of 224 publicly traded firms in the United States (U.S.) comprising high-tech industries. The findings show that both, below-aspiration performance and absorbed slack, play positive roles in focusing attention on exploration rather than exploitation alliances. The results also show that CEO overconfidence intensifies the positive roles of below-aspiration performance and absorbed slack in the exploration alliance choice. This study contributes to extant literature by extending the behavioral theory to the choices of exploration versus exploitation in alliance portfolio configurations, and filling the limited attention on managers' subjective interpretation of behavioral drivers as boundary conditions in behavioral research.

Moderation in all things: Industry-university-research alliance portfolio configuration and SMEs’ innovation performance in China

ABSTRACT Industry-university-research (IUR) alliance portfolio configurations are vital for small- and medium-sized enterprises (SMEs). Our study extends the knowledge-based view and transaction cost theory on SMEs’ IUR alliance portfolio configurations and their deployment in different institutional conditions. We analyze these IUR alliance portfolio configurations in a panel data of listed SMEs in China’s manufacturing industry. Our findings indicate that both breadth and depth dimensions of these IUR alliance portfolio configurations have an inverted U-shaped association with SMEs’ innovation performance. Moreover, developed institutional conditions, characterized by high degrees of regional marketization, strengthen the positive effect of both breadth and depth, thereby, intensifying the inverted U-shaped relationship. Consequently, our evidence contributes to the literature on IUR alliances and firm innovation performance, suggesting that medium levels of IUR alliance portfolio breadth and depth in SMEs result in higher firm innovation performance, thereby, offering several useful insights for both SME managers and policymakers in emerging economies.

Bridging the gap: organisational value frames and sustainable alliance portfolios

Research on sustainability-oriented partnerships focused either on inter-firm or cross-sector partnerships separately and often took the partnership as a level of analysis. As opposed to the partnership level, the firm-level analysis that investigates portfolios of sustainability-oriented partnerships were brought forward by only a few studies. By drawing on the literature of alliance portfolios, this paper builds the notion of "sustainable alliance portfolio" further to move scholarly attention towards the bigger picture of firms' partnership efforts for sustainability. Taking stock on the research that introduced organisational cognition to corporate sustainability which showed how partners' value frames co-evolve, converge, diverge or fuse over time; this paper theorises how business case and paradoxical frames impact the configuration, management and development of sustainable alliance portfolios. Overall, this paper bridges the gap between two constructs-organisational value frames and sustainable alliance portfolios- and offers propositions for future research to draw attention to the under-theorised portfolios of sustainability-oriented partnerships.

A contingency view of alliance management capabilities for innovation in the biotech industry

In this research, we analyze the influence of two alliance management capabilities, coordination and interorganizational learning, on the performance of alliances for innovation. By adopting a contingency view, we explore whether the effectiveness of these capabilities depends on certain features of the alliance portfolio configuration (partner and geographic diversity). Based on a sample of Spanish companies belonging to the five leading biotech clusters, our results demonstrate that alliance management capabilities are not equally effective across different contexts. Alliance coordination capabilities become more effective when partner diversity is low and geographic diversity is high. By contrast, interorganizational learning capabilities have a positive effect on alliance portfolio performance when partner diversity is high and geographic diversity is low. These results also have useful implications for managers involved in alliances for innovation, who can direct the organizational efforts towards the most effective alliance capabilities, depending on the features of their alliance portfolio.JEL CLASSIFICATION M19

The link between SMEs alliance portfolio diversity and top management’s entrepreneurial and alliance orientations

To be able to survive and grow in twenty-first century global network economies, small-to-medium-sized enterprises (SMEs) strive to develop various types of interfirm alliances that provide them with bundles of resources and network security. Therefore, creating and configuring a beneficial and diverse alliance portfolio has become an important strategic issue for SMEs. The purpose of this article is to investigate how the entrepreneurial orientation and alliance orientation of the SMEs’ top managements lead to functional diversity of alliance portfolio configurations. Based on resource dependency and upper echelons theories, this study develops a model using survey data from 230 managers of Australian SMEs. The results suggest a significant link between the SME top management’s strategic orientations and the diversity of their alliance portfolios. When both entrepreneurial orientation and alliance orientation are high, the firms prefer to form portfolios that are functionally diverse. On the other hand, when either one or both strategic orientations are low, firms prefer to form portfolios that specialize on one of the functional areas like operations, logistics, marketing, or strategic management.

Knowledge breadth and depth development through successful R&D alliance portfolio configuration: An empirical investigation in the pharmaceutical industry

Organizational ambidexterity literature has emphasized the importance for firms to engage in dual activities of exploration (knowledge breadth) and exploitation (knowledge depth). However, little research has been done regarding what strategies firms need to adopt in order to achieve these two competing goals. This paper seeks to understand how different R&D alliance portfolio configuration strategies affect firms' ability to develop knowledge breadth and knowledge depth. The central argument is that different R&D alliance portfolio configuration strategies will produce different levels of knowledge structural benefit and relational capital benefit. A firm's preferences for different types of R&D alliance partners influence both the scope of external knowledge it is exposed to (knowledge breadth) as well as its ability to absorb and learn from its partners (knowledge depth). Using a panel data of 64 pharmaceutical firms over 15 years, our empirical results largely support the proposed hypotheses.

A contingency view of alliance management capabilities for innovation in the biotech industry

In this research, we analyze the influence of two alliance management capabilities, coordination and interorganizational learning, on the performance of alliances for innovation. By adopting a contingency view, we explore whether the effectiveness of these capabilities depends on certain features of the alliance portfolio configuration (partner and geographic diversity). Based on a sample of Spanish companies belonging to the five leading biotech clusters, our results demonstrate that alliance management capabilities are not equally effective across different contexts. Alliance coordination capabilities become more effective when partner diversity is low and geographic diversity is high. By contrast, interorganizational learning capabilities have a positive effect on alliance portfolio performance when partner diversity is high and geographic diversity is low. These results also have useful implications for managers involved in alliances for innovation, who can direct the organizational efforts towards the most effective alliance capabilities, depending on the features of their alliance portfolio.

Structural characteristics of extended alliance portfolio configuration and firm innovation

So far, the scope of alliance portfolio configuration (APC) studies has included only one degree, namely direct alliances or partners of a focal firm. Based on the sociological concept of 'three degrees of influence rule', this study extends the scope of the APC of a focal firm to three degrees, and two structural variables (clustering coefficient and closeness centrality) are extracted from the extended APCs of 31 Korean bio-pharmaceutical firms. Then, the effects of these variables on firm innovation performance are analysed using the two-step generalised method of moments (GMM) estimates. The results show that the more clustered the extended APCs are, and the closer their average distance from a focal firm, the more favourable the innovation performance of the firms. Additionally, the average distance was found to moderate the clustering effect in the extended APC for the innovation performance. Attempting to interpret the APC with such an expanded concept is expected to accelerate further research in the future.

Structural characteristics of extended alliance portfolio configuration and firm innovation

Structural characteristics of extended alliance portfolio configuration and firm innovation

The Relationship of Organisational Value Frames with the Configuration of Alliance Portfolios: Cases from Electricity Utilities in Great Britain

Increasing concerns over global and local sustainability issues motivate businesses to develop solutions via collaborative partnerships. While many studies explain the contributions of sustainable alliances to economic, environmental, and social sustainability, less is known about how a portfolio of these alliances is configured. This study aims to answer this question by examining the relationship between organisational value frames and alliance portfolio configurations of 16 utility companies in the electricity industry of Great Britain. The study finds that organisational value frames play a key role in the selection of alliance partners and hence the configuration of alliance portfolios. The results demonstrate that British electricity utilities often collaborate with cognitively similar organisations. The results demonstrate that cognitive homophily is common in selecting partners to tackle sustainability issues. While previous studies demonstrated homophily in partner selection as resource homophily or status homophily, in the sustainability context, this study shows that homophily is also about values that guide interpretations of sustainability issues.

Diversity in airline alliance portfolio configuration

Alliances in the airline industry operate as a basic strategy to stimulate competition and both the number and the types of alliances have increased over time. Each airline maintains alliances simultaneously with a variable number of partners. The set of airline's alliance partners constitutes its alliance portfolio. A central theme of these portfolios is the way in which partner selection improve performance. Is the alliance portfolio configuration based on either similar or different partners? We examine how the differences can arise from differences between the partners themselves, from resource complementarity, and from the partners structural positions in the network. The relations between these types of differences and whether they affect firm performance are studied. Codeshare alliances established between airline companies at a global level are analyzed to establish their effects on performance. In particular, the study comprises 135 alliance portfolios all of which from major airlines. The results suggest that structural homogeneity and complementarity improve performance and that alliance portfolio diversity favors network resource complementarity.

Alliance Portfolio Configurations and Firm Performance: A Study of Indian High-Tech Firms

This study examines how three important alliance portfolio (AP) characteristics – partner type diversity, tie-strength, and learning orientation- that enable organizational learning configure to af...

Casting a Wide Net for Innovation: Mediating Effect of R&D Human and Social Capital to Unlock the Value from Alliance Portfolio Diversity

AbstractThis paper examines the performance effects associated with different alliance portfolio configurations in terms of geographical location and partner type. Based on these distinctions, the authors hypothesize that more diverse alliance portfolios enable firms to gain and exploit innovation opportunities. Additionally, the mediating effects of R&D human and social capital on the R&D alliance portfolio diversity–innovation performance relationship are explored. The authors reason that the absorptive capacity of R&D intellectual capital determines a firm's potential gains from highly diverse alliance portfolios. From panel data of manufacturing firms in Spain for the period 2008–2013, the results confirm the inverted U‐shaped relationship between alliance portfolio diversity and firm innovation performance, implying that both insufficient and excessive alliance portfolio diversity may be detrimental to firm innovativeness. Additionally, R&D human and social capital partially mediates the R&D alliance diversity–innovation performance relationship, emphasizing the importance of internal capabilities to leverage the benefits of highly diverse alliance portfolios. These findings add a dynamic dimension to the conceptualization of alliance portfolios and how firms create value by balancing explorative and exploitative alliances.

Impact of extended alliance portfolio configuration on firm innovation

AbstractIn the past, alliance portfolio configuration (APC) studies concentrated mostly on the direct alliances or partners of a focal firm. However, a focal firm is also influenced by indirect alliances or partners. This study endeavors to focus on this aspect of APC. It contributes to APC research by extending the scope to three degrees from a focal firm. To assess the effects of extended APCs, 186 3-year window snapshots were created of the extended APCs of 31 Korean bio-pharmaceutical firms. These snapshots range from 2007 to 2014. The effects of structure (density), size (number of alliances and partners), and relationships to firm innovation were measured using the two-step generalized method of moments estimates. The results show that structural sparseness and larger-sized extended APCs are more favorable conditions for innovation, and that structural sparseness and size have a positive relationship to innovation performance.

Partner Type Diversity in Alliance Portfolios: Multiple Dimensions, Boundary Conditions and Firm Innovation Performance

AbstractOur research extends the current knowledge based view on the configuration of alliance portfolios and their deployment in different external knowledge environments. We study these alliance portfolios in a longitudinal sample (1996–2010) for over three thousand firms that operate in a large number of industries in the Netherlands. Our findings indicate that partner type variety and partner type relevance, as different dimensions of partner diversity in alliance portfolios, both have an inverted U‐shaped association with firm innovation performance. However, alliance portfolios characterized by both high partner type variety and high relevance cause inferior innovation performance. Different external knowledge environments, characterized by different levels of industry modularity and scope of knowledge distribution, moderate the inverted U‐shaped associations of partner type variety and relevance in alliance portfolios with firm innovation performance in opposing directions. While for partner type variety, a high level is found to be optimal in environments with greater modularity or broader scope of knowledge distribution, for partner type relevance it turns out that a low level is optimal under more modular industry conditions.

Alliance portfolios and firm performance: the moderating role of environmental dynamics

PurposeThe purpose of this paper is to focus on the operation strategy of high-performance alliance portfolios by analyzing the effect of alliance portfolios on the performance of focal firms, using post-structuralism of social network theory and contingency theory. In detail, this paper refines alliance portfolios into three dimensions, and studies the moderating role of context on the relation between alliance portfolios and firm performance.Design/methodology/approachThe empirical study was carried out with second-hand data gathered from Internal Revenue Service. In total, this paper gathered data from 506 focal firms in Zhejiang Province from 2001 to 2010 as the sample to test the hypotheses.FindingsBased on the empirical results, the authors find the positive effect of relational dimension (weak alliance portfolios) and partner dimension (the diversity of partners) on performance. The effect of the former will become weaker with the increasing environmental dynamic, while the effect of the latter will become stronger. However, the structural dimension (alliance portfolios size) and relational dimension (new partners) have the negative effect on performance. And the negative effect will become stronger under high environmental dynamic. Moreover, the negative effect of non-local partners on performance becomes stronger when the environmental dynamic is high.Research limitations/implicationsThe paper reveals that with the industry transformation caused by “internet +,” companies have been required go beyond traditional dyadic alliance management perspective. That is to say, individual alliance relationship should be seen as a part of a much broader picture of alliance portfolio. As such, the framework may help companies to manage their alliance portfolios by matching high-performance alliance portfolios to the external environment to produce a synergistic effect (Lea et al., 2006; Tritos et al., 2013; Keith et al., 2014) taking the characteristics of the configuration of alliance portfolios into consideration.Originality/valueThe paper presents a model that explains the effect of three dimensions of alliance portfolios on the performance of focal firms in different contexts through empirical study. This paper also integrates post-structuralism of social network theory and contingency theory to enable the understanding on the configuration of alliance portfolios.