In this paper, we introduce firms’ innovation comparison as a major antecedent to the intensity of firms’ alliance formation. We define innovation comparison as the difference between firms’ innovation performance and their aspiration levels. We build on the behavioral theory of the firm to explain the implications of negative innovation comparisons on firms’ tendencies to engage in alliances. We argue that when firms perform less than their innovation inspirations, they engage in more alliances to compensate for their lack of knowledge, experience, and resources. Additionally, we examine the moderating role of TMT characteristics on this relationship. We focus on TMT’s age, tenure, and functional diversity due to their effects on informational processing and environmental interpretations. A panel of knowledge intensive firms shows partial support to the proposed model. The proposed framework contributes to alliance literature by integrating the behavior theory of the firm to explain firms’ behavior towards alliance formation. Additionally, we extend TMT literature by examining age, tenure, and functional diversity as boundary conditions to firms’ ability to perform corrective actions in case of unfavorable performance.