Technology alliances in emerging economies: persistence and interrelation in European firms' alliance formation

We analyse the patterns and determinants of technology alliance formation with partner firms from emerging economies with a focus on European firms' alliance strategies. We examine to what extent European firms' alliance formation with partners based in emerging economies is persistent – that is, to what extent prior collaborative experience determines new alliance formation – and we compare this pattern with alliance formation with developed country partners. Second, we examine to what extent prior engagement in international alliances with partners from developed countries increases the propensity to form technology alliances with partners based in emerging economies, and vice versa (interrelation). We find that both persistence and interrelation effects are present, and that they are generally not weaker for emerging economy alliances. Alliance formation with Indian and Chinese firms is significantly more likely if firms have prior alliance experience with Japanese firms. The findings suggest that building on their prior international alliance experience firms extend their alliance portfolios across both developed and emerging economies, increasing the geographical diversity of their alliance portfolios.     

Alliance portfolios and firm performance: A study of value creation and appropriation in the U.S. software industry

This study reveals the multifaceted contribution of alliance portfolios to firms' market performance. Extending prior research that has stressed the value‐creation effect of network resources, it uncovers how prominent partners may undermine a firm's capacity to appropriate value from its alliance portfolio. Analysis of a comprehensive panel dataset of 367 software firms and their 20,779 alliances suggests that the contribution of network resources to value creation varies with the complementarity of those resources. Furthermore, the relative bargaining power of partners in the alliance portfolio constrains the firm's appropriation capacity, especially when many of these partners compete in the focal firm's industry. In turn, the firm's market performance improves with the intensity of competition among partners in its alliance portfolio. These findings advance network research by highlighting the trade‐offs that alliance portfolios impose on firms that seek to manage and leverage their alliances. Copyright © 2007 John Wiley & Sons, Ltd.     

Network resource stocks and flows: how do alliance portfolios affect the value of new alliance formations?

We examine how new network resources accessed through alliance formations interact with network resources present in a firm's alliance portfolio. We test our theoretical model using event study methodology and data from the global air transportation industry. We find that the market rewards firms forming alliances that contribute resources that can be synergistically combined with firms' own resources as well as with network resources accessed through their alliance portfolios. Our results also indicate that the market penalizes firms entering into alliances that create resource combinations that are substitutes to resource combinations deployed by existing alliance partners. Copyright © 2011 John Wiley & Sons, Ltd.     

Alliance Concentration in Multinational Companies: Examining Alliance Portfolios,Firm Structure,and Firm Performance

Research summary: This article explores the distribution of alliances across firms' internal structure. Focusing on multinational companies, we examine the impact of alliance portfolio concentration—i.e., the extent to which alliances are concentrated within a limited number of geographic units—on focal firms' performance. Relying on Knowledge‐Based View (KBV) insights, we hypothesize that an increase in alliance portfolio concentration positively influences firm performance and that alliance portfolio size negatively moderates this relationship. Our empirical results enrich the emerging capability perspective on alliance portfolios, point to the relevance of conceptualizing focal firms in alliance portfolio research as polylithic entities instead of monolithic ones, and provide new insights into how firms create value by potentially recombining externally accessed knowledge. Managerial summary: In the setting of multinational companies, we examine whether alliance activities are concentrated in a limited number of subsidiaries or are highly dispersed across multiple subsidiaries. We find that, over time, firms exhibit different patterns in terms of alliance portfolio concentration. In addition, the results show that, for MNCs with a relatively small alliance portfolio, an increase in alliance portfolio concentration is positively related to their financial performance. However, when MNCs' alliance portfolios are relatively large, the relationship between alliance portfolio concentration and firm performance becomes negative. Jointly, these findings suggest that the distribution of alliances across firms' internal structure is an important factor in shaping potential knowledge recombination benefits from alliance portfolios. Copyright © 2017 John Wiley & Sons, Ltd.     

Unpacking functional alliance portfolios: How signals of viability affect young firms' outcomes

This article investigates how alliance portfolio composition affects young firms' outcomes. Drawing on signaling theory, we propose how alliance portfolio composition—number, functional domains (R&D, manufacturing, and marketing), and single‐purpose or multi‐purpose nature of alliances within the portfolio—may affect a firm's likelihood of achieving a liquidity event (IPO or acquisition). We study 8,600 U.S.‐based, VC‐backed firms during the period of 1990 to 2002 from 10 industry sectors. We find that alliance portfolios (to a certain extent) increase a firm's liquidity event likelihood. Further, firms with heterogeneous alliance portfolios, including portfolios emitting greater efficiency signals versus endorsement signals, are more likely to experience an IPO versus acquisition. Our findings lend support to the value of multi‐function alliances within portfolios. Copyright © 2013 John Wiley & Sons, Ltd.     

Ties' repeatedness,partners' social value,and alliance portfolio performance in emerging economy: The moderating roles of firm-government linkages

Repeatedly collaborating with previous partners or following peers' decisions are two primary strategies employed by emerging economy firms in selecting their alliance partners. As a result, the alliance portfolios of firms often feature a high level of ties' repeatedness and partners' social value—the extensiveness of a firm's partners being selected by other players in the industry. However, few studies examine whether these two features can result in superior alliance portfolio performance. Leveraging data collected from 566 fund product distribution alliances initiated by 62 fund companies in a 5-year period (2007–2011), we find that ties' repeatedness does not significantly improve alliance portfolio performance. In fact, a high level of social value of the current partners produces a negative effect. However, firms' linkages to governments can change the performance consequences of these two features. As a category of formal government–firm linkages, state ownership improves the positive effect of ties' repeatedness on alliance portfolio performance, while it strengthens the negative effect of partners' social value. As a category of informal linkages, political ties weaken the positive effect of ties' repeatedness on alliance portfolio performance but cannot significantly alleviate the negative effect of the social value of current partners.     

The evolution of coopetitive and collaborative alliances in an alliance portfolio: The Air France case

This research studies the evolution of the composition of an alliance portfolio from a coopetition perspective. Building on resource dependence theory, market uncertainty appears to be a driver of alliance portfolio formation and evolution. Scholars have previously neglected key dimensions in analyzing the composition of firms' alliance portfolios: the partner type (pure partner or competitor) and partner interactions (horizontal, vertical or mixed). We build on the coopetition and alliance portfolio literature to explore (1) the composition of an alliance portfolio and (2) its evolution over time. We illustrate our theoretical framework with a longitudinal single-case study of Air France's alliance portfolio. First, we show that when market uncertainty is high, firms do not increase their reliance on collective strategies, but they do modify the composition of their portfolio. Second, to address high levels of market uncertainty, firms rely more on coopetitive alliances than on collaborative alliances. Third, firms use more horizontal than vertical interactions when market uncertainty is high.     

Alliance portfolio reconfiguration following a technological discontinuity

Research summary : We study how technological discontinuities generate first‐ and second‐order effects on alliance formation and termination, leading to reconfiguration of firms' alliance portfolios. Following technological shocks, we argue that firms often seek alliances that provide new resources while also having incentives to form alliances for reinforced and challenged resources that complement the new resources. In parallel, alliance terminations, even involving resources otherwise unaffected by the discontinuity, increase due to limits in firms' alliance carrying capacity. We study biopharmaceutical firms between 1990 and 2000, which faced a technological discontinuity in 1995 in the form of combinatorial chemistry and high‐throughput screening. We improve understanding of how technological discontinuities affect the value of resources and how firms reconfigure alliance portfolios in response. Managerial summary : When firms form alliances to gain new resources during technological discontinuities that disrupt their industry, they cannot consider only the focal new partnerships. Instead, new alliances create complementarity and substitution pressures that lead to broader reconfiguration of the firms' alliance portfolios: (1) complementarity creates incentives to also form alliances for resources that the technological discontinuity reinforces or challenges in order to improve the collective value of co‐specialized assets; (2) substitution creates incentives to terminate existing alliances, even if their value is otherwise unaffected by the discontinuity, in order to create carrying capacity for new alliances. Thus, one new alliance can generate a cascade of reconfiguration that challenges the balance between the benefits of stability and the need for change in an alliance portfolio. Copyright © 2016 John Wiley & Sons, Ltd.     

Growing with the market: How changing conditions during market growth affect formation and evolution of interfirm ties

Research Summary: Market conditions are known to matter for firm performance and growth. This study explores how changing levels of uncertainty and competition affect interfirm ties of entrepreneurial firms as markets transition from nascent to growth stage. Tracing six entrepreneurial game publishers during the growth stage of the U.S. wireless gaming market, the findings reveal that in a growth stage market, as uncertainty decreases, certain ties of entrepreneurial firms are terminated. First, existing partners may cut ties and become competitors after entering the market directly. This is a “winner's curse” as more successful firms are more likely to entice their partners to enter the market directly. Second, ties may be terminated as prominent firms that are “overwhelmed” with too many partners cut ties with low to mediocre performance, while their remaining partners enter a positive spiral of tie strength and performance. Finally, as uncertainty decreases, new firms may enter the market as competitors to prominent firms. While entrepreneurial firms with high‐ and low‐performing ties to prominent partners may find ties with these new entrants attractive, those with mediocre ties to few prominent partners find this move too risky and wait for a first mover to legitimate it. Overall, the findings show that changing levels of uncertainty and competition in growth stage markets can have different consequences for firms due to heterogeneity in their ties and power relative to partners. The findings provide several contributions to literature regarding the relationship among interfirm ties, firm performance, and market evolution. Managerial Summary: Based on interviews at six entrepreneurial game publishers in the United States and their partners, this study shows how changing levels of uncertainty and competition in growing markets can have different consequences for firms based on the different types of alliances in their portfolio and their power relative to partners. The findings highlight the importance of managing partners differently based on alliance type and goal of the partner. They advocate remaining flexible in alliance management as information asymmetries, intentions and bargaining power of partners can change and lead to abrupt alliance dissolution. They show that alliance portfolio management goes beyond a firm's capability of managing individual alliances, and provide a tool for managers to evaluate their alliance portfolios and take the necessary precautions.     

Competition and termination of the alliances between asymmetric partners: The case of Japanese department stores

To enrich the literature on alliance termination, we recognize that the dynamics of individual alliances are subject to the structural characteristics of the alliance portfolios in which they are embedded. We anchor our study in the context of large industry leaders partnering with multiple small partners, the latter of which can be viewed as competing for access to the formers’ resources. We expect that a small partner’s relative capability in relation to peer partners within a leader’s alliance portfolio is negatively related to the likelihood of alliance termination, since the leader acknowledges that partners with inferior capability do not deserve to be supported. Furthermore, this relationship would be moderated by alliance portfolio size, market overlap with peer partners, and with industry leaders. Using a unique dataset of 145 alliances between leading and small department stores in Japan in the period 1977-93, we found general support for the hypothesized relationships.     

Interorganizational alliances and the performance of firms: a study of growth and innovation rates in a high‐technology industry

This paper investigates the relationship between intercorporate technology alliances and firm performance. It argues that alliances are access relationships, and therefore that the advantages which a focal firm derives from a portfolio of strategic coalitions depend upon the resource profiles of its alliance partners. In particular, large firms and those that possess leading‐edge technological resources are posited to be the most valuable associates. The paper also argues that alliances are both pathways for the exchange of resources and signals that convey social status and recognition. Particularly when one of the firms in an alliance is a young or small organization or, more generally, an organization of equivocal quality, alliances can act as endorsements: they build public confidence in the value of an organization's products and services and thereby facilitate the firm's efforts to attract customers and other corporate partners. The findings from models of sales growth and innovation rates in a large sample of semiconductor producers confirm that organizations with large and innovative alliance partners perform better than otherwise comparable firms that lack such partners. Consistent with the status‐transfer arguments, the findings also demonstrate that young and small firms benefit more from large and innovative strategic alliance partners than do old and large organizations. Copyright © 2000 John Wiley & Sons, Ltd.     

Networking for sustainability: Alliance capabilities and sustainability-oriented innovation

Research on open innovation and sustainability suggests that alliances with external stakeholders help to improve innovation outcomes. This paper taps into the intersection of these literatures and investigates how alliance proactiveness and alliance portfolio coordination affect firms' sustainability-oriented innovation (SOI) outcomes. Data were collected from 170 firms in the Basque Country region in Spain, which has a highly collaborative regional innovation system. Partial least squares (PLS) modeling confirmed that alliance proactiveness is positively related to radical SOI, while alliance portfolio coordination is positively related to incremental SOI. In addition, these two capabilities involve a positive interaction effect in the case of radical SOI. An additional set of post hoc tests using latent class analysis (FIMIX-PLS) provided further evidence that firms with different internal features and levels of environmental turbulence benefit to varying extents from these capabilities and their interactions. Overall, the findings of this study show the benefits of the coupled mode of open innovation and alliance capabilities in reaching positive outcomes in SOI. On the one hand, companies focusing on incremental SOI can reap greater benefits from open innovation when collaborating within their existing portfolio; while for radical SOI, alliance proactiveness is beneficial for finding disruptive partners.     

Resource ambidexterity through alliance portfolios and firm performance

Research summary : Partner resources can be an important alternative to internal firm resources for attaining dual and seemingly incompatible strategic objectives. We extend arguments about managing conflicting objectives typically made at the firm level to the level of a firm's alliance portfolio. Specifically, will a balance between revenue enhancement and cost reduction attained collectively through partner resources accessed via a firm's various alliances be similarly beneficial for firm performance? Additionally, how do strategic attributes of alliance portfolio configuration, specifically alliance portfolio size and partner resource scope, condition the balance‐performance relationship? Based on data from the global airline industry, we find support for the balance‐performance relationship, though such balance is less beneficial for firms in the case of access to a broader resource scope per partner . Managerial summary : Increasing revenue and reducing costs simultaneously can potentially enhance firm competitiveness. We highlight that an alliance strategy can be an important alternative to internal resources for attaining such dual strategic objectives, particularly when partner resources accessed through alliances are treated collectively as portfolios. We examine the importance of balancing product‐market extending and efficiency‐improving partner resources in the global airline industry as well as the impact of two alternate strategies for accessing resources through alliances: fewer partners with more resources per partner or more partners with fewer resources per partner. We find that resource balance at the portfolio level helps airlines improve performance. Our results also suggest that managers should be cautious of accessing too many resources through just a few partners . Copyright © 2015 John Wiley & Sons, Ltd.     

When do firms change technology‐sourcing vehicles? The role of poor innovative performance and financial slack

This paper examines the adjustments firms make to the composition of their portfolios of technology‐sourcing vehicles (i.e., alliance, acquisition, or go‐it‐alone) in response to poor innovative performance. We advance a behavioral perspective on the make/buy/ally question, suggesting that differences in financial slack will generate different portfolio decisions. Specifically, we posit that firms with greater levels of financial slack are more likely to respond to poor innovative performance by opting for (1) greater vehicle diversification, and (2) new sourcing vehicles, while firms with less financial slack will respond by (1) downscoping their portfolio of sourcing vehicles, and (2) reverting to more familiar vehicles. We find support for our predictions using extensive data from the population of U.S. public pharmaceutical firms from 1992 to 2006. Copyright © 2015 John Wiley & Sons, Ltd.     

Structural homophily or social asymmetry? The formation of alliances by poorly embedded firms

Recent research shows that preexisting network structure constrains the formation of new interorganizational alliances. Firms that are poorly embedded in a network structure are less likely than richly embedded firms to form alliances, because they lack informational and reputational benefits. This study examines the types of ties that poorly embedded firms can form to overcome the constraints that their structural positions impose, in turn helping to explain how firms' actions can transform existing network structures. We argue that poorly embedded firms are more likely to participate in ties characterized by social asymmetry than in ties characterized by structural homophily. We analyze the terms of trade that socially asymmetric partners negotiate for alliance governance and discuss how such alliances influence network dynamics. To test our arguments, we use longitudinal data on the alliance activities of 97 global chemical firms from 1979 to 1991. Copyright © 2009 John Wiley & Sons, Ltd.     

Alliance portfolio diversity and firm performance

In this paper, we offer a comprehensive alliance portfolio diversity construct that includes partner, functional, and governance diversity. Grounding our work primarily with the resource‐ and dynamic capabilities‐based views, we argue that increased diversity in partners' industry, organizational, and national background will incur added complexity and coordination costs but will provide broadened resource and learning benefits. Increased functional diversity results in a more balanced portfolio of exploration and exploitation activities that expands the firm's knowledge base while increased governance diversity inhibits learning and routine building. Hypotheses were tested with alliance portfolio and performance data for 138 multinational firms in the global automobile industry during the twenty‐year period from 1985 to 2005. We found alliance portfolios with greater organizational and functional diversity and lower governance diversity were related to higher firm performance while industry diversity had a U‐shaped relationship with firm performance. We suggest firms manage their alliances with a portfolio perspective, seeking to maximize resource and learning benefits by collaborating with a variety of organizations in various value chain activities while minimizing managerial costs through a focused set of governance structures. Copyright © 2010 John Wiley & Sons, Ltd.     

What Makes a Family Firm Innovative? CEO Risk‐Taking Propensity and the Organizational Context of Family Firms

Investigating the new product portfolio innovativeness of family firms connects two important topics that have recently received considerable attention in innovation and family firm research. First, new product portfolio innovativeness has been identified as a critical determinant of firm performance. Second, research on family firms has focused on the questions of if and why family firms are more or less innovative than other organizational forms. Research investigating the innovativeness of family firms has often applied a risk‐oriented perspective by identifying socioemotional wealth (SEW) as the main reference that determines firm behavior. Thus, prior research has mainly focused on the organizational context to predict innovation‐related family firm behavior and neglected the impact of preferences and the behavior of the chief executive officer (CEO), which have both been shown to affect firm outcomes. Hence, this study aims to extend the previous research by introducing the CEO's disposition to organizational context variables to explain the new product portfolio innovativeness of small and medium‐sized family firms. Specifically, this study explores how the organizational context (i.e., ownership by top management team [TMT] family members and generation in charge of the family firm) of family firms interacts with CEO risk‐taking propensity to affect new product portfolio innovativeness. Using a sample of 114 German CEOs of small and medium‐sized family firms operating in manufacturing industries, the results show that CEO risk‐taking propensity has a positive effect on new product portfolio innovativeness. Moreover, the analyses show that the organizational context of family firms impacts the relationship between CEO risk‐taking propensity and new product portfolio innovativeness. Specifically, the relationship between CEO risk‐taking propensity and new product portfolio innovativeness is weaker if levels of ownership by TMT family members are high (high SEW). Additionally, the effect of CEO risk‐taking propensity on new product portfolio innovativeness is stronger in family firms at earlier generational stages (high SEW). This result suggests that if SEW is a strong reference, family firm‐specific characteristics can affect individual dispositions and, in turn, the behaviors of executives. Therefore, this study helps extend the knowledge on the determinants of new product portfolio innovativeness of family firms by considering an individual CEO preference and the organizational context variables of family firms simultaneously.     

The Effects of Knowledge Depth and Scope on the Relationship between R&D Alliances and New Product Development

In this study, we extend the new product development (NPD) literature that proposes that firms' knowledge depth, defined as the reuse of well understood technical knowledge, and scope, defined as the use of newly acquired technical knowledge, and new knowledge accessed from R&D alliances all positively impact NPD. Building on the knowledge‐based view of the firm, we posit that the impact of firms' R&D alliances is limited when their internal knowledge depth and scope are adequate for NPD needs. We suggest that although firms form R&D alliances to gain the right to access external knowledge of R&D alliance partners, they are not obligated to invest in resources to integrate external knowledge from R&D alliances. We propose that they wait to see if their internal knowledge depth and scope prove sufficient for NPD. If the external knowledge proves to be unnecessary, firms choose not to invest the resources required to integrate this knowledge with their internal knowledge. Alternatively, we suggest an increased impact of R&D alliances on NPD when firms are more limited in their internal knowledge depth and scope. We propose that when knowledge depth and scope prove insufficient, firms make the additional investments required to integrate external knowledge from R&D alliances with their internal knowledge stock. This reasoning is consistent with real options theory as it has been applied in alliance research, where strategic alliances are characterized as real options. We find support for our hypotheses using panel data of 738 firm year observations for 143 U.S. biopharmaceutical firms operating in 2007. Our study contributes to the NPD literature and suggests new directions for future research.     

Product innovation through coopetition in alliances: Singular or plural governance?

This study researches how firms can improve their product innovation in coopetition alliances through alliance governance. Our survey-based study of 372 vertical alliances in the medical device industry contributes to a clarification of prior studies' contrasting findings on product innovation when coopetition is present in alliances. Our results show that the singular use of relational governance improves product innovativeness in vertical alliances that experience growing levels of coopetition. In contrast, the singular use of transactional governance reduces product innovativeness with growing coopetition. When firms apply both relational and transactional governance as plural governance, vertical coopetition alliances get access to new ways to improve their product innovativeness.     

Learning from competing partners: outcomes and durations of scale and link alliances in Europe,North America and Asia

This paper investigates the outcomes and durations of strategic alliances among competing firms, using alliance outcomes as indicators of learning by partner firms. We show that alliance outcomes vary systematically across link and scale alliances. Link alliances are interfirm partnerships to which partners contribute different capabilities, while scale alliances are partnerships to which partners contribute similar capabilities. We find that partners are more likely to reorganize or take over link alliances than scale alliances. By contrast, scale alliances are more likely to continue without material changes. The two types of alliances are equally likely to shut down, at similar ages. These results support the view that link alliances lead to greater levels of learning and capability acquisition between the partners than do scale alliances. Copyright © 2000 John Wiley & Sons, Ltd.