Firms' heterogeneity,relationship embeddedness,and innovation development in competitive alliances

Few studies have investigated the effects of firms' heterogeneity in the context of competitive alliances' innovation development efforts. Prior research has mainly focused on how relationship embeddedness facilitates innovation development, with little attention to heterogeneity among firms and the role it might play. We addressed this gap by examining the relationships among firms' heterogeneity, relationship embeddedness, and innovation development in competitive alliances. We distinguished three dimensions of firms' heterogeneity and collected data from 481 surveys. We demonstrated that heterogeneity with regard to operational routines and organizational responsiveness, heterogeneity was found to have positive direct effects on innovation development while also undermining relationship embeddedness. By contrast, technological heterogeneity had a positive effect on both innovation development and relationship embeddedness. Competitive-alliance firms are more sensitive to heterogeneity regarding operational routines than to organizational responsiveness. These findings highlight the importance of overcoming the adverse effects of firms' heterogeneity through several means, such as full interpretation, observation, and offsetting incongruence through intermediaries or brokers. This study contributes to the strategic management and embeddedness literature by examining the implications of firms' heterogeneity and identifying how these effects influence relationship embeddedness as antecedent factors.