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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.

In this research, we unpack how interdependencies affect not just individual dyads but also value creation across an alliance portfolio and ultimately a focal firm’s performance. Moving beyond the collection of dyadic relationships of individual alliances, we examine more holistically the distribution of power imbalances and mutual dependences within alliance portfolios, as well as the impact of redundancies in portfolio partners’ resources. Building on resource dependence theory, we develop and test arguments on a sample of 59 firms in the U.S. passenger airline industry during 1998–2011. We find that nonuniform distributions of power imbalances and mutual dependences within the alliance portfolio as well as redundancy affect firm performance in different ways, which has implications for the management of alliance portfolios.

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Research summary: This article uses spectral graph partitioning to advance strategic management research, and focuses on the study of complex systems that contain strongly connected components with component interactions that are weighted and directed. The spectral graph partitioning method complements existing methods, especially, when external architectural artifacts do not exist or are less than certain. We illustrate this methodology using a U.S. airline's production system. We highlight some useful metrics and show how researchers can apply this method to generate additional architectural insights. Managerial summary: We describe a method for analyzing the architecture of complex systems that contain directed and weighted component interactions, and in which each component is interdependent (directly or indirectly) on every other component. Using the spectra of a complex system, the method is not only tractable but also provides good and predictable groupings. We illustrate this method using the firm-level production task system of a firm found in the U.S. passenger airline sector. The method is useful if the system architecture is hidden, in flux, or both. The method may also permit a holistic comparison of different systems and their architectures. We discuss metrics and illustrate how they can provide additional architectural insights. Copyright © 2015 John Wiley & Sons, Ltd.