In this study, we suggest a new perspective on the linkage between alliance portfolio diversity and innovation performance based on a contingency approach. Using a longitudinal data set on alliance portfolios and patents of 182 firms in the U.S. manufacturing industries, we examined that alliance portfolio diversity has a U-shaped relationship with firm-level innovation. Internal value creation capabilities in terms of routine and ability are found to moderate the relationship between alliance portfolio diversity and innovation performance: organizational search routine strengthens the relationship of alliance portfolio diversity and innovation performance while technological capabilities weaken and flip the relationship.
This study investigates the effects of alliance portfolio diversity on the innovation performance of firms. Alliance portfolio diversity is defined using partner characteristics (partner industrial background) and alliance characteristics (alliance objective). We also investigate the interaction between these two measures of diversity on innovation performance. The hypotheses are tested on a dataset of R&D alliances in the US biopharmaceutical industry from 1998–2002. We find an inverted U-shape relationship between the diversity of alliance partners’ industrial background and innovation performance, and a negative interaction of partner diversity and the diversity of the alliance objectives. This study contributes to the growing field of alliance portfolio diversity research by introducing a new alliance characteristic-based dimension of diversity and testing the interaction of different diversities. Our findings imply that firms with diverse alliance partners in particular need to be careful not to focus on too many objectives at the same time.
Alliance portfolios are an important source of competitive advantage for firms. Diverse resources of partners contribute to enhancing firms' performance, but relationships among the firms' partners also influence the performance. This paper, employing an embeddedness lens, aims to examine how these relationships influence the firms' innovation performance. We confirm two-sided effects of embeddedness within alliance portfolios. While the focal firms increase the size of their portfolios, dense relationships among their partners increase the performance and competitive relationships weaken the performance. For the empirical test, we collected data on 1863 technology alliances between US biotechnology and multinational pharmaceutical companies. This study highlights how firms have to consider relationships among their partners when configuring their alliance portfolios to maximise innovation performance.
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