Small fish, big fish: The performance effects of the relative standing in partners' affiliate portfolios

Özmel, Ümit; Güler, Işın

doi:10.1002/smj.2332

Cited by 36 publications

(30 citation statements)

References 105 publications

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“…In other words, beyond the initial decision to engage in an alliance, partnering firms will make ongoing decisions concerning how best to direct their attention, with time‐varying signals of productivity in part driving these decisions . This attention rationing logic is consistent with evidence from other settings, such as venture capital (Ozmel & Guler, ).…”

Section: Theory and Hypothesessupporting

confidence: 88%

Resource congestion in alliance networks: How a firm's partners’ partners influence the benefits of collaboration

Aggarwal

2019

Strategic Management Journal

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Research summary The network resources a firm can access through its strategic alliances are critical precursors to innovation: They provide the information and know‐how needed to generate new knowledge. Yet prior literature has not directly considered the congestion of network resources stemming from constraints on their capacity to be applied without loss of value across multiple settings. I examine the degree to which this form of resource congestion influences the innovation benefits a focal firm realizes from its alliance portfolio. In a panel dataset of biopharmaceutical firms, I find that the knowledge‐based resources of a focal firm's alliance partners can be congested due to multiple claims on these resources from the firm's partners’ partners. This insight bridges the network and resource‐based perspectives on alliances and innovation. Managerial summary Strategic alliances are an essential tool for managers in knowledge‐intensive settings: They allow firms to access diverse information and know‐how which can be of critical importance as inputs to the innovation process. What managers may overlook, however, is that the knowledge‐based resources of their alliance partners can be congested due to competing claims on these resources from the other alliances in which their partners are engaged. In such cases, firms may end up competing for resources such as partner time and attention with their partners’ other partners. Consequently, when engaging in alliances, managers should be attentive not only to the knowledge resources an alliance partner may hold but also to whether these partner knowledge resources may ultimately be congested due to their partners’ other relationships.

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Section: Theory and Hypothesessupporting

confidence: 88%

Resource congestion in alliance networks: How a firm's partners’ partners influence the benefits of collaboration

Aggarwal

2019

Strategic Management Journal

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“…To capture the venture's relationship with VCs, we first measured Venture Capitalist Funding by accumulating the total US dollar amount of venture capital financing received by the venture up to the spell (e.g., Evans & Jovanovic, ; Ozmel, Trombley, & Yavuz, ; Ransbotham & Mitra, ). We control for the Venture Capitalist Prominence via the eigenvector centrality of the VCs in the VC syndicate networks (e.g., Ozmel, Reuer, & Gulati, ; Ozmel & Guler, ; Podolny, , ). If there are multiple VCs investing in a particular technology venture, we picked the maximum of those VCs' centralities (Ozmel & Guler, ).…”

Section: Methodsmentioning

confidence: 99%

“…Technology ventures typically entail high uncertainty because they do not have established track records or even products (e.g., Ozmel & Guler, 2015;Ozmel, Reuer, & Gulati, 2013;Shane & Cable, 2002;Stuart et al, 1999). As a result, potential acquirers of a technology venture might face substantial uncertainty regarding the quality of the venture's resources and its prospects when they are assessing the venture as an acquisition target (e.g., Ozmel, Robinson, & Stuart, 2013;Stuart et al, 1999).…”

Section: Frequency-based Imitation For Acquisitions Of Venturesmentioning

confidence: 99%

“…It is well known that technology ventures present uncertainty to potential acquirers given that these ventures generally lack established track records, are privately held, and their knowledge resources are tacit (e.g., Amit, Glosten, & Muller, ; Ransbotham & Mitra, ; Ozmel & Guler, ; Ozmel, Reuer, & Gulati, ; Stuart, Hoang, & Hybels, ). Faced with such uncertainties, potential acquirers may not acquire a venture, and deals that would be valuable for acquirers and targets alike may fail to occur (e.g., Higgins & Rodriguez, ; Shane & Cable, ).…”

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confidence: 99%

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Interorganizational Imitation and Acquisitions of High‐tech Ventures

Özmel

Reuer

2017

Strategic Management Journal

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Research summary: This article shows that there is a positive association between the changes in the number of prior acquisitions or the changes in the prominence of prior acquirers within the focal venture's subfield and the venture's likelihood to be acquired. Results are in line with the existence of frequency‐ and trait‐based imitation in acquisitions targeting tech ventures. More importantly, these positive associations are more pronounced when (a) exogenous technological uncertainty within the venture's subfield increases and (b) there are significant differences between the focal venture's and acquirer's technological resources. Our findings are in accord with the suggestion that uncertainty in the technology domain is an important boundary condition in moderating the extent of imitation in technology acquisitions. We also discuss alternative explanations and implications. Managerial summary: The findings of this article suggest that when deciding whether or not to acquire a technology venture (i.e., startup company in a high‐tech industry), managers infer information by observing other acquisitions in the venture's subfield to make assessments about the underlying value of the potential targets. We also find that receiving some informational cues from previous acquisitions would be more useful when there is high technological uncertainty in the potential target's subfield about which technologies will be dominant, and when the potential acquirer and the tech venture operate in dissimilar technological areas. This article shows that imitation can be one way to deal with decision‐making under uncertainty when making acquisition decisions in high‐tech environments. Copyright © 2017 John Wiley & Sons, Ltd.

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“…Thus, the start-up faces greater costs associated with maintaining the alliance, which can be mitigated by embedding these relationships with other powerful partners in common third-party ties (Bae and Gargiulo, 2004). More generally, because relationships exist within a portfolio context, factors such as the relative standing of a firm in a partner's portfolio can shape the degree to which relationships confer benefits (Ozmel and Guler, 2015;Aggarwal, 2017). Social capital confers relatively less bargaining benefits for (co)specialized assets.…”

Section: Social Capital and Generic Complementary Assetsmentioning

confidence: 99%

Interorganizational Collaboration and Start-Up Innovation

Aggarwal¹,

2019

The Oxford Handbook of Entrepreneurship and Collaboration

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This chapter presents an overview of the literature on collaborative relationships between start-ups and incumbent firms, focusing on the implications of these relationships for start-up innovation and performance. Value creation in such relationships occurs when assets are exchanged by the parties involved: collaboration allows for passive knowledge flows and active knowledge creation; in addition, collaboration provides start-ups with access to the complementary assets of the incumbent. At the same time, value creation presents opportunities for value capture by either party, where value capture by the start-up is determined by their knowledge appropriation regime and social capital. The form in which the start-up appropriates value has implications for the assets that enable value creation. The framework for value creation and capture in bilateral start-up-incumbent collaborations extends to start-up-incumbent collaborations in a platform and ecosystem context, where there are fruitful future research opportunities.

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Small fish, big fish: The performance effects of the relative standing in partners' affiliate portfolios

Cited by 36 publications

References 105 publications

Resource congestion in alliance networks: How a firm's partners’ partners influence the benefits of collaboration

Resource congestion in alliance networks: How a firm's partners’ partners influence the benefits of collaboration

Interorganizational Imitation and Acquisitions of High‐tech Ventures

Interorganizational Collaboration and Start-Up Innovation

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