Two-Sided Effects of Embeddedness in Alliance Portfolios

Abstract

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.

The role of cooperation in productivity: Alliance portfolio and network resources

“…Third, studies confirming the importance of the size of the alliance portfolio on performance (Ahuja, 2000b;Kim et al, 2015;Kim & Choi, 2014;Mouri et al, 2012) point out the need to go deeper into that relationship and understand the underlying variables. This work includes a variable that according to the literature can explain the performance of companies in interconnected environments: network resources (Gulati et al, 2011;Lavie, 2006).…”

The devil you know? A review of the literature on the impact of prior ties on strategic alliances

“…However, as the literature on alliance performance suggests that there is a negative side of relying on familiar partners and that the synergistic potential of the relationship with specific partners is limited, future research should analyze when and how firms must put an end to their alliances. Recent research on alliance portfolios (Wassmer, 2010;Srivastava et al, 2011;Lavie and Singh, 2012;Castro et al, 2014;Kim et al, 2015;Park et al, 2015) could be developed to accomplish this goal.…”