Prior research suggests that diversified firms are often unable to match resources to the market needs and opportunities of their divisions due to factors such as influence activities. In this research, we propose that when such internal inefficiencies arise, diversified firms may form alliances to access resources externally to support their divisions in their industries and operations. Using a sample of US firms between 1997 and 2006, we find that, on average, diversified firms form more alliances within industries that they currently operate in when compared to single business firms. The alliancing activity in related industries increases when businesses with diverse growth opportunities exist within the same firm, and it decreases with the intensity of internal control and coordination mechanisms. Our study suggests a link between internal resource allocation processes and external alliancing activity, while highlighting that alliances may play an important role in how diversified firms manage the inefficiencies that arise within their boundaries.

Research Summary We examine the role of managerial job security in the adoption of innovative practices and structures. Utilizing state level antitakeover protections as an exogenous shock, we find that when managers are afforded greater job security through these protections they exhibit a higher probability of initiating a Corporate Venture Capital (CVC) program. Furthermore, the positive effect of job security on CVC adoption is stronger when firms are research intensive, and when there are slack financial resources. Our results suggest that providing managers leeway to experiment while ensuring job security is important for corporate entrepreneurship and the willingness to experiment with innovative strategies. Managerial Summary Entrepreneurial activity often involves identifying opportunities that the rest of the marketplace overlooks. While this risk taking is celebrated as part of entrepreneurial folklore, in pragmatic terms, for managers of public organizations, it requires going against the prevailing wisdom of important stakeholders. Since stakeholders can hold considerable influence over top managers' employment, managers may avoid innovation if they feel experimentation and/or failure could cost them their jobs. This study demonstrates that when top managers have more job security, they are more likely to experiment with new organizational forms and structures by establishing Corporate Venture Capital units. The study demonstrates that job security not only impacts the amount of risk taken within existing operations, but also the willingness to experiment with novel ideas and activities.

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The behavioral theory of the firm (BTF) suggests that when performance falls below aspirations, firms engage in problemistic search for solutions to the performance shortfall. In this paper, we contend recent experience is a critical determinant of the search mode employed by the firm. With this foundation, we examine the boundary conditions of search and investigate whether central BTF concepts of coalitions, routines, and slack resources exacerbate or alleviate the effect of recent experience. We focus our theorizing and empirical tests on R&D search, and results confirm that a firm will generally only engage in a specific search mode in response to performance shortfalls if it has had recent experience with that activity. Examination of boundary conditions indicates that the influence of recent experience is: weaker for firms that have experience with other search modes; weaker for diversified firms; stronger for larger firms; and stronger for firms with more absorbed slack.

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