Technological alliance portfolio configuration and firm performance

Abstract

Firms pursuing technological alliances to gain competitive advantages have become a ubiquitous phenomenon in today's business environment. This article examines which technological alliance portfolio configuration is better for focal firm performance using a portfolio rather than a dyadic perspective. To assess technological alliance portfolio effects on Korean pharmaceutical and biotechnology firms, we adopted three explanatory variables-number of alliances, number of partners, and spanning structural holes. The growth rate of revenue and the growth rate of profit are used as dependent variables. We identify two characteristics of technological alliance portfolios from the two-step generalized method of moments estimates. First, we find that between two firms with the same number of alliances, the firm with the larger number of partners would have a better performance. This result is unlike those in previous studies because it distinguishes between the number of alliances and number of partners based on the network theory. Second, we find that spanning structural holes affects firm performance rather like a double-edge swordit positively affects the growth rate of profit but negatively affects the growth rate of revenue of firms. In short, spanning structural holes is simultaneously beneficial for firm profitability and unfavorable for firm growth. This result differs from those of earlier studies because it shows that a firm spanning structural holes among alliance partners produces either a positive or a negative effect, suggesting that a firm should vary its strategy depending on whether it prioritizes profitability or growth.

The Effects of Boundary-Spanning Search, Network Ties, and Absorptive Capacity for Innovation: A Moderated Mediation Examination

“…The existing literature on innovation emphasizes the unique role of boundary-spanning search in organizational innovation activities [8,33]. First, it increases the resource stock or portfolio of an enterprise and facilitates innovation activities [34][35][36][37]. Second, Lopez-Vega, Tell, and Vanhaverbeke (2016) [15] opine that enterprises in need of specific technology can link up with external suppliers through boundary-spanning search to provide technical and scientific solutions to enhance competitive advantage and innovation capability.…”

Impact of extended alliance portfolio configuration on firm innovation

“…Therefore, this study adopted two size variables (NOA and NOP) and showed not only that these two variables vary significantly as the degree increases from a focal firm (where the correlations between the NOA and the NOP at one degree and at the extended APC are 0.72 and 0.63, respectively), but also that they have a different effect on firm innovation. This difference is due to the repeated partnerships of the two firms' alliances (Kim & Choi, 2014a). Network theory states that the NOA in a focal firm's APC represents the number of ties, while the NOP represents the number of nodes.…”

“…The majority of studies examining APC size have been focused on one aspect of size, which is NOA, while ignoring a second important dimension, which is NOP. Therefore, this study addresses the size of APC with NOP included, since it is theoretically different from NOA (Kim & Choi, 2014a). In the extended APC, it is necessary for the integrated size (NOA and NOP) to positively affect innovation performance for up to three degrees.…”

“…Therefore, this study adapted the size and structural dimension variables and analyzed the relationship between the two variables, which showed that one dimension alone cannot explain firm innovation. Third, this study introduces two concepts (NOA and NOP) that are significantly lacking in the alliance literature, and uses them as variables (Wassmer, 2010; Phelps, Heidl, & Wadhwa, 2012; Kim & Choi, 2014a). Scholars and managers should be able to understand and distinguish between these two completely different variables.…”

Configuring an alliance portfolio for eco-friendly innovation in the car industry: Hyundai and Toyota

“…Kim and Song, 2007;Kim and Choi 2014;Ma et al 2013). However, this study analyzes the configuration of alliance portfolio using the patent citation information and various patent cation indexes.…”