Hostname: page-component-f554764f5-8cg97 Total loading time: 0 Render date: 2025-04-10T21:40:06.503Z Has data issue: false hasContentIssue false
  • English
  • Français

Effect of firm’s diverse experiences on its alliance portfolio diversity: Evidence from India

Published online by Cambridge University Press:  10 August 2016

Dhirendra Mani Shukla  and
Amita Mital
Dhirendra Mani Shukla*
Affiliation:
Indian Institute of Management Lucknow, Lucknow, India
Amita Mital
Affiliation:
Indian Institute of Management Lucknow, Lucknow, India
*
Corresponding author: fpm14014@iiml.ac.in
Get access Rights & Permissions [Opens in a new window]

Abstract

This study examines the effect of diverse experiences on a firm’s alliance portfolio diversity (APD). Drawing on the organizational learning perspective, it argues that a firm’s learning from diverse experiences enables it to reap the benefits and mitigate the risks of high level of APD. Thus, an experienced firm may choose to form or maintain relationships with diverse partners to get the intended benefits of APD. In particular, the study hypothesizes that a focal firm’s product and international diversification experience, alliance experience, and alliance experience heterogeneity are positively associated with its APD. A longitudinal investigation of 90 Indian firms, for the period 2004–2014, provides support for all the hypothesized relationships. In general, findings, which are robust to multiple estimation methods, suggest that a firm’s diverse experiences influence its APD. Findings of this study contribute to the alliance portfolio and organizational learning literature by examining the experiential antecedents of APD.

Keywords

alliance portfolio diversitydiversificationalliance experienceorganizational learningalliance experience heterogeneity
Type
Research Article
Information
Journal of Management & Organization , Volume 24 , Special Issue 5: Contextualizing Diversity Within Islam , September 2018 , pp. 748 - 772
Copyright
© Cambridge University Press and Australian and New Zealand Academy of Management 2016 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Article purchase

Temporarily unavailable

References

Ahuja, G. (2000a). Collaboration networks, structural holes, and innovation: A longitudinal study. Administrative Science Quarterly, 45(3), 425–455.Google Scholar
Ahuja, G. (2000b). The duality of collaboration: Inducements and opportunities in the formation of interfirm linkages. Strategic Management Journal, 21(3), 317–343.Google Scholar
Al-Laham, A., & Amburgey, T. L. (2010). Who makes you central? Management International Review, 50(3), 297–323.Google Scholar
Anand, B. N., & Khanna, T. (2000). Do firms learn to create value? The case of alliances. Strategic Management Journal, 21(3), 295–315.Google Scholar
Andrevski, G., Brass, D. J., & Ferrier, W. J. (2013). Alliance portfolio configurations and competitive action frequency. Journal of Management, first published online. Retrieved from http://doi.org/10.1177/0149206313498901 Google Scholar
Augier, M., & Teece, D. J. (2007). Dynamic capabilities and multinational enterprise: Penrosean insights and omissions. Management International Review, 47(2), 175–192.Google Scholar
Bahlmann, M. D. (2014). Geographic network diversity: How does it affect exploratory innovation? Industry and Innovation, 21(7–8), 633–654.Google Scholar
Barkema, H. G., & Vermeulen, F. (1998). International expansion through start-up or acquisition: A learning perspective. Academy of Management Journal, 41(1), 7–26.Google Scholar
Bartlett, C. A., & Ghoshal, S. (1993). Beyond the M-form: Toward a managerial theory of the firm. Strategic Management Journal, 14(S2), 23–46.Google Scholar
Bartlett, C. A., & Ghoshal, S. (1999). Managing across borders: The transnational solution (Vol. 2). Boston, MA: Harvard Business School Press.Google Scholar
Baum, C. F. (2008). Stata tip 63: Modeling proportions. Stata Journal, 8(2), 299–303.Google Scholar
Beckman, C. M., Bird Schoonhoven, C., Rottner, R. M., & Kim, S.-J. (2014). Relational pluralism in de novo organizations: Boards of directors as bridges or barriers to diverse alliance portfolios? Academy of Management Journal, 57(2), 460–483.Google Scholar
Biemann, T., & Kearney, E. (2010). Size does matter: How varying group sizes in a sample affect the most common measures of group diversity. Organizational Research Methods, 13(3), 582–599.Google Scholar
Blau, P. M. (1977). Inequality and heterogeneity: A primitive theory of social structure (Vol. 7). New York: Free Press.Google Scholar
Bowen, H. P., Baker, H. K., & Powell, G. E. (2014). Globalization and diversification strategy: A managerial perspective. Scandinavian Journal of Management, first published online. Retrieved from http://doi.org/10.1016/j.scaman.2014.08.003 Google Scholar
Bruyaka, O., & Durand, R. (2012). Sell-off or shut-down? Alliance portfolio diversity and two types of high tech firms’ exit. Strategic Organization, 10(1), 7–30.Google Scholar
Castro, I., Casanueva, C., & Galán, J. L. (2014). Dynamic evolution of alliance portfolios. European Management Journal, 32(3), 423–433.Google Scholar
Castro, I., Roldán, J. L., & Acedo, F. J. (2015). The dimensions of alliance portfolio configuration: A mediation model. Journal of Management & Organization, 21(02), 176–202.Google Scholar
Chakrabarti, A., Singh, K., & Mahmood, I. (2007). Diversification and performance: Evidence from East Asian firms. Strategic Management Journal, 28(2), 101–120.Google Scholar
Chandler, A. D. (1982). The M-form: Industrial groups, American style. European Economic Review, 19(1), 3–23.Google Scholar
Chang, Y., & Thomas, H. (1989). The impact of diversification strategy on risk-return performance. Strategic Management Journal, 10(3), 271–284.Google Scholar
Collins, J. (2013). Social capital as a conduit for alliance portfolio diversity. Journal of Managerial Issues, 25(1), 62–78.Google Scholar
Collins, J., & Riley, J. (2013). Alliance portfolio diversity and firm performance: Examining moderators. Journal of Business and Management, 19(2), 35–50.Google Scholar
Cronbach, L. J. (1951). Coefficient alpha and the internal structure of tests. Psychometrika, 16(3), 297–334.Google Scholar
Cui, A. S. (2013). Portfolio dynamics and alliance termination: The contingent role of resource dissimilarity. Journal of Marketing, 77(3), 15–32.Google Scholar
Cui, A. S., & O’Connor, G. (2012). Alliance portfolio resource diversity and firm innovation. Journal of Marketing, 76(4), 24–43.Google Scholar
Culpan, R. (2009). A fresh look at strategic alliances: Research issues and future directions. International Journal of Strategic Business Alliances, 1(1), 4–23.Google Scholar
Das, T. K., & Teng, B.-S. (2001). Trust, control, and risk in strategic alliances: An integrated framework. Organization Studies, 22(2), 251–283.Google Scholar
Das, T. K., & Teng, B.-S. (2002). Alliance constellations: A social exchange perspective. The Academy of Management Review, 27(3), 445–456.Google Scholar
de Leeuw, T., Lokshin, B., & Duysters, G. (2014). Returns to alliance portfolio diversity: The relative effects of partner diversity on firm’s innovative performance and productivity. Journal of Business Research, 67(9), 1839–1849.Google Scholar
Delios, A., & Beamish, P. W. (1999). Geographic scope, product diversification, and the corporate performance of Japanese firms. Strategic Management Journal, 20(8), 711–727.Google Scholar
Doz, Y. L., & Prahalad, C. K. (1991). Managing DMNCs: A search for a new paradigm. Strategic Management Journal, 12(S1), 145–164.Google Scholar
Duysters, G., Heimeriks, K. H., Lokshin, B., Meijer, E., & Sabidussi, A. (2012). Do firms learn to manage alliance portfolio diversity? The diversity-performance relationship and the moderating effects of experience and capability. European Management Review, 9(3), 139–152.Google Scholar
Duysters, G., & Lokshin, B. (2011). Determinants of alliance portfolio complexity and its effect on innovative performance of companies. Journal of Product Innovation Management, 28(4), 570–585.Google Scholar
Faems, D., Janssens, M., & Neyens, I. (2012). Alliance portfolios and innovation performance connecting structural and managerial perspectives. Group & Organization Management, 37(2), 241–268.Google Scholar
Gallani, S., Krishnan, R., & Wooldridge, J. (2015). Applications of fractional response model to the study of bounded dependent variables in accounting research. Harvard Business School Accounting & Management Unit Working Paper No. 16-016. Boston, MA: Harvard Business School.Google Scholar
Gang, K. (2013). Prior experience on a subsequent entry and institutional changes on R&D investment. Unpublished Doctoral Dissertation. Troy, NY: Rensselaer Polytechnic Institute.Google Scholar
Gaur, A. S., & Kumar, V. (2009). International diversification, business group affiliation and firm performance: Empirical evidence from India. British Journal of Management, 20(2), 172–186.Google Scholar
George, G., Zahra, S. A., Wheatley, K. K., & Khan, R. (2001). The effects of alliance portfolio characteristics and absorptive capacity on performance: A study of biotechnology firms. Journal of High Technology Management Research, 12(2), 205–226.Google Scholar
Golonka, M. (2015). Proactive cooperation with strangers: Enhancing complexity of the ICT firms’ alliance portfolio and their innovativeness. European Management Journal, 33(3), 168–178.Google Scholar
Gulati, R. (1999). Network location and learning: The influence of network resources and firm capabilities on alliance formation. Strategic Management Journal, 20(5), 397–420.Google Scholar
Harrison, D. A., & Klein, K. J. (2007). What’s the difference? Diversity constructs as separation, variety, or disparity in organizations. The Academy of Management Review, 32(4), 1199–1228.Google Scholar
Hausman, J. A. (1978). Specification tests in econometrics. Econometrica, 46(6), 1251–1271.Google Scholar
Heimeriks, K. H., & Duysters, G. (2007). Alliance capability as a mediator between experience and alliance performance: An empirical investigation into the alliance capability development process. Journal of Management Studies, 44(1), 25–49.Google Scholar
Hennart, J.-F., & Reddy, S. (1997). The choice between mergers/acquisitions and joint ventures: The case of Japanese investors in the United States. Strategic Management Journal, 18(1), 1–12.Google Scholar
Hitt, M. A., Ahlstrom, D., Dacin, M. T., Levitas, E., & Svobodina, L. (2004). The institutional effects on strategic alliance partner selection in transition economies: China vs. Russia. Organization Science, 15(2), 173–185.Google Scholar
Hoang, H., & Rothaermel, F. T. (2005). The effect of general and partner-specific alliance experience on joint R&D project performance. The Academy of Management Journal, 48(2), 332–345.Google Scholar
Hoehn-Weiss, M. N., & Karim, S. (2014). Unpacking functional alliance portfolios: How signals of viability affect young firms’ outcomes. Strategic Management Journal, 35(9), 1364–1385.Google Scholar
Hoffmann, W. H. (2007). Strategies for managing a portfolio of alliances. Strategic Management Journal, 28(8), 827–856.Google Scholar
Hora, M., & Dutta, D. K. (2013). Entrepreneurial firms and downstream alliance partnerships: Impact of portfolio depth and scope on technology innovation and commercialization success. Production & Operations Management, 22(6), 1389–1400.Google Scholar
Jacob, J., Belderbos, R., & Gilsing, V. (2013). Technology alliances in emerging economies: Persistence and interrelation in European firms’ alliance formation. R&D Management, 43(5), 447–460.Google Scholar
Jacquemin, A. P., & Berry, C. H. (1979). Entropy measure of diversification and corporate growth. The Journal of Industrial Economics, 27(4), 359–369.Google Scholar
Jiang, R. J., Tao, Q. T., & Santoro, M. D. (2010). Alliance portfolio diversity and firm performance. Strategic Management Journal, 31(10), 1136–1144.Google Scholar
Khanna, T., & Palepu, K. (2000). The future of business groups in emerging markets: Long-run evidence from Chile. The Academy of Management Journal, 43(3), 268–285.Google Scholar
Knoben, J., & Oerlemans, L. a. G. (2012). Configurations of inter-organizational knowledge links: Does spatial embeddedness still matter? Regional Studies, 46(8), 1005–1021.Google Scholar
Kogut, B., & Singh, H. (1988). The effect of national culture on the choice of entry mode. Journal of International Business Studies, 19(3), 411–432.Google Scholar
Kogut, B., & Zander, U. (2003). A memoir and reflection: Knowledge and an evolutionary theory of the multinational firm 10 years later. Journal of International Business Studies, 34(6), 505–515.Google Scholar
Kölling, A. (2012). Firm size and employment dynamics: Estimations of labor demand elasticities using a fractional panel probit model. Labour, 26(2), 174–207.Google Scholar
Lavie, D., & Rosenkopf, L. (2006). Balancing exploration and exploitation in alliance formation. Academy of Management Journal, 49(4), 797–818.Google Scholar
Lavie, D., & Singh, H. (2012). The evolution of alliance portfolios: The case of Unisys. Industrial & Corporate Change, 21(3), 763–809.Google Scholar
Lee, D. (Don), Kirkpatrick-Husk, K., & Madhavan, R. (2014). Diversity in alliance portfolios and performance outcomes: A meta-analysis. Journal of Management, published online. Retrieved from http://dx.doi.org/10.1177/0149206314556316Google Scholar
Leiblein, M. J., & Madsen, T. L. (2009). Unbundling competitive heterogeneity: incentive structures and capability influences on technological innovation. Strategic Management Journal, 30(7), 711–735.Google Scholar
Levitt, B., & March, J. G. (1988). Organizational learning. Annual Review of Sociology, 14, 319–340.Google Scholar
Markides, C. C., & Williamson, P. J. (1996). Corporate diversification and organizational structure: A resource-based view. Academy of Management Journal, 39(2), 340–367.Google Scholar
Mayer, M. C. J., Stadler, C., & Hautz, J. (2014). The relationship between product and international diversification: The role of experience. Strategic Management Journal, 36(10), 1458–1468.Google Scholar
Mouri, N., Sarkar, M. B., & Frye, M. (2012). Alliance portfolios and shareholder value in post-IPO firms: The moderating roles of portfolio structure and firm-level uncertainty. Journal of Business Venturing, 27(3), 355–371.Google Scholar
Nadolska, A., & Barkema, H. G. (2007). Learning to internationalise: The pace and success of foreign acquisitions. Journal of International Business Studies, 38(7), 1170–1186.Google Scholar
Nielsen, B. B., & Nielsen, S. (2009). Learning and innovation in international strategic alliances: An empirical test of the role of trust and tacitness. Journal of Management Studies, 46(6), 1031–1056.Google Scholar
Palepu, K. (1985). Diversification strategy, profit performance and the entropy measure. Strategic Management Journal, 6(3), 239–255.Google Scholar
Pangarkar, N., & Wu, J. (2012). Alliance formation, partner diversity, and performance of Singapore startups. Asia Pacific Journal of Management, 30(3), 791–807.Google Scholar
Papke, L. E., & Wooldridge, J. (1996). Econometric methods for fractional response variables with an application to 401 (k) plan participation rates. Journal of Applied Econometrics, 11(6), 619–632.Google Scholar
Papke, L. E., & Wooldridge, J. M. (2008). Panel data methods for fractional response variables with an application to test pass rates. Journal of Econometrics, 145(1), 121–133.Google Scholar
Pericoli, F. M., Pierucci, E., & Ventura, L. (2013). Cross-border equity portfolio choices and the diversification motive: A fractional regression approach. Economics Letters, 121(2), 282–286.Google Scholar
Pfeffer, J., & Salancik, G. R. (1978). The external control of organizations: A resource dependence perspective. New York: Harper & Row.Google Scholar
Phelps, C. C. (2010). A longitudinal study of the influence of alliance network structure and composition on firm exploratory innovation. Academy of Management Journal, 53(4), 890–913.Google Scholar
Prahalad, C. K., & Bettis, R. A. (1986). The dominant logic: A new linkage between diversity and performance. Strategic Management Journal, 7(6), 485–501.Google Scholar
Reuer, J. J., Park, K. M., & Zollo, M. (2001). Experiential learning in international joint ventures: The role of venture novelty and experience heterogeneity. Working Paper No. inseadwp2001. Fontainebleau, France: INSEAD.Google Scholar
Reuer, J. J., & Ragozzino, R. (2006). Agency hazards and alliance portfolios. Strategic Management Journal, 27(1), 27–43.Google Scholar
Rogbeer, S., Almahendra, R., & Ambos, B. (2014). Open-innovation effectiveness: When does the macro design of alliance portfolios matter? Journal of International Management, 20(4), 464–477.Google Scholar
Rothaermel, F. T., & Deeds, D. L. (2006). Alliance type, alliance experience and alliance management capability in high-technology ventures. Journal of Business Venturing, 21(4), 429–460.Google Scholar
Schilke, O. (2014). Second-order dynamic capabilities: How do they matter? The Academy of Management Perspectives, 28(4), 368–380.Google Scholar
Schilling, M. A. (2009). Understanding the alliance data. Strategic Management Journal, 30(3), 233–260.Google Scholar
Schilling, M. A., & Phelps, C. C. (2007). Interfirm collaboration networks: The impact of large-scale network structure on firm innovation. Management Science, 53(7), 1113–1126.Google Scholar
Schulz, M. (2002). Organizational learning. J. A. C. Baum (Ed.), Companion to Organizations. Oxford, UK: Blackwell.Google Scholar
Sivakumar, K., Roy, S., Zhu, J., & Hanvanich, S. (2011). Global innovation generation and financial performance in business-to-business relationships: The case of cross-border alliances in the pharmaceutical industry. Journal of the Academy of Marketing Science, 39(5), 757–776.Google Scholar
Srivastava, M. K., & Gnyawali, D. R. (2011). When do relational resources matter? Leveraging portfolio technological resources for breakthrough innovation. Academy of Management Journal, 54(4), 797–810.Google Scholar
Stettner, U., & Lavie, D. (2014). Ambidexterity under scrutiny: Exploration and exploitation via internal organization, alliances, and acquisitions. Strategic Management Journal, 35(13), 1903–1929.Google Scholar
Stuart, T. E. (2000). Interorganizational alliances and the performance of firms: A study of growth and innovation rates in a high-technology industry. Strategic Management Journal, 21(8), 791–811.Google Scholar
Sullivan, D. (1994). Measuring the degree of internationalization of a firm. Journal of International Business Studies, 25(2), 325–342.Google Scholar
Tallman, S., & Li, J. (1996). Effects of international diversity and product diversity on the performance of multinational firms. The Academy of Management Journal, 39(1), 179–196.Google Scholar
Tao, Q. T., Jiang, R. J., & Santoro, M. D. (2014). Expand or retrench? Alliance portfolio adaptation to environmental jolts. International Journal of Business Environment, 7(1), 79–97.Google Scholar
van Beers, C., & Zand, F. (2014). R&D cooperation, partner diversity, and innovation performance: An empirical analysis. Journal of Product Innovation Management, 31(2), 292–312.Google Scholar
Wagner, J. (2003). Unobserved firm heterogeneity and the size-exports nexus: Evidence from German Panel Data. Review of World Economics/Weltwirtschaftliches Archiv, 139(1), 161–172.Google Scholar
Wagner, J. (2008). Exports and firm characteristics: first evidence from fractional probit panel estimates. University of Lüneburg Working Paper Series in Economics. Lüneburg, Germany: University of Lüneburg. Retrieved from http://www.econstor.eu/handle/10419/28215 Google Scholar
Wassmer, U. (2010). Alliance portfolios: A review and research agenda. Journal of Management, 36(1), 141–171.Google Scholar
Wooldridge, J. M. (2010). Econometric analysis of cross section and panel data. Cambridge, MA: MIT press.Google Scholar
Wuyts, S., & Dutta, S. (2014). Benefiting from alliance portfolio diversity: The role of past internal knowledge creation strategy. Journal of Management, 40(6), 1653–1674.Google Scholar
Yu, C.-M. J. (1990). The experience effect and foreign direct investment. Weltwirtschaftliches Archiv, 126(3), 561–580.Google Scholar
Zollo, M., & Singh, H. (2004). Deliberate learning in corporate acquisitions: Post-acquisition strategies and integration capability in US bank mergers. Strategic Management Journal, 25(13), 1233–1256.Google Scholar