Firm's performance implications of alliance portfolio cross Function and Attribute domains
Date Issued
2012
Date
2012
Author(s)
Cheng, Chih-Yuan
Abstract
Exploration-exploitation framework is an important issue and widely discussed in literatures. Also, some scholars apply it in alliance formation and develop three domains, that is, function, structure, and attribute domains. In addition, researches also extend the discussion to the alliance across domains. This research tries to fill the gap of lack of empirical evidence in firm’s performance implication of alliance portfolio across function and attribute domains based on resource-based view, transaction cost theory and knowledge transfer. Data used in the research covered 373 sample firms in the biotech and pharmaceutical industry from 1998 to 2007 from SDC, Compustat, and the independent variable in 2009 from Compustat. Through empirical analysis, the relationship between alliance portfolio of function exploration and attribute domain, firm performance and the moderating role of absorptive capacity and majority control are examined.
Statistical results significantly support our hypothesis that negative effect of alliance portfolio of function exploration and attribute exploration on firm’s performance. A firm tends to form strategic alliance portfolio with partners in different industries and does the upstream activities such as R&D may suffer from the bad knowledge transfer due to tacit knowledge and high coordination cost, and the uncertainty and risk of research return, thus may lead to worse firm performance. Firms form alliance portfolio of function exploration and attribute exploitation, that is, a firm tends to form strategic alliance portfolio with partners in the same industry and does upstream activities such as R&D may lead to worse firm performance due to the bad knowledge transfer of tacit knowledge and the opportunistic behavior between partners. Besides, firms can solve the negative firm performance implication of alliance portfolio of function exploration and attribute exploration by increasing absorptive capacity to assimilate and integrate tacit knowledge thus facilitate knowledge transfer and decreasing majority control to avoid the risk of over-investment in the uncertain research performance and return. Also, Firms can solve the negative firm performance implication of alliance portfolio of function exploration and attribute exploitation by decreasing absorptive capacity and increasing majority control to reduce the possible opportunistic behaviors in alliance and prevent the unintended knowledge leakage.
Subjects
Function alliance domain
Attribute alliance domain
Absorptive capacity
Majority control
Exploration and Exploitation
Type
thesis
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