Morehead State University

Poster Title

The Impact of a Firm's Alliance Portfolio Diversity on Its Innovation and Performance in the Software Industry

Institution

Morehead State University

Abstract

A firm is embedded in networks of relationships that often provide resources beyond those available from internal sources alone. The most important of a firm's network of relationships are termed strategic alliances. A firm's entry into strategic alliances is about leveraging the value of its internal resources with the external resources of its partners. In this study, the diversity of the industries in which a firm constructs its strategic alliances is considered firm's alliance portfolio. From this portfolio, a firm may draw upon the resources those alliances generate to introduce new technologies or products to the market. Using a sample of 49 firms in the software industry, this study proposes that a more diverse alliance portfolio enhances a firm's innovation and performance. For the measurement of industry diversity, this study uses the Standard Industrial Classification codes of the allying firms. Using multiple linear regression, controlling for firm's age and size, the results show that alliance portfolio diversity has positive effects on both firm's innovation and performance.

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The Impact of a Firm's Alliance Portfolio Diversity on Its Innovation and Performance in the Software Industry

A firm is embedded in networks of relationships that often provide resources beyond those available from internal sources alone. The most important of a firm's network of relationships are termed strategic alliances. A firm's entry into strategic alliances is about leveraging the value of its internal resources with the external resources of its partners. In this study, the diversity of the industries in which a firm constructs its strategic alliances is considered firm's alliance portfolio. From this portfolio, a firm may draw upon the resources those alliances generate to introduce new technologies or products to the market. Using a sample of 49 firms in the software industry, this study proposes that a more diverse alliance portfolio enhances a firm's innovation and performance. For the measurement of industry diversity, this study uses the Standard Industrial Classification codes of the allying firms. Using multiple linear regression, controlling for firm's age and size, the results show that alliance portfolio diversity has positive effects on both firm's innovation and performance.