Alliance Concentration in Multinational Companies: Examining Alliance Portfolios, Firm Structure, and Firm Performance

• DOI: http://doi.org/10.1002/smj.2652
• Date: 01 November 2017
• Published date: 01 November 2017

Strategic Management Journal

Strat. Mgmt. J.,38: 2298–2309 (2017)

Published online EarlyView 5 April 2017 in WileyOnline Library (wileyonlinelibrary.com) DOI: 10.1002/smj.2652

Received 9 February 2015;Finalrevision received 6 January 2017

Alliance Concentration in Multinational Companies:

Examining Alliance Portfolios, Firm Structure, and

Firm Performance

Brenda Bos,1Dries Faems,1*and Florian Noseleit1

1Department of Innovation, Management & Strategy, Faculty of Economics and

Business, University of Groningen, Groningen, The Netherlands

Research summary: This article explores the distribution of alliances across rms’ internal

structure. Focusing on multinational companies, we examine the impact of alliance portfolio

concentration— i.e., the extent to which alliances are concentrated within a limited number

of geographic units— on focal rms’ performance. Relying on Knowledge-Based View (KBV)

insights, we hypothesize that an increase in alliance portfolio concentration positively inuences

rm performance and that alliance portfolio size negatively moderates this relationship. Our

empirical results enrich the emerging capability perspective on alliance portfolios, point to

the relevance of conceptualizing focal rms in alliance portfolio research as polylithic entities

instead of monolithic ones, and provide new insights into how rms create value by potentially

recombining externally accessed knowledge.

Managerial summary: In the setting of multinational companies, we examine whether alliance

activities are concentrated in a limited number of subsidiaries or are highly dispersed across

multiple subsidiaries. We nd that, over time, rms exhibit different patterns in terms of

alliance portfolio concentration. In addition, the results show that, for MNCs with a relatively

small alliance portfolio, an increase in alliance portfolio concentration is positively related to

their nancial performance. However, when MNCs’ alliance portfolios are relatively large, the

relationship between alliance portfolio concentration and rm performance becomes negative.

Jointly,these ndings suggest that the distribution of alliances across rms’ internal structure is an

important factor in shaping potential knowledge recombination benets from alliance portfolios.

Copyright © 2017 John Wiley & Sons, Ltd.

Introduction

Alliance portfolios, i.e. rms’ collection of direct

alliances with partners (Lavie, 2007, p. 1188),

are recognized as important strategic phenomena

as they provide opportunities for knowledge

recombination at both the single alliance level and

Keywords: alliance portfolio; internal rm structure;

knowledge recombination; Knowledge-Based View; rm

performance

*Correspondence to: Dries Faems, Faculty of Economics and

Business, Department of Innovation Management & Strategy,

University of Groningen, Nettelbosje 2, 9747 AE Groningen, The

Netherlands. E-mail: d.l.m.faems@rug.nl

Copyright © 2017 John Wiley & Sons, Ltd.

the alliance portfolio level (Ozcan & Eisenhardt,

2009). Relying on congurational and capability

perspectives, scholars have studied how the com-

position and management of alliance portfolios

inuences focal rm performance, theorizing

that these characteristics shape the knowledge

recombination opportunities and abilities of focal

rms (Wassmer, 2010).

In this article, we point to the distribution of

alliances across focal rms’ internal structure as

a largely ignored but important factor to explain

rms’ capability in reaping knowledge recombi-

nation benets from alliance portfolios. Extant

alliance portfolio research tends to disregard the

internal structure of the focal rm. Aggregating all