Alliance portfolios and firm performance: the moderating role of environmental dynamics
| Date | 11 September 2017 |
| DOI | https://doi.org/10.1108/IMDS-09-2016-0351 |
| Published date | 11 September 2017 |
| Pages | 1550-1566 |
| Author | Xiaoyan Wang,Haijun Bao |
| Subject Matter | Information & knowledge management,Information systems,Data management systems,Knowledge management,Knowledge sharing,Management science & operations,Supply chain management,Supply chain information systems,Logistics,Quality management/systems |
Alliance portfolios and firm
performance: the moderating role
of environmental dynamics
Xiaoyan Wang and Haijun Bao
School of Public Administration,
Zhejiang University of Finance and Economics, Hangzhou, China
Abstract
Purpose –The purpose of this paper is to focus on the operation strategy of high-performance alliance
portfolios by analyzing the effect of alliance portfolios on the performance of focal firms, using
post-structuralism of social network theory and contingency theory. In detail, this paper refines alliance
portfolios into three dimensions, and studies the moderating role of context on the relation between
alliance portfolios and firm performance.
Design/methodology/approach –The empirical study was carried out with second-hand data gathered
from Internal Revenue Service. In total, this paper gathered data from 506 focal firms in Zhejiang Province
from 2001 to 2010 as the sample to test the hypotheses.
Findings –Based on the empirical results, the authors find the positive effect of relational dimension (weak
alliance portfolios) and partner dimension (the diversity of partners) on performance. The effect of the former
will become weaker with the increasing environmental dynamic, while the effect of the latter will become
stronger. However, the structural dimension (alliance portfolios size) and relational dimension (new partners)
have the negative effect on performance. And the negative effect will become stronger under high
environmental dynamic. Moreover, the negative effect of non-local partners on performance becomes stronger
when the environmental dynamic is high.
Research limitations/implications –The paper reveals that with the industry transformation caused by
“internet +,”companies have been required go beyond traditional dyadic alliance management perspective.
That is to say, individual alliance relationship should be seen as a part of a much broader picture of
alliance portfolio. As such, the framework may help companies to manage their alliance portfolios by
matching high-performance alliance portfolios to the external environment to produce a synergistic effect
(Lea et al., 2006; Tritos et al., 2013; Keith et al., 2014) taking the characteristics of the configuration of alliance
portfolios into consideration.
Originality/value –The paper presents a model that explains the effect of three dimensions of alliance
portfolios on the performance of focal firms in different contexts through empirical study. This paper also
integrates post-structuralism of social network theory and contingency theory to enable the understanding on
the configuration of alliance portfolios.
Keywords Operation management, Post-structuralism, Alliance portfolio, Network heterogeneity,
Environmental dynamics
Paper type Research paper
1. Introduction
Alliance portfolio is recognized as an increasingly important source of competitive
advantage, such as obtaining diverse information benefits (Rowley et al., 2000), reducing the
potential for competition (Baum et al., 2000) and increasing organization legitimacy and
reputation (Stuart et al., 1999). In many industries, the alliance portfolio has become an
essential strategic device and a key part of firm strategy. Firms pursue alliances portfolios
to improve the performance and gain a competitive advantage in markets with increasing
competition. Hence, alliance portfolios could be considered an important asset (Hoffmann,
2007). According to Wassmer (2010), alliance portfolios are a relatively new research area in
the broader field. An alliance portfolio is defined as a focal firm’s egocentric alliance network
in the network literature (Baum et al., 2000; Ozcan and Eisenhardt, 2009). Themes in this
area cluster around three major issues, namely, the emergence, configuration and
management of alliance portfolios. Despite the potential important role of the configuration
Industrial Management & Data
Systems
Vol. 117 No. 8, 2017
pp. 1550-1566
© Emerald PublishingLimited
0263-5577
DOI 10.1108/IMDS-09-2016-0351
Received 4 September 2016
Revised 13 April 2017
Accepted 22 April 2017
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0263-5577.htm
1550
IMDS
117,8
of alliance portfolios, theoretical and empirical work in this area concerning the effect on
performance is very limited. To advance the literature, we examine how and under what
conditions different dimensions of alliance portfolios influence the performance of firms.
We expect that this new research perspective will go beyond the dyadic perspective, and
more specifically, help establish enduring relationship patterns among firms in strategic
alliances (Lavie et al., 2007).
The existing literature on the performance effect of alliance portfolios configuration is
explored based on social network theory and the resource-based review. However, prior
research on the relationship between alliance portfolios and firm performance shows
inconsistent conclusions, even diametrically opposite results (Hoffmann, 2007; Tiwana,
2008; Faems et al., 2012). To fulfill the research gap, we argue that the multi-dimension
alliance portfolios have been ignored and the standards of measurement of dimension
may not be perfect (Wassmer, 2010), which leads to the limitation of conclusions.
Specifically, previous studies pay more attention on the traditional dimensions of
network, such as structural dimension and relational dimension. However, in this study
the heterogeneity of focal firms will be taken into consideration and the partner
dimension of alliance portfolios will be paid more attention. The network heterogeneity
may be the possible reason that causes the paradox of the conclusion ambiguous
mechanism. In addition, based on social network theory, different network structures
have various effects on performance. However, the effect not only is decided by static
network structure, but also is influenced by different contexts. Prior scholars have
mostly ignored the contextual effect and failed to show the influence mechanism between
different dimensions of alliance portfolios and performance.
To fill the gap in the above theory, this paper tests these relationships with a sample of
506 firms of Zhejiang Province in China for ten years. Taking the environmental dynamics
into consideration, the study has investigated the effect of alliance portfolios of focal firms
on performance based on social network theory and contingency theory. This paper not
only makes contribution to the empirical analysis of alliance portfolios, but also provides the
theoretical and practical implications.
2. Literature review
2.1 Structuralism in social network theory
Following the traditional perspective of embeddedness, prior scholars of social network
theory mainly focus on the effect of network on firm performance. A large range of studies
pay attention to the relational dimension and structural dimension of network on the
performance (Granovetter, 1973; Uzzi, 1997; Kilduff et al., 2006). Based on prior literature,
the relational dimension of network refers to the strength of ties (Granovetter, 1973,
Uzzi, 1997), and the structural dimension refers to the characteristics of networks such as
network centrality and density of networks (Kilduff et al., 2006; Wassmer, 2010).
Generally, the inconsistence of conclusions has been made, and then the factor of context
has been taken into consideration to investigate the effect. As to the studies on alliance
portfolios, the existing literature investigates the effect of the size, network destiny and
the strength of ties of alliance portfolios on performance of focal firms based on the social
network theory. However, the conclusions of the relation between alliance portfolios and
performance remain paradox. For instance, Hoffmann (2007) found the positive effect of
thesizeofallianceportfoliosonperformance from the perspective of the resource-based
view. Gulati (1998) pointed out that it was not always beneficial when the size of alliance
portfolio was bigger, and the size is a necessary condition instead of a sufficient condition.
Faems et al. (2012) found that strong ties could promote the exchange of innovative
resources while Tiwana (2008) pointed out that strong ties were a “double-edged sword”
and might cause over-embeddedness which could harm the performance.
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Alliance
portfolios
and firm
performance
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