Academic journal article International Journal of Business

Interrelatedness, Interdependencies, and Domain Learning in Alliance Portfolios

Academic journal article International Journal of Business

Interrelatedness, Interdependencies, and Domain Learning in Alliance Portfolios

Article excerpt

ABSTRACT

This study examines why firms configure their alliance portfolio within (convergence) or across industry (divergence). This study argues that greater similarity with partners leads firms to employ convergence learning, while greater diversity leads to the use of divergence learning. Further arguments justify the use of convergence learning when dependencies are asymmetrical, but divergence learning when dependencies are balanced. This study further integrates the two perspectives on the configuration of domain learning. The developed hypotheses are tested on S&P 500 firms' alliances from 2000 to 2007. The results indicate that greater similarity and asymmetry of dependencies leads to the use of convergence learning, while greater diversity and balance leads to the use of divergence learning. Further results show that less dependent firms with greater similarity to their partners employ convergence learning, while more dependent firms configure their alliance portfolio divergently to avoid misappropriation from stronger partners. Firms with balanced dependencies configure their alliance portfolios ambidextrously when relatedness to partners is high.

JEL Classifications: G340, D74

Keywords: interrelatedness; interdependencies; ambidextrous; domain learning; alliance portfolios

(ProQuest: ... denotes formulae omitted.)

I. RESEARCH BACKGROUND

IBM generated more than one-third of its revenues through their alliance portfolio (Feder, 2001; Parise and Casher, 2003). Heimeriks, Klijn, and Reuer (2009) also report that Cisco's alliance portfolio generated more than 13 percent of its total business activity in the 2000s. An alliance portfolio is a firm's collection of direct alliances with partners (e.g., Hoffmann, 2007; Lavie and Miller, 2008), and the collection averagely increased from four to more than thirty partners over the 1990s (Lavie, 2007).

One of the primary activities of an alliance portfolio is learning, which enables a firm to access and acquire new knowledge residing outside its boundaries and to collaboratively leverage existing knowledge with partners (e.g., Beckman, Haunschild, and Philips, 2004). Previous studies approach such learning from the function, structure, and other peripheral attributes involved in the alliance (Lavie and Rosenkopf, 2006; Lin, Yang, and Demirkan, 2007), or by examining process-based learning inside the alliance (e.g., Kale and Singh, 2007). There has been rapid progress in the study of the interorganizational learning, and most research undermines the fact that a firm may also learn by forming alliance that is different from or similar to its core business - domain learning.

This study argues that domain learning is the learning strategy of a firm to maintain an alliance portfolio to conform the relatedness and dependencies toward partners' resources. The resource-based theory (Barney, 1991; Das and Teng, 2000) suggests that greater relatedness leads to convergence learning due to similar bases of knowledge (e.g., Makri, Hitt, and Lane, 2010), while less relatedness leads to divergence learning due to less-redundant knowledge (e.g., Baum, Calabrese, and Silverman, 2000). Another perspective suggests that it is difficult for similar partners to work together within one domain, because their use of similar resources can make them compete against each other (e.g., Chen, 1996) and offer less new skills and knowledge for the other party to learn (e.g., Wang and Zajac, 2007).

This study further argues that these inconsistencies can be resolved by considering the nature of relationships between a firm and its partners in an alliance portfolio. Resource dependence theory (Emerson, 1962; Pfeffer and Salancik, 1978) suggests that the level of interdependence toward partners could explain firm behavior. Specifically, convergence learning is adopted by a firm when there are asymmetrical dependencies toward partners in an alliance portfolio in order to access and exploit partners' knowledge (Grant and Baden-Fuller, 2004). …

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