what can new product portfolio management learn from
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Faculty of Economics and Businesses
MSc. Strategic Innovation Management
By: Bas Hoogendoorn
S2891123 b.hoogendoorn@student.rug.nl
Supervisor: Hans van der Bij Co-Assessor: Eelko Huizingh
Date: 05-07-2020
Word Count: 14891 (excl. appendix)
What can New Product Portfolio Management learn from Alliance
Portfolio Management?
A systematic literature towards the identification of characteristics for successful new product
portfolio composition
Abstract Firms need to introduce a steady stream of new products to be successful. New product portfolio management
(NPPM) helps organizations to make optimal decisions regarding project selection and termination. Previous
research towards NPPM identified four compositions characteristics that form a prerequisite for a successful
portfolio: strategic fit, value maximization, balance and size/selecting the right number of projects. Due to ever
changing customer needs, increasing amounts of data and turbulent environments it seems that these
characteristics alone are not able to cope with the current developments in portfolio management. Based on a
systematic literature review consisting of 28 papers from the alliance portfolio management literature, this thesis
identified diversity and interdependencies as two additional characteristics which are viable candidates for
NPPM. Also new insights were found regarding balance and portfolio size. This thesis discusses the applicability
of the identified characteristics in NPPM and gives directions for future research to test the findings in NPPM.
Keywords: New Product Portfolio Management; Alliance Portfolio Management; Diversity; Interdependencies; Size; Balance; Strategic fit
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Content
1. INTRODUCTION .......................................................................................................................... 3
2. THEORETICAL BACKGROUND .............................................................................................. 5
3. METHODOLOGY ......................................................................................................................... 7
3.1 FORMULATION OF THE RESEARCH QUESTION ................................................................................ 7 3.2 SEARCHING FOR STUDIES ................................................................................................................. 7 3.3 SELECTION AND EVALUATION OF THE STUDIES ............................................................................. 8 3.4 ANALYSIS AND SYNTHESIS ............................................................................................................. 10
4. RESULTS AND DISCUSSION .................................................................................................. 12
4.1 DESCRIPTIVE ANALYSIS .............................................................................................................. 12 4.1.1. YEAR OF PUBLICATIONS ............................................................................................................... 12 4.1.2 DISCIPLINE .................................................................................................................................... 13 4.1.3 RESEARCH METHODS .................................................................................................................... 13 4.1.4 MANAGEMENT THEORIES .............................................................................................................. 14 4.1.5 COMPOSITION CHARACTERISTICS ................................................................................................. 15 4.1.6 DIFFERENT FORMS OF DIVERSITY ................................................................................................. 16 4.2 COMPOSITION CHARACTERISTICS AND COMPARISON WITH NEW PRODUCT PORTFOLIO MANAGEMENT ....................................................................................................................................... 17 4.2.1 DIVERSITY ..................................................................................................................................... 17 4.2.2. INTERDEPENDENCIES ................................................................................................................... 25 4.2.3 ALLIANCE PORTFOLIO SIZE ........................................................................................................... 27 4.2.4. BALANCE ...................................................................................................................................... 29 4.2.5. STRATEGIC FIT ............................................................................................................................. 31
5. CONCLUSION ............................................................................................................................. 34
6. IMPLICATIONS .......................................................................................................................... 36
6.1 THEORETICAL IMPLICATIONS AND RECOMMENDATIONS ........................................................... 36 6.2 MANAGERIAL IMPLICATIONS ........................................................................................................ 38
7. LIMITATIONS ............................................................................................................................ 39
LITERATURE ..................................................................................................................................... 40
APPENDIX ........................................................................................................................................... 48
APPENDIX 1: OVERVIEW FINDINGS CATEGORIZED PER COMPOSTION CHARACTERISTIC .............. 48 APPENDIX 2: ANALYSIS INDIVIDUAL ARTICLES ................................................................................. 50
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1. Introduction
In a world of global competition, organizational survival depends on implementing a steady
stream of successful new products (Hunt et al., 2008). Therefore, firms have to manage the
right innovation projects to be successful (Behrens, 2015). The decisions that are made to
manage the development of new products is described in the literature as new product portfolio
management (Cooper et al., 1999). The main objective within portfolio management is the
prioritization of new products or R&D projects (Cooper et al., 1999). Authors use different
terms to describe the concept of portfolio management in the field of innovation. To avoid
ambiguity, I follow Cooper et al. (1999) and use the term of new product portfolio management.
New product portfolio management (NPPM) is defined as a dynamic decision process, whereby
a business’s list of active new product projects is constantly updated and revised. In this process,
new projects are evaluated, selected, and prioritized; existing projects may be accelerated, killed
or deprioritized; and resources are allocated and reallocated to the active projects’ (Cooper, et
al, 1999, p. 335)’.
The most significant empirical research investigating NPPM was conducted by Cooper et al.
(1992, 1999, 2000, 2001, 2004). In his research he benchmarked current practices for project
selection and prioritization methods and developed an understanding of management’s
perception regarding the portfolio management methods. It was found that managers mostly
relied on financial models as a decision-making tool, however they found that those businesses
that used financial methods as the dominant portfolio selection method ended up with the worst
and poorest performing portfolios (Cooper, et al., 1999). Their most important finding was the
conceptual identification of four characteristics of successful NPD portfolio composition:
strategic alignment; maximizing NPD portfolio value; selecting the right number of projects;
and a balanced NPD portfolio.
These four objectives for a successful portfolio have been acknowledged by many researchers
(Kester et al., 2009; Nowak, 2013; McNally et al., 2013; Kester et al., 2014; Kock &
Gemünden, 2016). Researchers have enhanced these success dimensions with theory on
antecedents (Kock & Gemünden, 2016; Kester et al., 2014), social influences (McNally et al.,
2013) and managerial decision-making (Kester et al., 2009). A literature review conducted by
Meifort (2016) called for more research into the field of NPPM. Due to an ever-growing number
of innovation management tools, rapidly changing environments and an increasing amount of
data, future research could give a better insight on which factors and information are truly
important during the process of NPPM (Meifort, 2016). It is therefore questionable whether the
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characteristics as identified by Cooper et al. (1999) are the only characteristics needed to
successfully compose a portfolio. On top of that the study of Cooper et al. (1999) remained
only descriptive regarding the characteristics for portfolio composition and it did not show how
it is related to specific performance outcomes. Since portfolio management exists in different
fields such as investment (Cardozo & Smith, 1983), patent (Conegundus de Jesus & Salerno,
2018) or alliance portfolio management (APM) (Hoffmann, 2015), NPPM could possibly
benefit from the research insights from other areas. Several scholars have suggested that
theories in the field of finance represent potentially viable candidates for application in the
product market management context (Leong & Lim, 1991). This could also be the case for
alliance portfolio management (APM), as companies are involved in multiple different alliances
that have mutual relationships (Castro & Roldán, 2015). Accordingly, this resulted in the
following research question: Which characteristics for successful portfolio composition found
in different portfolio management streams are applicable to new product portfolio
management?
The aim of this study is to show and discuss possible successful portfolio characteristics from
different research streams and to extend the current knowledge about the characteristics in
NPPM. The choice is made for a literature review since this research method intends to assess
the current literature to specify research questions to develop the existing body of knowledge
further (Tranfield et al., 2003).
This thesis has a two-fold contribution. First, it creates a better understanding of the portfolio
composition characteristics as identified by Cooper et al. (1999): strategic fit, balance and the
selection of the right number of projects for the portfolio. It also contributes to the NNPM
literature with the identification of two portfolio composition characteristics from the APM
literature: interdependencies and diversity. Interdependencies between projects in the portfolio
results in synergies or conflicts, which makes the value of the portfolio greater or smaller.
Second, diversity at an intermediate level leads to novel resource and knowledge
recombination. Managers must follow a contingency approach regarding the implementation
of different diversity forms in the portfolio.
To answer the research question, the thesis is organized as follows. First, a theoretical
background will give insights in the current research on NPPM. Second, in the methodology I
will explain the different portfolio streams which are identified and how the research is
conducted. Thereafter in the results part I integrate all the literature and discuss it with NPPM.
The conclusion is aimed to provide an overview of the findings and to point out gaps that form
a potential for future research.
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2. Theoretical Background
The purpose of this section is to give an overview of the current research on NPPM. The
domain of NPPM includes several activities. First, portfolio management is about strategic
decision making (Cooper et al. 1999). It encompasses decisions made by senior management
about the type of products, markets and technologies they want to invest in and the relative
emphasis on the importance of each of those. Second, portfolio management is concerned with
the allocation of scarce resources within a company. Third, those resources need to be balanced
across the different projects. Based on those activities NPPM is defined as follows: ‘Portfolio
management is a dynamic decision process, whereby a business’s list of active new product
(and R&D) projects is constantly updated and revised. In this process, new projects are
evaluated, selected, and prioritized; existing projects may be accelerated, killed, or
deprioritized; and resources are allocated and reallocated to the active projects. The portfolio
decision process is characterized by uncertain and changing information, dynamic
opportunities, multiple goals and strategic considerations, interdependence among projects, and
multiple decision-makers and locations (Cooper, et al, 1999, p. 335)’.
Most of the literature regarding portfolio management is about the optimal configuration of the
portfolio. However, it was found that the result of the portfolio composition is influenced by
how a firm makes NPPM decisions (Hauser et al., 2006). Therefore, Kester et al. (2011)
investigated the portfolio decision making process and came with three dimensions of NPPM
decision making effectiveness. First, to make effective portfolio decisions, management needs
to have a complete understanding of all projects in the NPD portfolio, also known as a portfolio
mindset. An effective portfolio management process needs to provide an overview of all the
projects being considered, all the projects which are in progress, and when each is expected to
launch (Kester et al., 2011). Second, effective decision making uses a focus on short-term
actions and long-term goals. This focused effort is needed to avoid being opportunistic (Kester
et al., 2011). At last, decision making is most effective when a firm is agile in how they make
and implement NPD portfolio decisions (Kester et al., 2011).
Kester et al. (2011) suggests that the three dimensions of NPD decision making effectiveness
are antecedents of Cooper et al.’s (2001) three characteristics for successful portfolio
composition. Cooper et al. (2001) concluded that managers use three dimensions to evaluate
and compose their portfolio for new projects and products in order to achieve a successful
portfolio composition: value maximization, strategic fit, and balance. Cooper et al. (2002), later
expanded these three criteria with a fourth criteria; selecting the right number of projects. In
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case of maximal NPD portfolio value, the portfolio has an optimal ratio between resource input
and return (Kester et al., 2014). The optimal portfolio composition in terms of value
maximization differs by firm and depends on the strategic objectives and the market in which
the firm operates (Kester et al., 2014). Second, NPD portfolio composition must reflect the
firm’s strategic objectives. This means that each individual project should be aligned with the
firm’s innovation strategy articulated for specific market or technological areas. Also, the
portfolio needs to have projects incorporated which contribute to achieving a firm’s strategic
goals (Kester et al., 2014). The third characteristic, balance, is defined by Cooper et al. (2001)
as a portfolio with an optimal spread in individual project risk, and the right number of projects
for the available resources. A balanced portfolio should carry both incremental and radical
projects (Jansen et al., 2006); have a ratio between short- and long-term projects; and the
projects should be distributed according to the various NPD stage-gate stages (Cooper et al.,
2001).
Kester et al. (2014) was the first researcher who investigated the performance implications of
the three characteristics as identified by Cooper et al. (1999). They looked at the influence of
those characteristics on market performance, in terms of customer satisfaction, market
effectiveness, and profit (Vorhies & Morgan, 2005). Kester et al. (2014) found when a firm is
not appropriately balanced, it may be difficult to achieve strategic and financial objectives.
Furthermore, they found that in order to improve customer satisfaction the portfolio should be
aligned with the firm strategy. When the portfolio consists of products which are not in line
with the strategy of the firm, it will result in incoherent messages to the customer and eventually
lowering customer satisfaction.
Cooper et al. (1999) laid the foundation for research towards NPPM and its corresponding
characteristics for successful portfolio composition. Their research remained only descriptive
and did not provide empirical evidence on specific performance implications. Kester et al.
(2014) were the first researchers who investigated the performance implications of the
characteristics identified by Cooper et al. (1999). However, over the past twenty years there are
no researchers who critically discussed the relevance of these characteristics. Since the business
environments are nowadays under conditions of rapidly changing customer,- and
environmental needs, it is imaginable that there are additional characteristics to identify which
makes a portfolio successful. Therefore, this thesis examines the characteristics for successful
portfolio composition identified in different portfolio management streams and its applicability
for NPPM.
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3. Methodology In order to conduct an overview of the different portfolio management streams and its relating
criteria for successful portfolio composition, this thesis uses a systematic literature review. A
systematic literature review is a methodology that describes existing studies, selects and
evaluates contributions, analyzes and synthesizes data, and reports the evidence in such a way
to reasonably draw conclusions about what is and what is not known (Briner & Denyer, 2012).
In this thesis we will follow five key steps as described by (Briner & Denyer, 2012): (1)
formulation of the research question, (2) locating the studies, (3) selection and evaluation of the
studies, (4) analyzing and synthesizing information, and (5) reporting the best evidence.
3.1 Formulation of the research question
A research question is needed to give direction to the systematic literature review. According
to Counsell (1997) this question defines which studies will be included, what the strategy will
be to identify the relevant studies, and which data needs to be extracted from the studies.
Therefore, we identified the research question in the introduction section.
3.2 Searching for studies
A systematic literature review starts with the identification of keywords and search terms
(Tranfield et al., 2003). This systematic literature review only covers English articles, as this is
the language widely used within scientific studies, the databases are English, and the search
terms will be in the English language. In order to get the most information possible, I will not
limit the search with a certain time period. This also accounts for the type of research (i.e.
qualitative or quantitative, or both) and contexts of the research. To search for relevant articles,
I made use of the Ebsco database. This database is used because of its advanced search options
and it gives access to reliable and peer reviewed content. I have only selected articles that are
published in academic journals and which are peer reviewed.
I have chosen to use a top-down method to select additional portfolio management streams
besides NPPM. A top-down method means that I am already familiar with the topic of portfolio
management, I therefore identified three relevant portfolio management streams: alliance
portfolio management, investment portfolio management and patent portfolio management.
The first search without preconditions gave the following hits: 582, 36.537 and 431,
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respectively. To make sure I did not forget to include a portfolio management stream, I
performed an additional search using the bottom-up approach. A bottom up approach is used
when someone is unfamiliar with a specific topic and aims to gather general knowledge. Using
the key term “portfolio management” resulted in 67043 articles with portfolio management in
the title or the abstract, however did not showed any other relevant portfolio management
stream for this study. A benefit of the Ebsco database is that it gives an overview of the different
subjects of the articles. Therefore, I can easily identify the different subjects of the articles and
determine the different portfolio management streams. Portfolio management subjects
according to Ebsco are financial management, research, alliance, decision making, finance,
investment, economics, evaluation, decision making, patent and project management.
Secondly, I did a screen of the titles of the articles. Based on these results I will continue with
the three different portfolio management streams: alliance portfolio management, investment
portfolio management and patent portfolio management. Therefore, the search terms that are
used to further examine the different streams are “Alliance portfolio management”, “Investment
portfolio management”, and “Patent portfolio management”.
3.3 Selection and evaluation of the studies
To create a transparent selection process, I set up inclusion and exclusion criteria to assess if
each study really addresses the research question. Criteria used for this research were:
Inclusion criteria: Studies that cover the topics of portfolio management in the field of
investment, alliance and patent were selected if they cover the criteria for successful portfolio
composition. This can be in the form of empirical research, case studies, meta-analysis and
literature reviews.
Exclusion criteria: Studies that focus on individual cases without a perspective of the complete
portfolio are excluded. Also, studies that focus on general management practices or evaluation
tools are not selected.
The registration and classification of this study was done in Microsoft Excel. During the
systematic literature review we found a selection of 3.627 articles, which all are related to
alliance-, investment-, or portfolio management (See table 1). The article selection was
conducted in April 2020.
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For my initial search I selected the articles where alliance-, investment-, or patent portfolio
management is mentioned in the title or the abstract. Those articles are registered in Excel.
After this, I performed a second search where I included the inclusion and exclusion criteria to
select our final pool of articles for the systematic literature review. In the Excel file I highlighted
articles green if they cover characteristics for successful portfolio composition, articles that
were possibly useful are highlighted orange and articles that did not cover the criteria for
successful portfolio composition were highlighted red. Orange articles were subject to a
discussion in order to make the final decision if they should be incorporated in the data set.
Table 1 shows the search results per research stream. Regarding alliance portfolio management
I found 28 articles describing characteristics of successful alliance portfolio composition. These
articles comprise my final data set and will be used for this research paper. With regard to
investment portfolio management I found no useful articles. Articles describing investment
portfolio management mostly focus on mathematical methods to calculate and compare
portfolios considering the highest return based on risk predictions. Since the focus within
investment portfolio management is not on the characteristics for successful portfolio
composition, I eliminated this research stream for this research. Concerning patent portfolio
management, Conegundus de Jesus & Salerno (2018) stated in their literature review that the
literature about patent management is not a well-developed topic. Their literature review
discussed useful topics of new product portfolio management to be used in patent portfolio
management. This insight combined with the judgement of our initial pool of articles, I also
could not find articles which comprised characteristics of successful patent portfolio
composition. I therefore decided, along with investment portfolio management, to not focus on
patent portfolio management literature in identifying the characteristics of successful portfolio
composition.
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Keyword Initial selection Final selection
Alliance Portfolio Management
(total of 582 articles)
50 articles 28
Investment Portfolio Management
(total of 2614 articles)
36 articles 0
Patent Portfolio Management
(total of 431 articles)
29 articles 0
Table 1. Search results in numbers
3.4 Analysis and synthesis
The objective of the analysis within the systematic literature review is to analyze individual
papers and synthesis by making associations between findings. The aim of the analysis is to
examine and dissect individual studies and explore how the components relate to one another
(Briner & Denyer, 2012). I started the analysis by creating an overview of the findings about
specific composition characteristics. De composition characteristics are grouped together with
their corresponding performance implications per article. Appendix 1 gives an overview of the
identified composition characteristics and its related performance outcomes.
The second step, synthesis, will create the added value of my research paper. The synthesis is
the process of putting the findings from individual studies together “into a new or different
arrangement and developing knowledge that is not apparent from reading the individual studies
in isolation” (Denyer & Tranfield, 2009; Briner & Denyer, 2012). In order to synthesize the
articles, a narrative synthesis approach is used. This method is chosen because of the nature of
the literature in our dataset, which consist of both quantitative and qualitative research methods.
With this method we map the characteristics for successful portfolio composition emerging
from literature on alliance portfolio management literature in order to answer our research
question. This is done by describing how these characteristics fit in the current literature on
NPPM.
The synthesis of the articles is based on the characteristics proposed in table 2. These
characteristics make it possible to synthesize, integrate and accumulate the information and
results of the studies. Each article is analyzed and synthesized with the use of Microsoft Excel.
By analyzing and synthesizing each article in Excel I could easily identify similarities and
differences between the articles.
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Title Title of the article
Authors Authors
Year Year of publication of the study
Composition
characteristic
Composition characteristic that might be applicable to NPPM
composition
Motivation Motivation for the researchers to research this topic
Timing period Timing period of the research
Research method Research method used in the article
Discipline Discipline field of the research (e.g. operations, management)
Management theory Management theory used as viewpoint for the topic
Segment Type of companies the research was executed
Region Region where the research took place
Relevant research
objective
The research objective(s) relevant to the research question of
this research
Relevant variables Variables used in the article to measure the hypothesis relevant
research
Relevant findings Findings relevant to the objective of this research
Limitations Limitations that are relevant to this research
Table 2. Characteristics of articles
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4. Results and Discussion
4.1 Descriptive analysis
This chapter elaborates on the main findings emerged from the 28 articles of the APM literature.
First a descriptive analysis is performed to give an overview of the year of publications,
different disciplines, management theories and composition characteristics resulting from the
consideration set. Next, the findings of the identified composition characteristics as found in
the APM literature are discussed in detail.
4.1.1. Year of publications
Figure 1: Year of publications Figure 1 gives an overview of the years in which the articles are published. It can be noticed
that research towards alliance portfolio management is relevant since most of the articles are
recently published. Nine of the twenty-eight papers are published in 2017, which implies that
APM is a relevant topic nowadays.
0123456789
10
2005 2007 2010 2011 2012 2013 2014 2016 2017 2018
Number of publications per year
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4.1.2 Discipline
Figure 2: Disciplines in which APM is described Figure 2 gives an overview of the distribution of the articles among the different disciplines as
identified by the SOM research institute (2020). The main research towards the composition
characteristics for APM is from the management discipline (19). Four of the articles belong to
the field of innovation & technology management. Two articles belong to the field of
organization studies and the two to the field of marketing.
4.1.3 Research methods
Figure 3: overview of the research methods The articles are analyzed based on the research methods employed in the different articles. It is
an important finding that most of the research is quantitative research (22) Since the goal is to
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4
2
2
Management Innovation & Technology Management Marketing Organization Studies
22
4
2
Quantitative Qualitative Combination
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identify composition characteristics for NPPM, it is important that the composition
characteristics as identified in the APM literature are empirically tested.
4.1.4 Management theories
Figure 4: Overview of the management theories
In figure 3 an overview is given of the different management theories that are used in the
articles. A strategic management theory is a system of ideas which explains the origin,
evolution, principles, and applications of strategic management (Omalaja & Eruola, 2011). It
is important to be aware of the management theory which is used since it explains which
perspective is used to describe a specific phenomenon.
The main streams of literature are based on the Resource-Based View (9) Contingency
Perspective (4) Knowledge-Based view (3) and Resource Dependence Theory (2). The
resource-based view (RBV) sees the firm as a bundle of heterogeneous resources, where a
competitive advantage can be achieved by a firm’s ability to exploit and (re)combine resources
that are valuable, rare, and hard to imitate and substitute (Teece et al.,1997). The alliance
literature extended the resource-based view by expanding the firm’s boundaries to their inter-
firm alliance relationships and the alignment with their external environment (Dyer and Singh,
1998). From a contingency perspective the most appropriate style of management depends on
0
1
2
3
4
5
6
7
8
9
10
Resource
-Based View
Continge
ncy Persp
ective
Knowledge-Base
d View
Socia
l Netw
ork Th
eory
Resource
-Depen
dence
Theory
Transac
tion-Cost
Economics
Structu
ral Persp
ective
Relational
Perspec
tive
Manag
erial P
erspecti
ve
Not Specif
ied
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the context of the situation. Organizations should develop an appropriate strategy based on the
specific situation and the conditions they are experiencing (Omalaja & Eruola, 2011). The
knowledge-based view (KBV) assumes that knowledge is the primary source of value for firms
(Grant, 1996). Knowledge creation is a recombinant process where firms search for
(re)combinations of different knowledge components (Karim & Kaul, 2015). The resource
dependence theory (RDT) states that firms do not have all critical resources, so they must
acquire those missing resources externally and enter into exchanges with partners to obtain the
necessary resources (Pfeffer and Salancik, 1978).
4.1.5 Composition characteristics
Figure 4: Composition characteristics APM
Figure 3 shows the composition characteristics as identified in the alliance portfolio
management literature. Diversity (15) is the most prominent characteristic identified in the
alliance portfolio management literature. Interdependencies are mentioned in eight articles.
Size, strategic fit, and balance represent two, two and one of the articles respectively.
2
15
8
21
Size Diversity Interdependencies Strategic Fit Balance
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4.1.6 Different forms of diversity
Figure 5: Different forms of diversity
Since diversity is characterized by different forms in the literature, figure 4 gives an overview
of these different forms. Six articles define diversity as technological diversity and functional
diversity is mentioned four times. Industry, governance and partner type diversity are each
represented three times. Finally, exploration vs exploitation diversity is mentioned two times.
The next section will discuss in detail the findings regarding the composition characteristics in
the alliance portfolio management literature.
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3
3
4
3
2
Technological Governance Industry Functional Partner Type Exploration vs Exploitation
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4.2 Composition characteristics and comparison with new product portfolio management
The second step in this result section is to describe the findings regarding the portfolio
composition characteristics found in the APM literature. An overview will be given about the
findings of the alliance portfolio composition characteristics and thereafter the portfolio
composition characteristics will be linked to the field of NPPM and further discussed.
4.2.1 Diversity
As shown in figure 3 diversity forms a prominent characteristic in the APM literature. A meta-
analysis conducted by Lee et al. (2017) concluded that the performance outcomes are not
uniform across all diversity domains. Therefore, the findings of the different diversity forms
are explained with their corresponding performance outcomes.
Diversity – technological
A technological diverse alliance portfolio is defined as the diversity of technological resources
held by the partner firms in the alliance portfolio (Marhold & Kang, 2017). It is argued by
Fleming (2001) and Goerzen & Beamish (2005) that access to diverse technological domains
creates a wider perspective and stimulates creative thinking since innovation often results from
recombination across diverse technological fields. According to Cohen & Levinthal (1990),
exposure to diverse technology domains increases the likelihood of new knowledge
assimilation by associating new external knowledge with knowledge accessed in the past. To
cope with the scarcity and uncertainty of superior products, diverse technology domains enables
firms to make more informed decisions (Bowman & Hurry, 1993). Drawbacks relating to
technological diversity are the risk of information overload and diseconomies of scale (Ahua &
Lampert, 2001). Next to this, knowledge recombination becomes harder when diversity is high
(Fleming & Sorenson, 2001).
Following above reasoning, Wuyts and Dutta (2014) investigated the influence of technological
diversity in the alliance portfolio on superior product innovation. They hypothesized an
inverted-U effect of portfolio diversity on superior product innovation, however they found that
firms with either focused or highly diverse alliance portfolio strategies outperform other firms
that have a balanced portfolio (U-shape relationship). They could not give an explanation of
this unexpected finding and argued that more research is required with alternative dependent
variables.
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Van de Vrande (2012) found a different result regarding technological diversity and innovation
performance. In their study they use the term technological proximity as the extent to which the
technological competences of the partners are in line with the technological competences of the
firm. Their study was just as the study of Wuyts and Dutta (2014) based on pharmaceutical
firms and they focused on the influence of technological proximity on innovation performance.
They argue from a KBV perspective that a diverse alliance portfolio leads to knowledge
recombination and that a diverse portfolio avoids being trapped into a particular technological
trajectory. However, greater variance of knowledge also results in greater complexity of
managing the alliance. They concluded that variance in relative technological proximity
between the focal firm and its partners leads to an inverted U-shape relationship related to
innovation performance.
Subramanian and Soh (2017) examined the influence of technological diverse alliance
portfolios on the firm’s breadth of recombinant innovation from a social network perspective.
The social network theory states that extensive ties in a network widen information channels
and mitigate organizational inertia (Rosenkopf and Almeida, 2003). Having a technological
diverse portfolio increases the likelihood to combine old and new ideas to produce
commercially viable solutions to solve certain problems. They found a positive influence of
technological diversity of alliance portfolios on the breadth of recombinant innovation.
Whereas, Wuyts and Dutta (2014), Van de Vrande (2012), and Subramanian and Soh (2017)
investigated the influence of technological diversity on specific performance outcomes,
Marhold and Kang (2017) investigated in their study what is affecting the diversity of a firm’s
alliance portfolio. They examined how a firm’s internal technological diversity influences the
technological diversity of the alliance portfolio. They found that increasing internal diversity
of the technological resources held by a firm negatively influences the diversity of its portfolio.
This can be explained by advocating that firms strive for organizational ambidexterity; pursuing
both exploration and exploitation activities (Raisch et al., 2009). For example, firms with high
internal technological diversity, which is related to exploration within the firm’s boundaries,
focus their external technology acquisition on a smaller range of technologies in order to form
exploitative alliances. Therefore, their alliance portfolio will be less technological diverse.
Diversity – partner type
Partner type diversity is defined as the number of different partner types (i.e. competitors,
universities, customers, suppliers and research institutes) with whom a focal firm collaborates
(Hagedoorn et al., 2018). From an RBV perspective, firms collaborate with external partners to
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strengthen their internal innovation efforts (Faems & Vanhaverbeke, 2009). Superior
innovation performance can be achieved by combining the resources of partners in the alliance
portfolio and exploiting complementarities and synergies (Nieto & Santamaria, 2007).
Changing the perspective to the attention-based view, high levels of alliance portfolio diversity
could lead to information overload and thereby decreasing the ability to take optimal advantage
of learning opportunities (Koput, 1997). Therefore, de Leeuw et al. (2014) and Hagedoorn et
al. (2018) concluded that APD has an inverted U-shape relationship with innovative
performance. de Leeuw et al. (2014) also found an inverted U-shape relationship between APD
and productivity. A firm can increase its productivity by combining skills, assets and knowledge
from different alliance partners. However, the expansion in the number of different alliances,
may increase the risk of opportunistic behavior (Teece, 2002).
De Leeuw et al. (2014) also took into consideration the type of innovation (i.e. incremental or
radical) and concluded that partner type diversity in a firm’s alliance portfolio has an inverted
U-shaped relationship with productivity and radical innovative performance; and a positive
relationship with incremental innovative performance.
Diversity – Functional
Wagner and Zidhorn (2017) focused on functional diversity, which are the knowledge
differences in an alliance portfolio (Heimeriks et al., 2009). Knowledge differences are the
result of two independent factors, namely alliance content (e.g., alliance focus on R&D or
marketing) and alliance mode (e.g., license or informal collaboration). Wagner and Zidhorn
(2017) found that alliance portfolio diversity (APD) negatively relates to innovation output
since it increases complexity in managing the alliance portfolio. Moreover, they found that
APD negatively moderates the relationship between the number of alliances and innovative
output, again as a result of an increase in complexity. They also took into consideration the role
of firm age and found that older firms negatively moderate the relationship between APD and
innovation output. Older firms have already developed technological capabilities which allows
them to focus on fields where they already have expertise (Wagner & Zidhorn, 2017)..
However, younger firms need a more diverse portfolio since they have to develop the capacities
to survive in high-tech industries. A diverse portfolio helps young firms to acquire information,
skills and resources from various sources to develop these capacities (Wagner & Zidhorn,
2017).
Jiang et al. (2010) found different results regarding the influence of functional diversity on
performance, they investigated the influence of functional diversity on firm performance and
20
found a positive relationship. When a firm increases the functional diversity of its alliance
portfolio, it creates a balanced portfolio consisting of core and noncore activities, it gains access
to supplementary and complementary assets, and it expands its knowledge base (Jiang et al.,
2010). The different results compared with Wagner and Zidhorn (2017), can be explained by
the management perspective. Whereas the first mainly focus on the relational view and the
potential for complexity of managing alliances portfolios, Jiang et al. (2010) took an RBV
perspective stating that a diverse alliance portfolio can lead to useful resource combinations.
In the paper of Beers and Zand (2013) it is investigated what the impact is of functional diversity
on innovation performance. Functional diversity relates in this study to cooperation with
partners from multiple categories. They found that diversity positively influences innovation
performance and that this effect is higher for radical performance than incremental
performance. This is explained by the RBV suggesting that a diverse portfolio provides access
to a broader range of technological knowledge, information and complementary skills
(Duysters and Lokshin, 2007). Firms who introduce radical products are more in the need of
these external resources since they deal more with technological complexity, uncertainty and
financial risk. It was found that the influence of partner diversity on innovation performance is
more profound in high-technology and knowledge-intensive industries since these industries
have more market volatility, uncertainty and complexity in their innovation projects (Beers &
Zand, 2013)
Cui and O’Connor (2012) investigated the moderating influence of functional diversity on the
relationship between alliance portfolio resource diversity and firm innovation. They found that
diversity of functional activities in a portfolio negatively interacts with alliance portfolio
resource diversity and firm performance. High functional diversity means firms in the alliance
portfolio do not share common activities (i.e. marketing and R&D). In such situation’s
information and resource sharing between firms becomes harder since they lack knowledge.
Therefore, the low absorptive capacity as a consequence of this lack of knowledge overlap
limits the degree of knowledge transfer between alliances.
Diversity – Industry
Industry diversity refers to industries that have different routines and processes in upstream and
downstream activities (Lee et al., 2017). Jiang et al. (2010) found that alliance portfolio partner
diversity is associated with firm performance that first decreases and then increases (U-shape).
Greater partner industry diversity provides learning and resource access benefits. Partnering
with up- or downstream firms can offer complementary resources and facilitate entry into new
21
markets (Kogut, 1988). However, firms have to first overcome two obstacles. Partners from
unrelated industries could have different routines and processes which makes collaboration
more difficult. Second, increasing diversity leads to alliance management complexity. As firms
become better able to manage their alliances and accumulate resource benefits, they reach a
minimum degree of diversity effectiveness and can expect net gains surpassing this threshold
(Jiang et al., 2010).
Diversity – Governance
Governance diversity is defined as the various ways in which the alliance is governed such as
an equity or non-equity alliance (Lee et al., 2017). Different governance structures have
different implications for the degree of integration, level of commitment, and learning (Kogut,
1988). Jiang et al. (2010) found in their quantitative study in the automobile industry a negative
relationship between governance diversity and firm performance. This can be explained based
from a transaction cost perspective. It takes time for firms to set up a governance structure for
a specific alliance, since each alliance requires managerial attention, unique resource
commitments, and relationship-building routines (Jiang et al., 2010). Firms with more
experience regarding a specific governance structure can help a firm institutionalize knowledge
and skills about a particular governance form (Sampson, 2009). However, matching governance
structures to various alliances in the portfolio is not very effective. It can increase managerial
complexity and thereby losing opportunities for institutionalized learning (Jiang et al., 2010).
Diversity – Exploration vs Exploitation
Yamakawa et al. (2010) describes diversity in their paper as the choice between explorative
and exploitative alliances. They argue that firm performance can be affected by the choice of
exploration/exploitation alliances in the alliance portfolio. Exploration alliances are needed
when a firm search for new opportunities through the acquisition of skills, knowledge, and
capabilities which are new to the firm (Koza & Lewin, 1998). Exploitation alliances are needed
when a firm wants to leverage their existing resources and capabilities (Rothaermel & Deeds,
2004). It was found that firms that have more exploitative alliances in their portfolio tend to
have higher firm performance in the near term. They furthermore took the role of firm age into
consideration and found that younger firms will benefit more from a higher ratio of exploitation
alliances, while older firms will benefit more from a higher ratio of exploration alliances.
Younger firms have limited internal resources and capabilities (compared to mature firms),
22
which creates the need to collaborate with older firms to access complementary resources such
as financial capital and distribution capabilities (Pisano, 1991).
Once exploitative practices become more institutionalized in their internal routines, matured
firms face the threat of falling into the familiarity trap (Levitt & March, 1988). Hereby, the
firm’s existing resources and routines become obsolete and no longer match with their current
environment (Eisenhard, 1989). Firms can get access to new knowledge by entering into
explorative alliances since they offer the potential for resource recombination (Hagedoorn &
Schakenraad, 1994).
Comparing diversity with new product portfolio management
Diversity is a multi-dimensional concept which showed different performance implications in
the APM literature. Based on the above findings I suggest that managers in NPPM should take
a contingency perspective regarding the different forms of diversity. Meaning that the type of
diversity in the new product portfolio is contingent on the age, needs and the environment in
which the organization operates.
A technological diverse portfolio in NPPM means diversity in technological resources required
by the new product projects. Technological diversity can help firms overcome learning traps by
engaging in areas which are unfamiliar to them (Ahuja & Lampert, 2001). If the portfolio
consists of technological diverse projects, it stimulates the breadth of creative thinking since
people and projects with different knowledge backgrounds are brought together. Eventually
this creative thinking will lead to resource recombination whereby new projects can be initiated.
Having a portfolio with a broad technological background enables the firm to make better
informed decisions. However, we know from the alliance literature that increasing
technological diversity could lead to information overload which makes it difficult for
managers to make effective decisions.
Beers and Zand (2013) found that alliance portfolio diversity (functional) positively influences
innovation performance and that his effect is higher for explorative performance than for
exploitative performance. Radical innovations in NPPM are projects that focus on the changing
customer/environmental needs and are new to the firm (Bauer & Leker, 2013). A diverse
functional portfolio gives access to a broader range of knowledge and information which
enables knowledge recombination. Since exploratory products come along with complexity,
uncertainty and risk they will benefit more from the new knowledge recombination.
Wagner & Zidhorn (2017) took the role of firm age into consideration in explaining the
influence of functional diversity on the alliance portfolio. To effectively manage a diverse
23
portfolio firms should have the required capacities (i.e. resources) and capabilities (i.e. decision
making). Young firms do not always possess the required financial or human resources,
whereas older firms already have the needed capabilities to effectively deal with increasing
technological diversity. To give an illustration, functional diversity can lead to situations of
information overload and complexity of managing the portfolio, older firms have more
expertise and routines to effectively manage this complexity and will have more experienced
human resources available to deal with this amount of information.
In the NPPM literature Zahavie and Lavie (2013) investigated the influence of industry
diversity on firm performance. They made a distinction between inter-industry diversification
and intra-industry diversification. The first form of diversity is defined as the expansion into
additional businesses which are new to the firm (Berry, 1975 & Chandler, 1962), the latter is
defined as a firm’s presence in more than one market niche or product line within a single
industry (Li & Greenwood, 2004). The performance outcomes of inter-industry diversity
showed an inverted U-shape relationship between industry business diversity and firm
performance (Grant et al.,1988 & Palepu, 1985). Regarding intra-industry diversity, Zahavie
and Lavie (2013) showed that intra-industry diversity has a U-shaped effect with firm
performance.
Increasing industry diversity in NPPM is beneficial since it broadens the compositions of the
portfolio and thereby its ability to increase sales (Fernhaber & Patel, 2012). Second, when a
portfolio consists of multiple diverse products it is difficult for competitors to replicate the
portfolio, therefore a diverse portfolio increases competitive advantage. Third, greater industry
diversity is beneficial for the firm’s technical core which makes it more capable of reacting to
changes in customer demand and the environment. Finally, the interdependencies which arise
due to increasing industry diversity lead to synergies and shared learning within and outside the
company (Fernhaber & Patel, 2012).
However, after a certain point increasing industry diversity leads to a decrease in firm
performance. Having a portfolio of diverse products from different industries requires large
financial investments, which not always resulted in the expected payoffs (Johnson & Kirchain,
2011). Following the reasoning in the alliance portfolio literature and the transaction-cost
perspective, an increase in industry diversity leads to higher coordination costs. This is
especially the case for younger firms since they lack the routines of coordinating a complex
portfolio. Finally, in line with the attention-based view, managers may experience information
overload through a growing portfolio and the related resource allocations. Managers are more
likely to make suboptimal decisions since they rely on biases and heuristics, which could result
24
in new products that do not increase firm value (Leenders et al., 2007). Based on the above
reasoning regarding the multiple forms of diversity I propose that:
Proposition 1: Diversity (at an intermediate level) can be seen as an additional characteristic
for successful new product portfolio composition.
Future research on diversity in NPPM
Since diversity is a multi-dimensional concept manager should take a contingency perspective
regarding the implementation of diversity in the new product portfolio. First, technological
diversity in the portfolio enables firms to overcome the problem of learning traps by entering
in areas which are unfamiliar to them. However, there is a tipping point where situations of
information overload occur. Future research on technological diversity could investigate how
managers can effectively deal with the increasing technological diverse knowledge. The second
form of diversity, partner type, is explained as the different partner types with whom the focal
firm collaborates. Future research on partner type diversity could investigate if partner type
diversity is a relevant concept in NPPM and what the different partner types in the NPPM
portfolios are. Having a functional diverse portfolio stimulates the development of explorative
products and older firms are better able to cope with a functional diverse portfolio. Future
research in NPPM could investigate how a functional diverse portfolio influences the
development of exploitative projects, to see whether functional diversity hampers or
strengthens the development of these projects. Industry diversity strengthens a firm’s
competitive position by offering more varied products and making them better able to respond
to environmental changes. Governance in NPPM consists of four elements: 1) formality and
explicitness; 2) review frequency; 3) decision transparency; and 4) information support (Urhahn
& Spieth, 2014). Following the reason of Tushman and O’Reilly (2013), organizations needs
to pursue both exploratory and exploitative projects. Therefore, future research regarding
governance diversity could investigate whether it is beneficial to set up different governance
structures for explorative and exploitative projects. Since exploratory projects require less risk
it could be argued that these projects need to be organized and reviewed in a less formalized
way to speed up the development of these projects. Since it is argued by Cui and O’Connor
(2012) that different forms of diversity influence each other, future research could investigate
whether it is beneficial or not to have multiple forms of diversity in the portfolio.
25
4.2.2. Interdependencies
A firm’s alliance portfolio is not merely the sum or collection of its constituent alliances with
the focal firm (Wassmer & Dussauge, 2012). Therefore, APM is also studied more holistically
at the portfolio level. A central issue which is related to this are the portfolio effects created by
the interdependencies between individual alliances in a portfolio. Firms need to continuously
reconfigure their alliance portfolio since interdependencies in the alliance portfolio create two
different types of outcomes: synergies or conflicts (Wassmer, 2010). Synergy and conflicts
result in the so-called alliance portfolio effect, which makes the overall value created by an
alliance portfolio greater (synergy) or smaller (conflict) than the sum of the values created by
each individual alliance in the portfolio (Vassolo et al., 2014)
Degegner et al. (2018) performed quantitative research and investigated the moderating
interplay of two alliance management capabilities; portfolio coordination capability and
proactive partner selection capability on the relationship between APD and innovation
performance, they found that firms realize innovation benefits from a diverse set of external
alliance partners only when they focus on and apply internal coordination or partner selection
routines to manage these alliance. As a result of an increase in APD firms should be better able
to benefit from synergies resulting from alliances because they can exploit interdependencies
among different partners (Vassolo et al., 2004). Routines to identify interdependencies,
determine areas of synergy, and synchronize activities across alliance partners are the result of
a portfolio coordination capability. Proactive partner selection capability is the extent to which
a firm is engaged in the process of discovering and acting on new partner opportunities (Sarkar,
et al., 2009). An increase in APD potentially results in disagreements between firms in the
alliance portfolio. To ensure mutual understanding and avoid conflicts, it is an important task
for firms to select firms which are compatible with other alliances in the portfolio (Lavie, et al.,
2012). Degegner et al. (2018) showed that firms realize synergies from a diverse alliance
portfolio only when they focus on and apply internal coordination or partner selection routines
to manage these alliances.
The need to reconfigure the alliance portfolio is acknowledged by Asgari et al. (2017), who
investigated alliance portfolio reconfiguration as a consequence of technological discontinuity.
Forming new alliances create complementary and substitution pressures that lead to broader
reconfiguration of the alliance portfolio (Asgari et al., 2017). A technological discontinuity
affects resource value in five different ways: A new resource occurs since the discontinuity
made the resource valuable (new resource). A resource value can increase as a consequence of
a technological discontinuity (reinforced resource). The value of a resource can decline
26
(challenged resource). The value of a resource is reduced to zero (obsolete resource) and a
resource can be unaffected by the discontinuity. (unaffected resource). Reconfiguration
therefore can be needed to either enter into complementary alliances to improve the value of
co-specialized assets or terminate alliances once they reflect a reduction in the value of
particular resources (Asgari et al., 2017).
Also, Hoehn-Weiss et al. (2017) provided evidence for considering the whole alliance portfolio
instead of only each alliance individually. A benefit of having many partners in the alliance
portfolio is the ability to have access to their resources, however, it also creates the opportunity
for redundancy whereby multiple firms offer the same resources to the focal firm. Hoehn-Weiss
et al. (2017) found therefore that the greater the redundancy in the alliance portfolio, the worse
the effects are on the focal firm’s performance. This can be explained because the focal firm
must still invest time and energy into developing ties with others but will not be able to access
new knowledge or resources in return (Hoehn-Weiss et al. 2017).
Comparing interdependencies with new product portfolio management
Despite the growing importance of having a more holistic view of the new product portfolio,
Elonon and Artto (2003) revealed in their study that the links between projects are not
considered systematically due to complexity and lack of knowledge. In new product portfolio
management interdependencies arise as projects in the portfolio need to share the resources
which are assigned to the portfolio. Those resource interdependencies “occur when the total
cost of a portfolio is different from the sum of individual costs” (Schmidt, 1993, p. 404). A
second form of interdependency in NPPM is technological interdependency which is the ability
to leverage existing technological knowledge and knowledge diffusion between projects
(Verma & Sinha, 2002). Third, outcome dependencies arise when projects have to wait for the
end result of other projects (Killen & Kjaer, 2012). Finally, learning dependencies occur when
projects need to incorporate the capabilities and knowledge gained through another project.
Since interdependencies do occur in NPPM it is therefore something worthwhile to consider in
forming the new product portfolio.
Proposition 2: Interdependencies are an additional characteristic for successful new product
portfolio composition and have either a positive or negative influence on the portfolio.
27
Future research on interdependencies in NPPM
The studies by Hoehn-Weiss et al. (2017) and Asgari, et al. (2017) showed the importance of
interdependencies in the alliance portfolio. Degegner et al. (2018) gave insight into the
capabilities that are needed to realize synergies in the alliance portfolio. However, these studies
do not show how firms can form upfront alliances to maximize the synergy effects.
Interdependencies as described in the alliance literature are more the result of reactive events
(i.e. technological discontinuities) and management capabilities to (re)configure the portfolio.
Also, in NPPM interdependencies do occur, but there is no research on how firms can maximize
the synergistic effects in the product portfolio. More research is needed on what type of projects
(i.e. radical or incremental, explorative vs exploitative) create synergistic effects and what the
corresponding performance outcomes are for the total portfolio.
4.2.3 Alliance portfolio size
Alliance portfolio size (APS) is the total number of alliances in which the focal firm
simultaneously participates (Faems et al., 2012). Faems et al. (2012) showed in their conceptual
paper that there are mixed results regarding the influence of APS on firm or innovation
performance. These differences are the result of the managerial perspective of the researcher.
Resource-based arguments state that firms engage in different alliances to get access to
complementary resources (George et al., 2001), have the potential to realize economies of scale
and scope (Lavie & Miller, 2008) and experiencing learning opportunities (Kale & Singh,
2007). Interdependencies are also the result of an increased APS, since one alliance in a
portfolio could have a positive impact on other alliances in the portfolio (Faems et al., 2010).
Lahiri and Narayanan (2013) found that APS has an inverted U-shaped impact on both
innovation performance and financial performance. In their study they take an RBV perspective
suggesting that innovation involves combination and recombination of existing and new
resources available to the firm (Lahiri and Narayanan, 2013). Firms with larger APS will have
access to a wider variety of resources from different partners, which increases the likelihood of
identifying knowledge elements which were previously not known by the firm. Second, with
access to diverse knowledge elements from external sources, there is an increased possibility
for novel combinations. However, there are also challenges when the alliance portfolio size
increases. First, it is harder to search and identify knowledge resources across a wide portfolio
of partners. Second, when a firm utilizes resources from multiple partners, they need to adapt
internal routines to multiple partners.
28
Regarding financial performance, firms with larger APS could have better financial
performance since firms with larger alliance portfolios are better able to cope with
environmental changes by effectively responding to uncertainties (Duysters et al. 1999).
Secondly, there is an increased potential for economies of scale from multiple alliance partners.
However, also regarding the financial performance there is a limit to the positive effects of
increased APS. The effectiveness of a manager’s ability to exploit the alliances will decrease
given the increased demands on managerial attention and bounded rationality (Simon, 1991).
Wagner and Zidhorn (2017) found a positive relationship between APS and innovation output.
They take the perspective of the knowledge-based firm by arguing that firms enter into alliances
to acquire new knowledge which is not internally available.
Bos et al. (2017), took the perspective of the KBV and found that a situation of information
overload restricts the ability to engage in knowledge recombination by an increasing APS. They
found a hampered effect of APS on the relationship between alliance portfolio concentration
and MNC performance.
Changing the perspective from the RBV and KBV to the resource dependence theory (RDT),
Lahiri and Narayanan (2013) stated that with increasing levels of innovation, the positive
impact of increasing APS on financial performance is dampened. The RDT states that when
firms are dependent on external resources, firms may reduce uncertainty in the flow of these
needed resources by reducing their dependency on these external sources (Casciaro and
Piskorki, 2005). Therefore, firms with previous success in innovation engage more in repeated
use of internal knowledge which limits the benefits of an increased APS.
Comparing portfolio size with NPPM
In the NPPM literature it is stated by Cooper et al. (2004) that firms should select the right
number of projects for their portfolio. Following the RBV, the right number of projects is the
balance between the resources available from different functional areas and the resources
demanded by the projects (Cooper et al., 2004). Rothaermel et al. (2006) found an inverted U-
shape relationship between the size of a firm’s product portfolio on new product success and
firm performance. In line with the KBV it is argued that a mix of different knowledge stocks
enriches the firm’s ability to expand the product portfolio and offers a variety of related
products to meet consumer demand (Brown & Eisenhardt, 1997). A large portfolio leads to
synergistic effects such as economies of scope and scale due to knowledge spillovers in
production, marketing and distribution, so the production costs are decreased, and product
variety is increased (Kotha, 1995). However, an increase in the product portfolio could lead to
29
information overload, which has been found by firms with more diverse product portfolio’s
(Hoskisson & Hitt, 1994). When managers are not able to efficiently coordinate the portfolio,
new products will suffer from poor quality, lack of differentiation which will ultimately
influence firm performance (Rothaermel et al., 2006).
The findings from the APM strengthens the statement which has already been made by Cooper
et al. (2004) that selecting the right number of projects are a prerequisite for successful portfolio
composition. The APM literature and recent research by Rothaermel, et al. (2006) extended the
work of Cooper et al. (2004) that the optimal portfolio size cannot only be determined from a
resource-based perspective. Increasing portfolio size leads to interdependencies; we know from
the previous section that interdependencies makes the overall value of the portfolio greater
(synergies) or smaller (conflicts). However, at a certain point situations of information overload
and managerial complexity could limit the potential of increasing portfolio size. I propose that:
Proposition 3: Selecting the right number of projects for the portfolio is determined by a fit
between the available resources within the organization and resources demanded by the
projects, managerial capability to cope with diverse information, and the positive
interdependencies (synergies) between the projects.
Future research on portfolio size in NPPM
Cooper et al. (2004) was the only researcher in NPPM who investigated portfolio size. Based
on the reasoning in the APM literature I found that the suggestion which has been made by
Cooper et al. (2004) was incomplete. Portfolio size should not only be determined by a resource
fit, but also by the interdependencies and managerial capability to cope with diverse
information. Future research is needed to empirically test this proposition. Also, future research
could investigate what the influence is of increasing or decreasing the size of the portfolio on
innovation/financial performance. The study of Lahiri and Narayanan (2013) studied the
influence of increasing alliance portfolio size on firm and innovation performance, similar
research can be conducted in the NPPM literature.
4.2.4. Balance
Wassmer et al. (2017) argued in their study that a balance between cost reduction and revenue
enhancing strategy will lead to better firm performance, since exploitative and explorative
alliances lead to synergy (i.e. resource complementary effects). From an RBV perspective,
30
firms utilize strategic resources to enhance their product offering (Wassmer et al., 2017).
Product market extension aims to enhance revenues by entering new lines of business and
efficiency improvement focuses on enhancing the productivity of existing assets and aims at
cost reduction (Koza & Lewin, 1998). Based on the concept of resource ambidexterity, to
survive in the long-term firms should pursue dual objectives simultaneously to cope with
environmental change (O’Reilly & Tushman, 2013).
To survive in the long-term firms should pursue dual objectives simultaneously to cope with
environmental changes (O’Reilly & Tushman, 2013). An alliance strategy can be an important
alternative to internal resources for attaining those dual objectives (Wassmer et al., 2017).
Based on data from the global airline industry, a balance between revenue enhancing
(exploration) and cost reduction (exploitation) partners in the alliance portfolio enhances firm
performance (Wassmer et al., 2017).
Comparing balance with NPPM
In the NPPM literature, balance is identified by Cooper et al. (1999) as a prerequisite for
successful portfolio composition. Bauer and Leker (2013) provided empirical evidence for the
importance of a balanced portfolio, they did research towards the effects of balancing R&D
budget allocation between exploratory and exploitative innovation activities on new product
performance. Exploration activities are ones which refer to a firm’s ability to create products
that are entirely new to the company’s product portfolio (March, 1991). Exploitation in R&D
refers to a firm’s ability to improve the products that already exist in their portfolio (Bauer &
Leker, 2013). They found that product performance is positively influenced by the simultaneous
pursuit of explorative and exploitative innovation activities for both product and process
innovations.
The introduction of the concept of ambidexterity by Tushman and O’Reilly (2013) made it clear
that firms should pursue both exploratory and exploitative activities, since they result in
synergistic effects. Prove is given by Wassmer et al. (2017) for APM literature and by Bauer
and Leker (2013) for the NPPM literature that ambidexterity in the portfolio leads to better firm
and product performance respectively.
The alliance portfolio management literature regarding balance does not provide new insights
regarding balance in the new product portfolio. However, returning to the findings of
Yamakawa et al. (2010) regarding diversity in explorative and exploitative alliances, I want to
point that resource ambidexterity differs as the firm matures. Yamakawa et al. (2010) found
that younger firms benefit more from exploitative alliance in their portfolio, while older firms
31
benefit more from a higher ratio of exploration alliances. In line with the reasoning of
Yamakawa et al. (2010) similar propositions can be made for NPPM. Younger firms have
limited internal resources (i.e. financial capital) and capabilities. Therefore, younger firms
cannot compose their portfolio with a high share of explorative projects since they involve
higher risk. Therefore, younger firms should compose a product portfolio of exploitative
projects to create a solid resource base and need to develop capabilities to effectively manage
the portfolio. Exploitative projects refer to projects which a firm is experienced with and that
already exists in the current product portfolio (March, 1991). Once the firm is successful in its
exploitative projects it can grow by increasing the share of explorative projects in their
portfolio. Explorative projects are projects which are new to the portfolio, they involve higher
risk and potentially larger payoffs than exploitative projects (Bauer & Leker, 2013). I propose
that:
Proposition 3: Young firms should have a higher ratio of exploitative projects (compared to
explorative) in their new product portfolio, whereas older firms should have a higher ratio of
explorative (compared to exploitative) projects in their new product portfolio
Future research on balance in NPPM
Since it is proposed that young firms should have a higher ratio of exploitative projects
(compared to explorative) in their new product portfolio and older firms should have a higher
ratio of exploratory (compared to exploitative) projects in their new product portfolio, future
research needs to examine whether this propositions hold for the NPPM literature. This can be
done by using the same research method as Yamakawa et al. (2010) used. A quantitative study
could compare portfolios with different ratios of exploratory/exploitative projects on firm
performance, and thereby using firm age as a boundary condition.
4.2.5. Strategic Fit
Hoffman (2005) identified in his paper the tasks of an alliance portfolio manager. One of these
tasks comprises the development and implementation of a portfolio strategy. A portfolio
strategy is the main strategic direction for all alliances in a particular business unit and
encompasses the rules for managing all the alliances of the entire company (Hoffman, 2015).
Based on interviews in twenty-five leading European corporations the strategic alignment of
the alliance portfolio takes place at the business level. At this business unit level, the tasks of
32
alliance strategy are to strategically align all alliances of a business unit with the business
strategy.
Alliances strategies can also be used to balance the trade-off between exploration and
exploitation (Hoffmann, 2005). The alliance strategy is accountable for the number, spread,
redundancy and linkage strength of the company’s interorganizational relationships in order to
contribute to its business strategy. The configuration of the alliance portfolio depends on its
strategic objective, in case of an exploration strategy the portfolio will be filled with many
diverse partners, whereas an exploitation strategy only needs a few alliances with similar
partners (Hoffmann, 2005).
Hoffmann (2007) states that firms should take a contingency perspective regarding the role of
alliance portfolios in enabling a fit between internal resource endowment of a firm and external
requirements it faces. The contingency theory assumes that the structure and strategy of an
organization must fit with external environmental conditions, internal resource endowments,
and firm strategy to positively influence firm performance.
Comparing strategic fit with NPPM
In NPPM strategic alignment is the extent to which the NPD portfolio is in line with the strategic
aspirations of the firm (Cooper et al., 2001). Each individual project should fit with specific
market or technology areas as defined by the firm’s innovation strategy (Kester et al., 2014).
Also, a strategically aligned portfolio should have projects incorporated which are in line with
the firm’s strategic goals. To give an example; firms who want to enter new markets should
have projects in their portfolio that addresses that market opportunity (Kester et al., 2014).
Finally, the budget allocation across the multiple projects gives a good indication of the
importance of each market or technology area in achieving a firm’s strategic objectives.
Whereas, the alliance portfolio management literature does not provide any new insights for
strategic fit in NPPM, it strengthens the NPPM literature by confirming that individual projects
and the whole portfolio should be aligned with the firm’s strategy. As mentioned in the APM
literature, the alliance strategy can be used to balance the trade-off between exploration and
exploitation alliances. We know from the balance section that organizations should move to
ambidextrous organizations. By strategically aligning the goals of the firm with the goals of the
portfolio, strategic fit ensures that the portfolio will consist of both explorative and exploitative
projects. Having explorative and exploitative projects in the portfolio eventually lead to
synergistic effects which will increase the value of the project’s portfolio.
33
Table 6 summarizes the findings in a complete overview of the characteristics for successful
new product portfolio composition. Based on the findings from this literature review the new
product portfolio should be composed based on these six characteristics. Future research is
needed to test the applicability of these characteristics in the NPPM literature.
Figure 6: Composition characteristics for successful new product portfolio composition
•A strategically aligned portfolio should have projects incorporated which are in line with the firm’s strategic goals (Kester et al., 2014; Hoffman, 2015)
Strategic Fit
•A balanced porfolio consists of exploratory and exploitative projects, have a ratio between short- and long-term projects, projects should be distributed according to the various NPD-Stages (Cooper et al., 1999; Tushman & O'Reilly, 2013)
•New finding: Younger firms should have a higher ratio of exploitative compared to exploratory projects in the portfolio. Older firms should have a higher ratio of exploratory compared to exploitative projects in their portfolio
Balance
•The portfolio has an "optimal ratio between resource input and return" (Kester et al., 2014, p. 329).
Value maximization
•Selecting the right number of projects is determined by a fit between resources demanded by the projects and resources available in the organization (Cooper et al., 1999)
•New finding: Selecting the right number of projects for the portfolio is determined by a fit between resources available by the organization and resources demanded by the projects, managerial capability to cope with diverse information, and the positive interdependencies (synergies) between the projects.
Seleting the right number of projects/Size
• New finding: Synergies between the projects should be maximized and conflicts should be avoided
Interdependencies
•New finding: The portfolio should have an intermediate level of diversification between the projects. •New finding: Managers must follow a contingency perspective regarding the implementation of the different forms
of diversity in the new product portfolio
Diversity
Successful New Product Portfolio Composition
34
5. Conclusion In this thesis I tried to identify characteristics for successful portfolio composition in different
portfolio management streams which could extend the current NPPM characteristics. The
literature review is based on 28 papers from the APM literature and identified two
corresponding characteristics for successful portfolio composition. This thesis also found new
insights regarding the composition characteristics balance and size.
First, it is stated in the APM literature that alliances should be strategically aligned with the
firm’s strategic objectives. The concept of strategically aligning the new product projects with
the firm’s objectives is already found in the NPPM literature to be a prerequisite for successful
portfolio composition, the findings from the APM literature strengthens this.
Second, the alliance literature acknowledges what already has been found in the NPPM
literature regarding balance, namely that the portfolio must consist of a balance between
exploratory and exploitative projects. However, the APM literature provided additional insights
for NPPM by arguing that the balance between explorative and exploitative projects is
influenced by the age of the firm. Younger firms should have a higher ratio of exploitative
compared to explorative projects in their portfolio since they do not possess the required
resources and capabilities to cope with the higher risk of explorative projects. Once the firm is
more experienced in its exploitative projects it can grow by increasing the ratio of explorative
projects.
Third, portfolio size is already recognized in the NPPM literature as a prerequisite for successful
portfolio composition. The findings from the alliance literature provides a better understanding
on how the optimal portfolio size should be determined. The NPPM literature argues that the
optimal portfolio size is determined by the fit between the available resources and the resources
demanded by the projects. The APM literature showed that an increase in portfolio size
increases managerial complexity due to information overload. Moreover, increasing portfolio
size leads to interdependencies from which we know those leads to synergies or conflicts.
Therefore, selecting the right number of projects for the portfolio is determined by a fit between
resource available and resources demanded, managerial capability to cope with diverse
information, and the positive interdependencies (synergies) between the projects.
Fourth, the APM literature argues that the interdependence between projects in the portfolio
results in synergies or conflicts, which makes the value created by a portfolio greater or smaller
than the sum of the values by each individual alliance in the portfolio. The portfolio must be
composed in such a way that it maximizes synergies and avoids conflicts between projects.
35
Therefore, interdependencies are seen as an additional characteristic for successful NPPM
composition.
Finally, diversity is a multi-dimensional concept with different performance implications in
APM. RBV and KBV arguments state that diversity is beneficial since it leads to novel resource
and knowledge recombination. However, according to the attention-based view, too much
diversity hampers the positive effects since managers’ bounded rationality limits their ability
to cope with diverse information. Therefore, intermediate level of diversity is identified as an
additional characteristic for successful portfolio composition. Managers must follow a
contingency approach regarding the role of the different diversity forms in the new product
portfolio. First, if firms want to overcome the problem of learning traps they should have a
technological diverse portfolio. Second, a functional diverse portfolio is beneficial when firms
want to improve the ratio of exploratory projects. Older firms are better able to reap the benefits
of a functional diverse portfolio since they possess the required resources and capabilities to
deal with the increased complexity created by this functional diversity. More research is needed
to investigate whether governance diversity in exploratory and exploitative projects is
beneficial.
36
6. Implications
6.1 Theoretical implications and recommendations
This research contributes to the NPPM literature by providing two additional characteristics for
successful new product portfolio composition and creates a better understanding of the already
identified portfolio characteristics as identified by Cooper et al. (1999). The findings of this
literature review contribute to the NPPM literature by arguing that the new product portfolio
must be composed and evaluated based on six characteristics: value maximization, strategic fit,
balance, diversity, selecting the right number of projects/size, and interdependencies.
The first identified composition characteristic from the alliance literature is diversity. Whereas
the concept of diversity is relatively unexplored in the NPPM literature, I was able to propose
that at an intermediate level, diversity can be seen as an additional characteristic for new product
portfolio composition. Managers must take a contingency approach regarding the role of
diversity in the new product portfolio. If firms want to overcome the problem of learning traps
they need to focus on creating a technological diversified portfolio. If firms want to increase
their share of exploratory projects, it would be better to have a functionally diverse portfolio.
Due to the high complexity of managing a functionally diverse portfolio, I argued that older
firms are better able to cope with a diverse portfolio due to their routines. Future research needs
to investigate the different forms of diversity in NPPM and test whether the different diversity
forms in the portfolio influences each other.
Second, interdependencies are identified as a second additional characteristic for successful
new product portfolio composition. Interdependencies are identified in both the alliance
portfolio management and NPPM literature as making the value of the portfolio greater or
smaller than the sum of the individual alliances or projects. Interdependencies are investigated
in the NPPM literature by Elonon and Arotto (2003) and they stated that the links between
projects in the portfolio are not considered systematically due to complexity and lack of
knowledge. The interdependencies described in these articles are described as reactive events.
Interdependencies occur as a consequence of the interplay between projects. However, the goal
of this study was to identify characteristics for successful portfolio composition, therefore
future research should investigate the characteristics that maximize synergy effects in the new
product portfolio. This could be done by quantitatively examining what type of projects results
in synergies and conflicts, thereby creating a guideline for firms to show how they can
maximize upfront synergies between projects.
37
This thesis also contributes to the work of Cooper et al. (1999) in the NPPM literature by
creating a better understanding of the already identified portfolio characteristics: balance and
size. The alliance literature and the NPPM literature agreed on the fact that organizations need
to balance the portfolio between exploitative and explorative projects. The alliance literature
additionally showed that the ratio between explorative and exploitative projects is influenced
by the age of the firm. Younger firms are expected to benefit more from a higher ratio of
exploitative projects compared to exploratory projects, whereas older firms benefit more from
a higher ratio of explorative projects compared to exploitative projects. This effect is only
investigated in alliance portfolios, therefore future research in NPPM could empirically
investigate whether these statements actually hold for the new product portfolios. Also, future
research needs to identify the required resources and capabilities that are needed to increase the
share of exploratory projects.
Furthermore, the APM literature provided an important extension on Cooper et al. (1999)
statement that selecting the right number of projects for the new product portfolio is determined
by the resource available by the organization and the resource demanded by the projects. This
statement is extended with the KBV arguing that increasing portfolio size leads to novel
knowledge recombination, but situations of information overload and managers’ bounded
rationality diminish the positive effects of an increased portfolio size (Bos et al., 2017). On top
of that increasing portfolio size leads to interdependencies which can result in redundancy in
the portfolio whereby the same projects compete for resources that are scarce available (Hoehn-
Weiss et al. 2017). Empirical research is needed to test this proposition, moreover future
research could also investigate what the effects are of increasing/decreasing the new product
portfolio on firm performance.
38
6.2 Managerial implications
This thesis provides managers two additional characteristics to consider when they compose
their new product portfolio: diversity and interdependencies. It was found that at intermediate
levels of diversity, projects in the new product portfolio benefit from resource and knowledge
recombination’s. Managers need to take a contingency approach regarding the implementation
of different forms of diversity in the new product portfolio, also keeping in mind that only
intermediate levels of diversity will be beneficial. Technological diversity is needed to
overcome learning traps. Functional diversity is preferred when the firms need to strengthen
their exploratory projects. Older firms are better able to handle a functional diverse portfolio
and need to have a higher ratio of exploratory projects compared to exploitative projects in the
portfolio. On the other side, younger firms should have a higher ratio of exploitative projects
compared to exploratory projects in their portfolio. interdependencies between projects results
in synergies or conflicts, such as complementarities or resource constraints which also
influences the optimal size. On top of that, this research was able to show how managers can
determine the optimal size for the portfolio. Whereas it was initially suggested that selecting
the right number of projects is determined by a fit between the resources demanded by the
projects and the resources available by the organization, managers must take into account the
role of information overload and interdependencies between projects. Increasing the size of the
portfolio will lead to extra information on which decisions need to be based. Depending on the
ability of managers to cope with this extra information, increasing the size will be beneficial or
not.
39
7. Limitations The first limitation of this study concerns the systematically of literature review. While the
APM literature is systematically selected and analyzed, this was not the case for the NPPM
literature. Possibly more relevant articles about NPPM could have been found if the selection
of those articles was performed systematically.
The second limitation of this study concerns the chosen research method. Since this study is
based on a systematic literature review this study can only make propositions and
recommendations for future research. The comparison is made between alliance portfolio
management and new product portfolio management literature, despite the similarities between
those literature streams it does not mean that results from one stream of literature are replicable
to the other field of research, therefore future research is needed to empirically test the
propositions. Furthermore, the research in the alliance literature is mainly conducted in fast-
paced industries (pharmaceutical industry and airline industry), since it was found that firm age
influences the ratio of exploratory and exploitative projects in the portfolio, it could also be the
case that the type of industry influences the composition of the portfolio. Therefore, to test
whether the propositions accounts for the NPPM literature research must be conducted in both
slow-changing and fast-paced industries.
40
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Appendix
Appendix 1: Overview findings categorized per composition characteristic
Composition Characteristic Findings Technological diversity Wuyts & Dutta (2014) Found a U-shape relationship between portfolio diversity on
superior product innovation Van de Vrande (2012) Found an inverted U-shape relationship in technological proximity
between the focal firm and its partners on innovation performance Subramanian & Soh (2017) Found a positive influence of technological diversity of the alliance
portfolio on the breadth of recombinant innovation Marhold & Kang (2017) Found that increasing internal diversity of the technological
resources negatively influences the diversity of the portfolio Partner type diversity de Leeuw et al. (2014) Found an inverted U-shape relationship between APD and radical
innovative performance Found a positive relationship between APD and incremental innovative performance Found an inverted U-shape relationship between APD and productivity
Hagedoorn et al. (2018) Found an inverted U-shape relationship between partner type variety in the alliance portfolio and innovation performance
Functional diversity Wagner & Zidhorn (2017) Found a negative relationship between APD and innovation output Jiang et al. (2010) Found a positive relationship between APD and firm performance Beers & Zand (2013) Found a positive effect between APD and innovation performance.
This effect is higher for radical performance instead of incremental performance
Cui & O’Connor Found that diversity of functional activities in a portfolio negatively moderates with alliance portfolio resource diversity and firm performance.
Industry diversity Jiang et al. (2010) Found a U-shaped relationship between industry diversity and firm
performance Governance diversity Jiang et al. (2010) Found a negative relationship between governance diversity and
firm performance Partner relevance diversity Hagedoorn et al. (2017) Found an inverted U-shape relationship between partner type
relevance and innovation performance Exploration vs Exploitation diversity
Yamakawa et al. (2010) Found that firms who have more exploitative alliances have a higher firm performance in the near term Younger firms benefit more from exploitation alliances in their portfolio
49
Older firms benefit more from a higher ratio of exploration alliances in their portfolio
Interdependencies Degener et al. (2018) Found that firms realize innovation benefits from ADP only when
they focus on and apply coordination or partner selection routines to manage these alliances
Agari et al. (2017) Found that reconfiguration is needed as a consequence of a technological discontinuity (complementing alliances or terminating alliances).
Hoehn-Weiss et al. (2017) Found that greater redundancy among partners within the alliance portfolio, the worse the focal firm’s performance
Alliance portfolio size Lahiri and Narayanan (2013) Found an inverted U-shaped relationship between APS and
innovation/financial performance Wagner & Zidhorn (2017) Found a positive relationship between APS and innovation output Bos et al. (2017) Found a hampered effect of APS on the relationship between
alliance portfolio concentration and MNC performance Faems et al. (2013) Stated that with increasing levels of innovation, the positive impact
of increasing APS on financial performance is dampened Balance Wassmer, et al. (2017) A balance between cost reduction and revenue alliances strategies
in the alliance portfolio will lead to better firm performance Strategic Fit Hoffman (2005) Firm should take a contingency perspective regarding the role of
alliance portfolios in enabling a fit between internal resource endowment and external requirements
50
Appendix 2: Analysis individual articles
Title Alliance Concentration in Multinational Companies: Examining Alliance Portfolios, Firm Structure, and Firm Performance
Authors Bos, Faems, Noseleit
Year 2017
Composition characteristic
AP Size
Motivation Explore if the distribution of alliances across focal firms' internal structure influences how firms can benefit from alliances by knowledge recombination. Because often firms consist of multiple, geographically dispersed units.
Data collection timing
2000-2010
Sample size 32 firms
Research method
Quantitative
Management theory
Knowledge-Based View
Discipline Management
Segment Multinational Pharmaceuticals
Region Global
Relevant research objective
Does the more alliance portfolios are concentrated with a limited #geographic unit of the firm --> + firm performance? Might be limited by portfolio size (hard to identify, assimilate, and exploit the locally available knowledge).
Relevant variables
• Alliance portfolio size (sum of all operational alliances)
Relevant findings • Size --> - moderates the 'alliance portfolio concentration > FP' relationship.
(Less than five alliances are positive, more than 26 is negative) With small alliance portfolios recombination can be triggered.
Relevant limitations
Non
Title Alliance Portfolio Configurations and Competitive Action Frequency
Authors Andrevski, Brass, Ferrier
51
Year 2016
Composition characteristic
Diversity (industries of partners, diversity between partners/structural holes)
Motivation What is the optimal alliance portfolio configuration of attributes that would maximize the firm's ability to win from the competition?
Data collection timing
1988-2013
Sample size 12 firms
Research method
Quantitative
Management theory
Configurational approach (network & relational)
Discipline Management
Segment Automobile manufacturing
Region Global
Relevant research objective
How do alliance portfolio attributes (relational/structural) help to reach network resources and affect competitive action frequency (=better than sum to win from competition)? Advent. APM: opportunity recognition, opportunity development and action execution. High level of the attributes (structural holes, R&D alliances, and equity alliances) will lead to increased competitive action frequency for strategic actions (= more winning from the competition).
Relevant variables
• R&D alliance scope (#industries in which automakers have formed R&D alliances, shows the breadth of new knowledge);
• Structural holes (looking at the partners of X, and if their partner Q also has connection with J)
Relevant findings
• Broad technological knowledge -->+ new innovation by mixing and matching components.
• Wide R&D alliance scope -->+ creating broad technological knowledge enables firms to recognize new ideas and create the capacity of opportunity development.
But, only if in combination with structural holes & equity alliances.
Limitations The influence of competition and strategic affects has not been examined but could be interesting.
Title Alliance Portfolio Diversity and Firm Performance: Examining Moderators
Authors Collins, Riley
52
Year 2013
Composition characteristic
Diversity (alliance partners, functional, governance)
Motivation There were mixed findings related to the moderating factors of alliance portfolio characteristics on firm performance
Data collection timing
1999-2004
Sample size 300 firms
Research method Quantitative
Management theory
Not specified
Discipline Management
Segment Standard & Poor's 500 firms
Region Global
Relevant research objective
This study examined the relationship between alliance portfolio diversity and firm performance and tries to understand the moderating roles of reciprocity and status similarity on firm performance.
Relevant variables
• Firm performance (return on assets); • Alliance portfolio diversity (diverse knowledge); • Status similarity (#direct relationship in portfolio)
Relevant findings • Alliance portfolio diversity inverted U-shape --> firm performance. • Reciprocity (+) and status similarity (-) moderate --> alliance
portfolio diversity-performance relationship.
Limitations They had no control of technological complexity in their research;
Title Alliance Portfolio Diversity and Firm Performance
Authors Jiang, Tao & Santoro
53
Year 2010
Composition characteristic
Diversity in five different types: industry; national; organizational; functional; governance.
Motivation Focus on the composition of the portfolio looking at the alliance partners.
Data collection timing
1985-2005
Sample size 138 firms
Research method Quantitative
Management theory
Resource-Based view
Discipline Management
Segment Automobile industry
Region Global
Relevant research objective
This article examines the relationship of different forms of diversity (industry, organizational, national, functional and governance) on firm performance
Relevant variables • Firm performance (measured in net profit);
Relevant findings • Partner industry diversity: U-shaped relationship --> FP; • Organizational diversity: J-shaped relationship +--> FP; • Functional diversity: (if it results in explorative and exploitative
portfolio)+--> FP; • Governance diversity: - --> FP;
OD & FD capture learning and resource access benefits.
Limitations One industry design limits the generalizability
Title Alliance Portfolio Diversity and Innovation: The Interplay of Portfolio Coordination Capability and Proactive Partner Selection Capability
Authors Degener, Maurer, Bort
54
Year 2018
Composition characteristic
Interdependencies (overlap, synergy on diversity)
Motivation Are there specific alliance management capabilities that positively influence the alliance diversity-FP relation?
Data collection timing
2014
Sample size 132 firms
Research method
Quantitative
Management theory
Resource-Based View
Discipline Management
Segment Biotechnology industry
Region Germany
Relevant research objective
Researches relation between APD and innovation performance; & portfolio coordination capability as moderator (because it creates attention for identifying interdependencies between alliance partners, determining areas of synergy, and synchronizing activities across alliance partners)
Relevant variables
• Innovation Performance (patent applications); • Alliance portfolio diversity (organizational diversity); • Alliance coordination capability (measuring if companies focus on
synergies, interdependencies and overlaps)
Relevant findings
• Coordination in the portfolio on these topics (synergies, interdependencies, overlaps) -->+ APD.
Coordination makes organizations able to benefit from highly diverse portfolios. These results show why some companies can better use their resources and that the value can be more than the sum.
Limitations Small high-tech companies have pressure to innovate, maybe different than larger companies.
55
Title Alliance Portfolio Reconfiguration Following a Technological Discontinuity
Authors Asgari, Singh, Mitchell
Year 2017
Composition characteristic
Interdependencies (complement/ substitute)
Motivation Limited understanding of the pressures to reconfigure alliance portfolio that arise when firms form new alliances
Data collection timing
1990-2000
Sample size 285 firms
Research method
Quantitative
Management theory
Resource-Based view
Discipline Management
Segment Biopharmaceutical firms
Region Global
Relevant research objective
Reconfiguration might be needed: (1) complementarity alliances to higher the value more than the total sum; (2) substitution leads to terminating in order to create room for new alliances. Technological discontinuity changes the value of resources in the following ways: new, reinforced, challenged, obsolete, unaffected. How does this work?
Relevant variables
Dependent and explanation variable is the #alliances counted per different resource type effect (reinforced etc.)
Relevant findings
Reconfiguration of the portfolio is important for firms to respond to changes. This means adding complementary alliances to strengthen other alliances, or terminating substitute alliances, even resources otherwise unaffected by the discontinuity, to free alliance capacity.
Limitations Correlations are researched, and not causal influences. However, they highlight important patterns in the reconfiguration of alliance portfolios.
56
Title Alliance Portfolio Resource Diversity and Firm Innovation
Authors Cui & O'Connor
Year 2012
Composition characteristic
Resource diversity
Motivation In the past research has not focused enough how alliances within the portfolio can be used to create synergies and enhance innovation, rather than focusing on a single alliance.
Data collection timing
2005-2008
Sample size 85 firms
Research method
Quantitative
Management theory
Not specified
Discipline Marketing
Segment Fortune 1000, mixed
Region Global
Relevant research objective
The article looks into factors that create better information and resource sharing, where diversity in resources can lead to more innovation. This leads to conditions for a firm to benefit from diverse partner resources.
Relevant variables
• Innovation performance is self-assessed to Fortune standards; • Resource diversity: (industry diversity within alliances in portfolio); • Functional heterogeneity (# different activities involved in group of
alliances)
Relevant findings • Collaboration with diverse partners and having a portfolio with diverse partners --> + IP (because diverse resources create synergy)
• It is better to focus on a narrow range of activities (R&D, marketing etc.), this allows more effective knowledge flow among alliances. More heterogeneity of functional activities can cause complexity.
Limitations Different types of diversity can impact innovation performance differently and influence each other differently.
57
Title Alliance Portfolios and Innovation Performance: Connecting Structural and
Managerial Perspectives
Authors Faems, Janssens, Neyens
Year 2012
Composition characteristic
AP Size Interdependencies Diversity
Motivation Existing portfolios study only into either the structural or managerial perspective, they largely ignore the interactions between them
Data collection timing
2012
Sample size Not applicable
Research method Qualitative
Management theory
Structural & Managerial Perspectives
Discipline Organization Studies
Segment Not applicable
Region Not applicable
Relevant research objective
They connect alliance portfolio composition with alliance portfolio management and innovation performance. Found in literature a U-shaped relationship between size and performance.
Relevant variables
• Alliance portfolio size; • Innovation performance; • Alliance portfolio heterogeneity
Relevant findings • Portfolio size --> innovation performance (+ when there are interdependencies by complementarities & - when there are interdependencies by constraints);
• Heterogeneity -->+ innovation performance.
Limitations It is only a conceptual paper not based on empirical findings
58
Title Alliance Portfolios: A Review and Research Agenda
Authors Wassmer
Year 2010
Composition characteristic
Interdependencies AP Size
Motivation Since there are a broad range of perspectives of different theories and alliance portfolio related research, it is difficult to synthesize the existing insights and knowledge on the subject
Data collection timing
1988-2010
Sample size Not specified
Research method Qualitative
Management theory
Not specified
Discipline Management
Segment Not specified
Region Not specified
Relevant research objective
This article offers a review of the extant alliance portfolio literature and organizes it around three key dimensions: emergence, configuration and management.
Relevant variables
Not applicable
Relevant findings More empirical research should be performed on: Portfolio size --> (+/-) firm performance but can be outweighed by other factors. Interdependencies --> (+synergies; -conflicts) firm performance.
Limitations No empirical research
59
Title Balancing Your Technology-Sourcing Portfolio: How Sourcing Mode Diversity
Enhances Innovative Performance
Authors van de Vrande
Year 2013
Composition characteristic
Diversity (technological)
Motivation What interorganizational strategies that can be used to access external knowledge? They will use technological diversity and sourcing mode diversity as AP choices.
Data collection timing
1990-1997
Sample size 78 firms
Research method
Quantitative
Management theory
Not specified
Discipline Management
Segment Pharmaceutical firms
Region Global
Relevant research objective
Investing in a broader range of technologies avoids the danger of being locked in; having a variety of companies that differ on technologies -->+ firm's innovative performance. Benefits can be limited due to monitoring complexities.
Relevant variables
• Innovation performance (weighted patent counts); • Variance (relative technological proximity similarities of the focal firm
and its partners and innovative performance. )
Relevant findings • Variance in relative technological proximity - inverted U-shape --> innovative performance.
Limitations Diversity comes in many forms and not only technological.
60
Title Benefiting From Alliance Portfolio Diversity: The Role of Past Internal
Knowledge Creation Strategy
Authors Wuyts & Dutta
Year 2012
Composition characteristic
Diversity (technological)
Motivation What are the consequences of a diverse alliance portfolio?: Stimulate firm innovativeness, but difficult management structures and complex knowledge transfers.
Data collection timing
1985-1999
Sample size 52 firms
Research method
Quantitative
Management theory
Contingency perspective
Discipline Management
Segment Biopharmaceutical industry
Region Global
Relevant research objective
Will a diversified alliance portfolio -->+ (non-linear) superior product innovation? Because of new knowledge assimilation (new + past), it creates a broader perspective, creative thinking, helps to cope with scarcity and uncertainty. Non-linear: information overload, diseconomies of scale, hard to build relationships and coordinate.
Relevant variables
• Diversity (technological diversity in total #alliances); • Superior innovation performance (independent measurement of 'best-in-
class' drugs).
Relevant findings
• Diversified alliance portfolio U-shaped (not inverted) effect --> superior product innovation.
Means that high & low amount of diversity leads to superior product innovation.
Limitations There was no data on failed patents; and they didn't incorporate the costs of alliances. This might have caused the U-shape.
61
Title Determinants of Alliance Portfolio Complexity and Its Effect on Innovative
Performance of Companies
Authors Duysters & Lokshin
Year 2011
Composition characteristic
Diversity
Motivation The relationship between alliance portfolio complexity and innovative performance is relatively unexplored
Data collection timing
1998-2000
Sample size 334 firms
Research method Quantitative
Management theory Not specified
Discipline Innovation & Technology Management
Segment Random; large and small firms
Region Netherlands
Relevant research objective
Depending on the type of company (innovator or imitator) the alliance portfolio will be broader.
Relevant variables • Innovativeness (introduced products new to the market)
Relevant findings • Developing relations that bring access to new information --> + innovation;
• Intensive (exploitation) and/or broad (exploration) use of external information sources --> innovation.
Limitations
62
Title Diversity in Alliance Portfolios and Performance Outcomes: A Meta-
Analysis
Authors Lee, Husk & Madhavan
Year 2017
Composition characteristic
Diversity (multi-dimensional)
Motivation There is a theoretical tension between the benefits and costs of alliance diversity
Data collection timing
Not specified
Sample size 67 studies
Research method Meta-analysis: Quantitative
Management theory TCE, RBV, Knowledge and learning, social network theory
Discipline Management
Segment Not specified
Region Not specified
Relevant research objective
Using a meta-analysis this study investigates alliance diversity and its impact
Relevant variables • APD performance; • Firm performance
Relevant findings • Diversity: performance outcomes are not uniform across all diversity domains;
• Theoretical orientation: TCE and RBV demonstrate the strongest results when they employ the variety measure
Limitations
63
Title Effects of Extent and Diversity of Alliancing on Innovation: The Moderating
Role of Firm Newness
Authors Wagner & Zidorn
Year 2017
Composition characteristic
Diversity (functional)
Motivation The innovation effects of the extent and heterogeneity of alliances and the newness position of a firm are hardly investigated
Data collection timing
1980-2008
Sample size 20 firms
Research method
Quantitative
Management theory
Not specified
Discipline Innovation & Technology Management
Segment Biotechnology industry (young, high-tech)
Region Global
Relevant research objective
How does the combination of heterogeneity and the size of alliance portfolios relate to innovation output?
Relevant variables
• Innovation output (patents granted); • Diversity (functional heterogeneity)
Relevant findings
• Younger firms with more APD benefit more(in innovation output) than older firms with APD;
• Young firms are maybe more flexible and react better to challenges. And might also have more resource scarcity and have more synergy effects. They also benefit from "more" alliances (bigger portfolio size). The combination is only beneficial up to a certain point.
Limitations Only young high-tech firms; patent measures used which is not a perfect measure of innovation activity
64
Title Examining Alliance Portfolios Beyond the Dyads: The Relevance of Redundancy and Nonuniformity Across and Between Partners
Authors Hoehn-Weiss, Karim, Lee
Year 2017
Composition characteristic
Interdependencies
Motivation Interdependencies are critical determinants of whether the overall value that firms derive from their alliance portfolios is smaller or greater than the sum of the values derived from each individual alliance
Data collection timing
1998-2011
Sample size 59 firms
Research method Quantitative
Management theory
Resource dependence theory
Discipline Organization Studies
Segment Airline industry
Region U.S.
Relevant research objective
This article studies interdependencies at the alliance portfolio level
Relevant variables
• Performance (natural logarithm of carrier i's time ratio); • Redundancy within the portfolio (Burt measure)
Relevant findings • Redundancy --> - firm performance
Relevant limitations
Non
65
Title Exploration versus Exploitation in Alliance Portfolio: Performance
Implications of Organizational, Strategic, and Environmental Fit
Authors Yamakawa, Yang, Lin
Year 2010
Composition characteristic
Diversity (Exploration vs Exploitation)
Motivation It is not clear how and when strategic alliances carry positive implications for firm performance
Data collection timing
1988-1995
Sample size 95 firms
Research method Quantitative
Management theory
Resource-based view
Discipline Innovation & Technology Management
Segment Pharmaceutical, computer, food, steel and paper
Region Not specified
Relevant research objective
Under what conditions does a firm's alliance portfolio lead to superior performance?
Relevant variables • Firm performance (ROA); • Exploration alliance ratio (Total number of "exploration -
exploitation" formed / total number of exploitation alliances formed)
Relevant findings • Firms forming more exploitation alliances --> + Firm performance;
• Younger firms benefit more from a higher ratio of exploitation alliance. Older firms benefit more from a higher ratio of exploration alliances;
• Higher exploration alliance ratio leads to better performance in the short-term when combined with a differentiation strategy
Limitations
66
Title Heterogeneity, Diversity and Complementarity in Alliance Portfolios
Authors Cobena, Gallego, Casanueva
Year 2017
Composition characteristic
Diversity & Interdependencies
Motivation There is a controversy about what the best type of partner might be to improve the business performance
Data collection timing
2011-2012
Sample size 135 firms
Research method Quantitative
Management theory Resource-Based view & Network theory
Discipline Management
Segment Airline Industry
Region Global
Relevant research objective
Understanding the relations between three basic forms of alliance portfolio configuration (heterogeneity, diversity, complementary)
Relevant variables • Firm performance (operating results); • Heterogeneity (% of focal firm partners that belong to subsectors); • Diversity (coefficient expresses the extent to which the portfolio
members differs from each other’s); • Complementary (% of different destinations between each other that
the focal firm has with each of its partners)
Relevant findings • Resource complementary --> + operational performance; • Partner heterogeneity does not positively relate to company
performance or obtaining complementary network resources; • Diversity --> + performance and resource complementarities;
Limitations Very specific industry and only one resource type researched
67
Title How to Manage a Portfolio of Alliances
Authors Hoffmann
Year 2005
Composition characteristic
Strategic fit; Interdependencies
Motivation How does alliance portfolio management work and what do you have to do?
Data collection timing
Not specified
Sample size 25 firms
Research method Quantitative & qualitative
Management theory Relational view
Discipline Management
Segment Leading companies
Region European
Relevant research objective
What are the tasks of alliance portfolio management and how can they be performed effectively?
Relevant variables • Not applicable
Relevant findings • Alliances portfolio need to be aligned with the firm strategy; this decision should be made for each individual alliance;
• Need to avoid conflicts within the portfolio but create synergies. By synergies economies of scale can be created.
Limitations
68
Title Linking Alliance Portfolios to Recombinant Innovation: The Combined
Effects of Diversity and Alliance Experience
Authors Subramanian & Soh
Year 2017
Composition characteristic
Diversity (technological)
Motivation Earlier research did not focus on a specific type of alliance portfolio diversity (influence on performance) if alliance experience attained through learning between partners (explorative and exploitative alliances) positively moderates this specific type of APD-performance relationship.
Data collection timing 1990-2000
Sample size 222 firms
Research method Quantitative
Management theory Contingency perspective
Discipline Management
Segment Biotechnological industry
Region Global
Relevant research objective
Firm's alliance portfolio consisting of partners collaborating in diverse technological areas relation to the firm's recombinant innovation performance.
Relevant variables • Technological Diversity (Herfindahl index); • Breadth of recombinant innovation (the extent to which a firm's
successful patents cite patents from diverse technology classes)
Relevant findings • Technological diversity of a firm's alliance portfolio -->+ breadth of recombinant innovation.
Limitations patent data is used; did not take into account repetitive collaboration;
69
Title Partner Type Diversity in Alliance Portfolios: Multiple Dimensions, Boundary
Conditions, and Firm Innovation Performance
Authors Hagedoorn, Lokshin, Zobel
Year 2018
Composition characteristic
Diversity (partner type/partner relevancy)
Motivation Make a difference within diversity by focusing on two partner type diversities: (1) variety of partners in alliance portfolios (customer/supplier etc.) and (2) partner type relevance (focal companies need knowledge). They both trigger different type of knowledge sharing mechanisms: (1) exploit complementarities, (2) internalize the knowledge.
Data collection timing
1996-2010
Sample size 3000+ firms
Research method
Quantitative
Management theory
Knowledge-Based view
Discipline Management
Segment A large number of industries
Region Netherlands
Relevant research objective
The two-alliance portfolio partner type diversity (i.e., partner type variety and relevance) --> firm innovation performance? Expect U-shaped because diverse knowledge is beneficial but searching, monitoring and coordinating activities will limit the resources that a firm could otherwise allocate to those activities that directly generate innovation performance.
Relevant variables
• Innovation performance (new sales to total sales); • Diversity in partner type (customer, supplier etc.); • Relevance by manager self-assessment
Relevant findings
• Partner diversity --> inverted U-shape to innovation performance; due to increased cost of coordination.
• It is not a "one size fits all" approach but the choices but differs per industry.
Limitations It would be interesting to research the external influences of complexity and technological discontinuities on alliance portfolio effectiveness. Also, it is necessary to see what strategies could mitigate this diversity decrease after peak.
70
Title R&D Cooperation, Partner Diversity, and Innovation Performance: An
Empirical Analysis
Authors van Beers, Zand
Year 2013
Composition characteristic
Diversity (multi-dimensional)
Motivation Discusses different kinds of partner diversity (functional & geographical) and if they might have different impacts (radical/incremental) on firms' innovation performance.
Data collection timing
1994-2006
Sample size 12811 Dutch Firms
Research method
Quantitative
Management theory
Resource-Based view/Knowledge-Based view and Contingency perspective
Discipline Innovation & Technology Management
Segment Unclear
Region Netherlands
Relevant research objective
Partner diversity supports learning innovation skills; because of synergies and access to complementary and multi-disciplinary knowledge. This might contribute to the production and sales of innovative products.
Relevant variables
• Innovation performance (process & organizational); • External cooperation (y/n); • Partner diversity (experience, patents, IT, size, multinational, subsidy,
sector, year)
Relevant findings • Innovation activities collaborate with external partners --> + innovation performance and effect is stronger for radical then incremental.
• Functional diversity -->+ sales of radically new products per employee.
• Effects are stronger in high-technology and knowledge-intensive industries because of higher degrees of product complexity, market volatility, and riskiness/uncertainty of innovation projects in these sectors.
Limitations Moderators such as corporate strategy and organizational structure could be researched.
71
Title Resource Ambidexterity Through Alliance Portfolios and Firm Performance
Authors Wassmer, Li, Madhok
Year 2017
Composition characteristic
Balance
Motivation It is said that you need balance between revenue enhancing and cost reduction strategies; but is this balance also needed in a firm's alliance portfolio?
Data collection timing
1994-2008
Sample size 724 firm-year observations
Research method
Quantitative
Management theory
Resource perspective
Discipline Management
Segment Airline industry
Region Global
Relevant research objective
They argue that better balance between cost reduction & revenue enhancing strategy will lead to better performance. Does the portfolio size (#partners) and partner scope (range & variety of partners) condition this balance-performance relationship?
Relevant variables
• Proportion of partner resources (product extension and efficiency improvements);
• Balance (0 = perfect homogeneous, unbalanced partner resource stock > 1 perfectly heterogeneous balanced resource stock)
Relevant findings
• Balance of product-market extending and efficiency-improving alliance partner resources -->+ firm performance;
• Scope --> - balance-performance relation, size has no impact; • Resource balance at portfolio level helps improve performance but
accessing too many resources through just a few partners is counterproductive.
Limitations This article only focuses on horizontal alliances
72
Title Returns to Alliance Portfolio Diversity: The Relative Effects of Partner Diversity
on Firm's Innovative Performance and Productivity
Authors de Leeuw, Lokshin, Duysters
Year 2014
Composition characteristic
Diversity (partner type)
Motivation Previous studies: APD --> firm performance; but most of these studies have only focused on 1 performance measure.
Data collection timing
1996-2006
Sample size 11279 firm observations
Research method
Quantitative
Management theory
Not specified
Discipline Management
Segment Different
Region Different
Relevant research objective
Which level of APD is optimal for which performance dimension (radical, incremental innovation performance or productivity performance)? Different types of alliances can enhance a different type of performance. Ex: supplier collaboration -->+ exploitation; uni's -->+ enhance exploration. But, too much diversity will create information overload.
Relevant variables
• Productivity (sales per employee); • Radical (#really new products); • Incremental (# refinement products); • APD (different partner types like customer, supplier, uni etc.)
Relevant findings
• APD inverted U-shape --> radical innovation (requires focus); • APD inverted U (with early tipping point, earlier then radical) -->
productivity: less APD can realize high productivity; • APD inverted U-shape --> incremental innovation (tipping point is
higher than productivity)
Limitations No
73
Title Strategies for Managing a Portfolio of Alliances
Authors Hoffmann
Year 2007
Composition characteristic
Strategic fit
Motivation Seeks understanding to clarify which tasks the management of an alliance portfolio comprises and how these tasks can be performed effectively.
Data collection timing
Not specified
Sample size 2 cases
Research method
Qualitative/ In-depth study & Quantitative
Management theory
Not specified
Discipline Management
Segment Leading companies
Region European
Relevant research objective
What are the core tasks of multi-alliance management, and how do companies with multiple alliances carry out these tasks?
Relevant variables
• Portfolio strategy; • Portfolio monitoring; • Portfolio coordination; • Institutionalizing multi-alliance management
Relevant findings
• Developing and implementing alliance strategies and alliance policy have become routine in large companies and significantly affect their alliance activities. It is their job to align the alliance activities with corporate strategy/values.
• Coordination is needed to use synergies and avoid conflicts. Redundancy is costly but can confirm knowledge and makes sure you don't bet on one horse.
Limitations Small number of cases, not empirically tested
74
Title The Effects of Internal Technological Diversity and External Uncertainty on Technological Alliance Portfolio Diversity
Authors Marhold & Kang
Year 2017
Composition characteristic
Diversity (technological)
Motivation As it is important to understand the possibilities of alliances, they want to know how diversity and various factors, via the mediating effect on alliance portfolio diversity, affect the firms' financial and innovation performance.
Data collection timing
1990-2010
Sample size 171 firms
Research method
Quantitative
Management theory
Not specified
Discipline Innovation & Technology Management
Segment Semiconductor
Region U.S. listed
Relevant research objective
How do internal and external determinants influence alliance portfolio diversity? They suggest that internal technology diversity --> - to tech diversity of alliance portfolios.
Relevant variables
• Alliance portfolio diversity (technological diversity by patent data & Herfindahl Index);
• Technology diversity (Herfindahl index)
Relevant findings
• Internal diversity of technological resources -->- diversity of portfolio (firms that have different technological fields in their company will be less likely to follow the same strategy in building their alliance portfolio = ambidexterity).
Limitations Diversity is measured by patent-based indicators, which potentially disregard innovations that are not patented
75
Title The Evolution of Coopetitive and Collaborative Alliances in an Alliance
Portfolio: The Air France Case
Authors Chiambaretto & Fernandez
Year 2016
Composition characteristic
Environmental circumstances
Motivation Looking to RDT, market uncertainty drives changes in AP. Previous studies neglected the compositions dimensions: partner type and partner interactions and their relationship with market uncertainty and APM.
Data collection timing
2000-2011
Sample size Single firm
Research method Qualitative (Case-study)
Management theory
Resource dependence theory
Discipline Marketing
Segment Airline
Region France
Relevant research objective
This study explores the composition of an alliance portfolio (partner type & interaction) and its evolution over time with uncertainty influences.
Relevant variables
• Partner type (competitor or not); • Partner interaction (horizontal, vertical, mixed); • Market uncertainty (low-high-back to normal)
Relevant findings • Managers must configure portfolio to adapt to changing environment; • High market uncertainty --> firms modify the composition of their
portfolio and rely more on cooperative alliances than on collaborative alliances. They use more horizontal than vertical interactions.
Limitations Single-Case study
76
Title Value Creation in Alliance Portfolios: The Benefits and Costs of Network
Resource Interdependencies
Authors Wassmer & Dussauge
Year 2011
Composition characteristic
Interdependencies
Motivation Alliances can create value through leveraging supplementary and complementary resources, but the value can be reduced by substitutability in the portfolio. This combines value creating literature, RBV and cost of coordinating and controlling alliances.
Data collection timing
Not applicable
Sample size Not applicable
Research method
Qualitative
Management theory
Resource-Based view
Discipline Management
Segment Not applicable
Region Not applicable
Relevant research objective
Alliances portfolio management is used to create more value than the sum of the individual alliances. Under what conditions can firms influence the network resources they get from forming alliances with different partners?
Relevant variables
• Network resource interdependencies (#supplementary and #complementary resources in portfolio)
Relevant findings
• Portfolio fit -->+ FP; • Firms should pick network resources that provide not only a good fit with
their own resources but also with the other networks’ resources in their alliance portfolios to create more value. It's best when both on an individual as on portfolio level, good alliances are chosen.
Limitations Not tested empirically
77
Title Vertical Integration, Innovation, and Alliance Portfolio Size: Implications
for Firm Performance
Authors Lahiri & Narayanan
Year 2013
Composition characteristic
Alliance Portfolio Size
Motivation Firms with similar APS often experience heterogeneity in their performance outcomes
Data collection timing 1991-2002
Sample size 282 firms
Research method Quantitative
Management theory Contingency Perspective
Discipline Management
Segment Semiconductor Industry
Region Global
Relevant research objective
They investigate the effect of alliance portfolio size on innovation and financial performance
Relevant variables • Alliance portfolio size (#alliances); • Innovation performance (weighted #patent data); • Financial performance (net income); • VI (0 for one topic; 1 for two topics of collaboration)
Relevant findings • Vertical integrated firms are better in benefiting from increased APS in financial performance;
• Vertical separated firms than can better utilize increased APS in innovation performance
Limitations Single industry setting
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