Alliance Type, Alliance Experience, and Alliance Management Capability in High-Technology Ventures

Posted: 16 Nov 2004

See all articles by Frank T. Rothaermel

Frank T. Rothaermel

Georgia Institute of Technology; Georgia Institute of Technology - Scheller College of Business

David L. Deeds

University of St. Thomas - Opus College of Business; Case Western Reserve University - Department of Marketing and Policy Studies

Abstract

Building on the recent theoretical notion that a firm's alliance management capability can be a source of competitive advantage (Dyer and Singh, 1998; Ireland, Hitt, and Vaidyanath, 2002), we empirically investigate the effect of alliance-specific and firm-level factors on a high-technology venture's alliance management capability. We define alliance management capability as a firm's ability to effectively manage multiple alliances.

To test the effect of alliance type on alliance management capability, we first establish that the relationship between a high-technology venture's R&D alliances and its new product development is inverted U-shaped, regardless of alliance type (i.e., upstream, horizontal, and downstream alliances). Then, we posit that different alliance types place differential demands on a firm's alliance management capability due to the different types of partners involved and due to the different types of knowledge being transferred. Finally, we argue that firms build an alliance management capability through cumulative experience with strategic alliances over time. We test the effects of alliance type and alliance experience on alliance management capability by drawing on a sample of 2,226 R&D alliances entered into by 325 global biotechnology firms in the twenty-five year period between 1973 and 1997.

We find that alliance type and alliance experience moderate the relationship between a high-technology venture's R&D alliances and its new product development. These results provide some preliminary empirical evidence for the existence of an alliance management capability. The results further highlight the relevance of alliance management capability for high-technology ventures since alliance experience appears to be a distinct construct, different from firm age and firm size. Taken together, these results underscore both the ability of a high-tech venture to create a competitive advantage based on its alliance management capability and the risks alliances pose if the firm's alliance activity exceeds its alliance management capability. Managers in high-tech ventures need to consider their current alliance portfolio as well as potential alliances within the context of their firm's alliance management capability.

Keywords: Strategic Alliances, New Product Development, Alliance Management Capability, Dynamic Capabilities, Biotechnology Industry

JEL Classification: L1, L14, L22, M1, M13, O32, O33

Suggested Citation

Rothaermel, Frank T. and Deeds, David L., Alliance Type, Alliance Experience, and Alliance Management Capability in High-Technology Ventures. Journal of Business Venturing, Vol. 21, pp. 429-460, 2006, Available at SSRN: https://ssrn.com/abstract=618768

Frank T. Rothaermel (Contact Author)

Georgia Institute of Technology ( email )

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HOME PAGE: http://mgt.gatech.edu/rothaermel

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

David L. Deeds

University of St. Thomas - Opus College of Business ( email )

1000 LaSalle Avenue
TMH 443
Minneapolis, MN 55403
United States

Case Western Reserve University - Department of Marketing and Policy Studies ( email )

Cleveland, OH 44106
United States

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