Portfolio effects in knowledge acquisition from inter-firm alliances

This study reveals the knowledge acquisition outcomes of technologically diverse alliance portfolios. Extending prior research that emphasizes learning benefits from alliance partners, it uncovers how technological diversity among partners in a firm's alliance portfolio exerts both positive and negative effects on the knowledge acquisition outcome. Based on a panel data of 200 alliance portfolios of 169 firms spread across four time periods, we find that after controlling for the firm's internal technological scope and its technological distance with the alliance portfolio members, technological diversity has an inverted U-shaped relationship with knowledge acquisition from the alliance portfolio. We analyze the knowledge outcomes of alliance portfolios by deploying a two-stage model, thereby accounting for the endogeneity in firms' choices to form technologically diverse portfolios. Our findings reveal that firms tend to form technologically diverse portfolios as a mechanism to offset a narrow internal technological scope. However, even for firms with a broad internal technological scope, technological diversity of the portfolio has a non-monotonic relationship with knowledge acquisition. These findings advance alliance research by integrating learning theories with the resource-based view that emphasizes the importance of intangible resources with limited fungibility, and by demonstrating the tradeoffs of technological diversity as firms build alliance portfolios.