Configuring alliance portfolios for digital innovation

Abstract

We examine how firms configure alliance portfolios—that is, networks of partnering firms—in order to exchange, share, or codevelop the capabilities they require to engage in digital innovation. We analyze data from 550 U.S. firms and the strategic alliances they formed within and across industrial sectors to study how the configuration of alliance portfolios in terms of size, degree of exploration, internationality, and competition affects the volume and quality of digital patents. We find that alliances appear to be an effective means, yet alliances for digital innovations require a different configuration when compared with alliances for non-digital innovations. Large and explorative alliance portfolios help with the creation of digital innovations while international alliances and alliances involving competitors do not. We discuss the implications of these findings for research on digital innovation and alliances. We also distill practical advice to executives charged with making strategic decisions about inter-firm partnerships.