Alliance Portfolio Diversity and Firm Performance: Examining Moderators

Abstract

The issue of the appropriate level of diversity in an alliance portfolio has emerged as a critical issue for managers and scholars. This study provides insight into how characteristics of alliance portfolios moderate the relationship between alliance portfolio diversity and firm performance. Firms should be able to best take advantage of diverse alliance portfolios when they have characteristics that enhance trust, knowledge sharing, and innovation. The effects of reciprocity and status similarity on the alliance portfolio diversity-firm performance relationship are examined. The findings of this study support the hypothesized inverted-U relationship between alliance portfolio diversity and firm performance. Findings also show that alliance portfolio characteristics are significant moderators of the alliance portfolio diversity-performance relationship. As predicted, reciprocity positively moderates this relationship while status similarity is unexpectedly found to negatively moderate this focal relationship.