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Process Capabilities and Value Generation in Alliance Portfolios

Department of Strategic Management, Fox School of Business, Temple University, Philadelphia, Pennsylvania 19122, and Grenoble École de Management, 38003 Grenoble, Cedex 01, France
Schulich School of Business, York University, Toronto, Ontario M3J 1P3, Canada
Schulich School of Business, York University, Toronto, Ontario M3J 1P3, Canada, and Faculty of Economics and Business, Vrije University, 1081 HV Amsterdam, The Netherlands
mbsarkar{at}temple.edu
paulakh{at}schulich.yorku.ca
amadhok{at}schulich.yorku.ca

This paper develops a multidimensional, process-based conceptualization of alliance portfolio management capability. Arguing that such a capability consists of organizational processes to proactively pursue alliance formation opportunities, engage in relational governance, and coordinate knowledge and strategies across the portfolio, we examine the impact of such a capability on organizational outcomes in the context of formal structure (alliance function) and strategy (portfolio diversity). Using data from 235 firms, we find that these three processes have a positive effect on a firm's alliance portfolio capital, and some of these effects are conditioned by a formal alliance function and diversity of the portfolio. Whereas the ability of proactive formation and relational governance processes to create value is further strengthened in the presence of an alliance function, that of the coordination dimension is weakened. Furthermore, the benefits of relational governance are strengthened for firms with diverse portfolios, whereas the benefits of coordination processes are weakened. We discuss implications of these findings for the alliance and network literature, and in general, for firm heterogeneity. In summary, we find evidence that variance in process-based capabilities to manage alliance portfolios can explain performance heterogeneity among firms.

Key Words: alliance portfolios; alliance management capability; portfolio capital; organizational processes; network diversity; interorganizational value creation; alliance function