Should Executives Consider the Rarity of IT Resources When Courting Alliance Partners?

Rarity has important implications with respect to information technology (IT) resources, enabling firms to develop competitive advantage. We study the effect of firms’ possession of rare technology (IT) resources in the formation of alliances and its effect on firm performance. Using text-mining techniques, we measure the rarity of the 488 technology keywords present in a text corpus from 81,264 press releases that mention inter-firm partnerships for a sample of 64 firms. Our analysis suggests that the possession of rare technology resources is associated with the formation of arm’s length alliances and joint ventures and ultimately the performance of the firm. We also show that firms possessing rare IT resources are less likely to form joint ventures than arm's length alliances compared to firms with fewer rare IT resources (i.e. the fraction of alliances which are joint ventures is lower for firms with rare IT resources).