Influence of Firm and Partner Resources on Firm Performance in the Alliance Portfolio

Although a firm benefits from the resource endowment of the partners in its alliance portfolio, research has so far concentrated on partners. This study proposes that mutual conditions of network resources between a firm and its partners – the compatibility of underlying resources, including physical and R&D resources, strategy, status, and the complementarity of technology – have a positive relationship to the firm’s economic performance in its alliance portfolio. By analyzing alliances within the global semiconductor industry, this study shows that a firm’s economic performance increases when the compatibility and complementarity of network resources are high. ! The effect of partners’ resources and attributes on firm performance has become an important theme in alliance portfolio research. An alliance portfolio is a focal firm’s set of all direct alliances, which take a variety of forms and occur across both vertical and horizontal boundaries (Baum, Calabrese, & Silverman, 2000; Hoffmann, 2007; Lavie, 2007; Wassmer, 2010). Scholars have argued that improvement of a firm’s performance by constructing an alliance portfolio is largely attributable to the partners’ principal network resources, defined as the alliance partners’ heterogeneous resources and characteristics that are available to the focal firm in its set of direct alliances (Baum et al., 2000; Gulati, 1998; Powell, Koput, & Simth-Doerr, 1996). For instance, the technological and commercial prominence of partners as well as relationships with prestigious venture capital firms influence startups’ innovation rate, sales growth, and IPO performance (Gulati & Higgins, 2003; Stuart, Hoang, & Hybels, 1999; Stuart, 2000). A key argument is that the most valuable aspect of composing the portfolio and improving performance is allying with partners who are well endowed with network resources. Partners’ resources are critical to the composition of the alliance portfolio, because they are pivotal components of both value creation in a firm’s alliances and improvement of firm performance (Baum et al., 2000; Stuart, 2000). While this research stream has contributed significantly to alliance portfolio research, it has focused on the inherent and prominent attributes of partners rather than on the properties of the portfolio’s network structure. Consequently, alliance portfolio researchers increasingly focus on partners’ resource endowment as a critical factor in the pursuit of performance improvement (Stuart, 2000). ! This paper is motivated by a gap in the literature. Although the key resources and attributes of partners are likely to be important, how much a focal firm’s resource condition influences the partners’ contribution to performance is unclear. Rather, current research offers a deterministic account of performance improvement, in which partners with attractive resources or capabilities are able to improve firm economic performance (Baum et al., 2000; Stuart, 2000). However, this “rich get richer” account presents mixed evidence on the performance implications of partner endowment. For instance, some studies have M@n@gement