Industrial Marketing Management 107 (2022) 238–252

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Industrial Marketing Management

journal homepage: www.elsevier.com/locate/indmarman

Alliance portfolios and joint R&D project performance

Sudha Mani a, *, Bahar Ashnai b, Jeff Jianfeng Wang a
a
Monash University, Department of Marketing, Monash Business School, 26 Sir John Monash Drive, Caulfield East, VIC 3145, Australia
b
William Paterson University, Department of Management, Marketing, and Professional Sales, Cotsakos College of Business, 1600 Valley Rd, Wayne, NJ 07470, USA

A R T I C L E I N F O A B S T R A C T

Keywords: This research examines the effects of alliance portfolios – the collection of alliances a firm undertakes – on joint
Alliance portfolio R&D project performance. Drawing on the exploration-exploitation framework, we examine how alliance
Ambidexterity portfolio exploration (alliances across product-markets) and portfolio exploitation (alliances within product-
Exploration
markets) influence alliance partners’ R&D projects. Moreover, we conceptualize alliance portfolio ambidex­
Exploitation
Network density
terity as a balanced portfolio of alliances across and within product-markets, and examine its effect on project
performance. Finally, we hypothesize how factors at two different levels – alliance type (scale or link), and
network density – moderate the relationships between firms’ alliance portfolios and performance. We collect
data on nearly 600 alliances over 12 years and find that alliance portfolio exploration and exploitation increase
joint R&D project performance, and that alliance portfolio ambidexterity enhances performance to a greater
extent. We also find that both scale alliances and network density reinforce the relationship between alliance
portfolio exploration and project performance, and they diminish the relationship between alliance portfolio
exploitation and performance.

1. Introduction
Research and Development (R&D) alliances are ubiquitous in busi­
ness markets. In 2018 alone, 3003 alliances were announced in the
biopharmaceutical industry, a 25% increase from 2017 (Micklus &
Muntner, 2019). Pharmaceutical companies are increasing the number
of R&D alliances and creating a diversified portfolio of prescription
medicines through their alliance networks (https://ceptonstrategies.
com/en/strategic-alliances/; Dan & Zondag, 2016). This phenomenon
is not unique to pharmaceutical industry; alliance portfolios are com­
mon in software (Lavie, 2007), manufacturing (Liu & Ravichandran,
2015), automobile (Jiang, Tao, & Santoro, 2010), mining (Market­
screener.Com, 2020), and energy (CE Noticias Financieras, 2021) and
“it’s important that companies view strategic alliances as a portfolio
game” (Özbek et al., 2022). For example, Daimler has an alliance with
BAIC group and Proterra to develop electric mobility, as well as alliances
with BMW, Bosch, and Torc Robotics to develop autonomous driving
systems. This portfolio of alliances helps Daimler to develop electric
mobility and autonomous driving systems. Similarly, Pfizer’s success
with the COVID-19 vaccine is attributed to the immense value of its
portfolio approach to alliances (ibid.).
Despite the growing popularity in alliance portfolios, “more than
50% of new product alliances fail to achieve their desired objectives”
(Chakravarty, Zhou, & Sharma, 2020, p. 74). Academics and managers
are intrigued by the factors that drive alliances’ success in joint R&D
projects. One essential factor is the “ability to manage, integrate and
learn from strategic alliances in today’s interconnected and globalized
economy” (Kohtamäki, Rabetino, & Möller, 2018, p. 188).
Firms can manage and learn from R&D alliances – formalized, non-
equity arrangements between firms to co-develop products (Koh­
tamäki et al., 2018; Mani & Luo, 2015). Alliances enable firms to learn
from partners, gain new competencies, and leverage existing know-how
(Ozdemir, Kandemir, & Eng, 2017; Rindfleisch & Moorman, 2001). In
firms’ quest to access knowledge and resources and develop new prod­
ucts, firms may participate in multiple alliances concurrently, estab­
lishing alliance portfolios – the collection of “alliances a firm is engaged
in at a certain point in time” (Cui, 2013, p. 16). A portfolio perspective
allows us to analyze and understand the synergies among a firm’s
multiple alliances (Koval, 2021).
Drawing on the exploration-exploitation framework, this research
examines the impact of alliance portfolio exploration and exploitation
on joint R&D projects. Alliance portfolio exploration is the diversity of
product-markets in a firm’s alliance portfolio. Alliances across diverse
product-markets allow firms to access non-redundant knowledge and

* Corresponding author.
E-mail addresses: sudha.mani@monash.edu (S. Mani), ashnaib@wpunj.edu (B. Ashnai), jeff.wang@monash.edu (J.J. Wang).

https://doi.org/10.1016/j.indmarman.2022.10.005
Received 30 January 2022; Received in revised form 3 October 2022; Accepted 8 October 2022
Available online 19 October 2022
0019-8501/© 2022 Elsevier Inc. All rights reserved.
S. Mani et al.
explore new opportunities (Thomaz & Swaminathan, 2015; Wuyts &
Dutta, 2014). By contrast, alliance portfolio exploitation is the extent to
which a firm’s alliances are within the same product-market. Alliances
in the same product market help firms refine and extend their current
knowledge and competencies (Hoang & Rothaermel, 2010; March,
1991). Despite the growing emphasis on alliance portfolios, there re­
mains three important research gaps, which we address with the current
study.
First, consistent with the exploration-exploitation framework
(March, 1991), alliances allow firms to develop new knowledge
(exploration) and build on existing knowledge (exploitation). Employ­
ing an organizational learning lens, previous studies on alliance port­
folios examine either alliance portfolio exploration or exploitation (e.g.,
Bos, Faems, & Noseleit, 2017; Cui, 2013; Cui & O’connor, 2012). These
studies find mixed effects of alliance portfolio characteristics on per­
formance. The mixed effects may be attributed to the lack of contin­
gency factors (e.g., Jiang et al., 2010; Wassmer, Li, & Madhok, 2017).
Further, prior studies that examine contingency factors mostly focus on
firm-level factors such as firm size and firm’s knowledge capabilities (e.
g., Bos et al., 2017; Yang, Zheng, & Zhao, 2014). There is scant research
on how alliance- and network-level characteristics intervene the effect
of alliance portfolio characteristics on performance. To bridge this gap,
we examine two moderators, one at the alliance level and another at the
network level. The alliance- and network-level moderators are external
to the firm and complement the alliance portfolios that are internal to
the firm (Martin, Josephson, Vadakkepatt, & Johnson, 2018). Specif­
ically, we study how alliance type (alliance level; Kalaignanam, Shan­
kar, & Varadarajan, 2007) and network density (network level;
Chakravarty et al., 2020) explain the heterogeneity in the relationships
between alliance portfolio exploration and exploitation and R&D project
performance. Therefore, our theoretical model provides a holistic un­
derstanding of alliance portfolios by integrating firm-, alliance-, and
network-levels (Bengtsson & Raza-Ullah, 2016; Feng, Zheng, Zhuang, &
Li, 2020).
Second, organizations are “capable of exploiting existing compe­
tencies as well as exploring new opportunities with equal dexterity”
(Lubatkin, Simsek, Ling, & Veiga, 2006, p. 647).1 The performance ef­
fects of ambidexterity have been examined in various contexts including
technology development, product innovation, alliance, employee
behavior and marketing strategy (for comprehensive reviews, see Lavie,
Stettner, & Tushman, 2010; O’reilly III & Tushman, 2013; Wenke,
Zapkau, & Schwens, 2021). Further, while some studies find a positive
effect of ambidexterity on performance (e.g., He & Wong, 2004; Zhang,
Edgar, Geare, & O’kane, C., 2016), ambidexterity can have a negative
impact on performance in some contexts (e.g., Vorhies, Orr, & Bush,
2011; Voss & Voss, 2013). These mixed effects necessitate the need to
examine alliance portfolio ambidexterity’s influence on R&D project
performance. A firm’s alliance portfolio is ambidextrous if the firm
simultaneously engages in moderate levels of alliances across diverse
product-markets (exploration) and within product-markets (exploita­
tion) (Lin, Yang, & Demirkan, 2007). We argue that alliance portfolio
ambidexterity enables firms to explore new knowledge that creates
opportunities to build flexibility (Lubatkin et al., 2006) as well as use
existing knowledge to improve R&D project performance (Zhang et al.,
2016). Our research proposes that exploitation and exploration com­
plement each other and provide a synergistic effect. We empirically test
the effect of alliance portfolio ambidexterity on performance, as
compared to exploration and exploitation alone.
1
An alternate conceptualizaiton of ambidexterity focuses on firms ability to
“balance exploration and exploitation” such that exploration inhibits exploita­
tion and vice versa (Lavie et al., 2011, p. 1517). Lavie’s conceptualizaiton fo­
cuses on the trade-off between alliance portfolio exploration and exploitation,
while we focus on the simulataneuous, yet balanced pursuit of exploration and
exploitation.
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Industrial Marketing Management 107 (2022) 238–252
Finally, prior literature has not examined whether alliance portfolios
affect joint R&D projects (see Hoang & Rothaermel, 2010 for a notable
exception). Prior studies investigate the effect of alliance portfolio
characteristics on firm performance, including shareholder value
(Chakravarty et al., 2020; Koval, 2021; Mani & Luo, 2015), financial
performance (Wang, Grünhagen, Ji, & Zheng, 2020; Yang, Huang,
Wang, & Feng, 2018), and product innovation (Ozdemir et al., 2017;
Wuyts & Dutta, 2014), all at the firm-level. However, little is known
about whether alliance portfolios influence product innovation at the
alliance-level (i.e., the success of a joint R&D project2). Our research
aims to shed light on whether learning from other alliances in a firm’s
alliance portfolio can influence the R&D outcome of an individual alli­
ance. R&D project performance is a non-financial operational measure
that is a more proximal outcome than firm performance (Hoang &
Rothaermel, 2010). Studying such operational performance indicators
takes us beyond the “black box” approach (Venkatraman & Grant, 1986)
as there are usually a number of intervening stages that link firm actions
with their performance (Katsikeas, Morgan, Leonidou, & Hult, 2016).
We show that alliance portfolio characteristics improve R&D project
performance. Examining alliance-level R&D project performance has
practical implications for the management of each alliance within the
entire portfolio in addition to overall firm performance (Bamford &
Ernst, 2002).
We test our hypotheses by using alliance portfolios of biopharma­
ceutical firms. We integrate data from multiple archival sources to
carefully ascertain the performance of each of the 575 R&D alliances to
determine joint R&D project performance formed over 12 years. We
correct for the endogeneity of alliance portfolio exploration, exploita­
tion, and ambidexterity to specify a random-effects logit model. We find
that alliance portfolio exploration, exploitation, and ambidexterity all
influence R&D project performance, but to different degrees. Moreover,
these main effects are contingent on alliance type and network density.
The rest of the paper is structured as follows. We first review joint
R&D project performance and alliance portfolio exploration, exploita­
tion, and ambidexterity. We then propose alliance portfolio character­
istics’ effects on R&D project performance, followed by the moderator
hypotheses – alliance type and network density. Then we describe the
research methods, introducing the data, measures, and model specifi­
cation. We conclude the paper with a discussion of the results, its
theoretical and managerial implications, the limitations of our research,
and suggestions for future research.
2. Conceptual background and hypotheses
2.1. Joint R&D project performance
The learning and innovativeness afforded by the collaboration be­
tween alliance partners is linked to better performance (Lee & Chang,
2014; Nicholls-Nixon & Woo, 2003). Consistent with prior research on
learning- and innovation-oriented alliances, our study is focused on
alliance partners’ joint R&D project performance. R&D project perfor­
mance is a joint outcome at the alliance level and is theoretically closer
to the alliance in comparison to the outcomes at the firm level (Hoang &
Rothaermel, 2005). A focus on the alliance level outcome “brings to the
fore the challenges that firms face to leverage these different alliance
experiences appropriately to enhance subsequent project outcomes”
(Hoang & Rothaermel, 2010, p.735). R&D collaboration in new product
development provides opportunities for alliance partners to learn from
one another (Hoang & Rothaermel, 2010). From a managerial
perspective, understanding what types of alliance portfolios lead to
measurable benefits provides insight into how firms can build an
effective alliance portfolio to improve joint R&D project performance.
2
Studies that examine alliance performance largely rely on expected stock
returns from alliance announcement, rather than observed innovation outcome.
S. Mani et al.
2.2. Alliance portfolios – exploration, exploitation, and ambidexterity
Alliances are formed to gain access to resources and learn from
alliance partners (Stuart, 2000). Due to high failure rates, firms mitigate
the risk of an individual alliance by engaging in multiple alliances (i.e.,
creating an alliance portfolio) (Wuyts & Dutta, 2014). We reviewed
prior alliance portfolios and learning literature to identify the contri­
bution of this research. We did four things to ensure we cast a wide net
for empirical research on alliance portfolios and performance. We first
conducted a Web of Science topic search for “alliance portfolio” AND
(“exploration” OR “exploitation” OR “ambidexterity”), and this gener­
ated a list of papers published in the top marketing and management
journals.3 Because this search does not capture all the alliance portfolio
literature, we conducted a similar search using Google Scholar. We also
considered the papers referenced in Wassmer’s (2010) comprehensive
review of the alliance portfolio literature. Finally, we conducted a for­
ward citation analysis of this paper to identify recent papers on alliance
portfolios.
In terms of inclusion criteria, we then screened the abstracts to
identify papers that examined any alliance portfolio characteristic and
performance and only retained studies that are on alliance portfolios and
learning. Research on alliance portfolios using the organizational
learning lens is focused on how firms can learn alliance management by
increasing their alliance experience (Anand & Khanna, 2000; Sivadas &
Dwyer, 2000). The emphasis of the alliance experience-based research
has been on how firms learn to manage multiple alliances (Hoang &
Rothaermel, 2005). By contrast, research drawing on the exploration-
exploitation framework has relied more on how firms can learn from
the alliances in their portfolio (Liu & Ravichandran, 2015; Wuyts &
Dutta, 2014). The focal issue of investigation here is on the different
types of knowledge that firms can build using their alliance portfolio (Bi,
Xie, & Jin, 2020). Thus, we only retained studies that focus on learning
from alliances, as this is the focus of our study. In Table 1, we identify the
alliance portfolio characteristics examined in prior research along with
the level of contingency factors and performance.
Exploration enables a firm to discover new opportunities and adapt
to market changes (Koza & Lewin, 1998). In contrast, exploitation is
built to leverage a firm’s existing capabilities (Rothaermel, 2001). In the
domain of organizational learning, exploration enables a firm to expand
its knowledge and pursue unknown things; exploitation enables a firm to
utilize existing knowledge and develop things already known (Amank­
wah-Amoah & Adomako, 2021; Levinthal & March, 1993). Exploration
requires firms to experiment with new opportunities while exploitation
entails refinement of existing capabilities. As shown in Table 1, studies
focus on either alliance portfolio exploration (Cui, 2013; Subramanian &
Soh, 2017) or on exploitation (Hoang & Rothaermel, 2010), but rarely
both. Alliance portfolio exploration has been found to have a positive
impact (Cui, 2013; Subramanian & Soh, 2017), an inverted U-shaped
effect (Wuyts & Dutta, 2014), negative effect (Hoang & Rothaermel,
2010) or no effect (Liu & Ravichandran, 2015) on performance. In
comparison, alliance portfolio exploitation has a positive (Hoang &
Rothaermel, 2010) or an inverted U-shaped effect on firm performance
(Rothaermel, 2001). Prior literature on alliance portoflio exploration
and exploitaiton have mixed effects on performance.
Organizational ambidexterity originates from March’s (1991) twin
concepts of exploration and exploitation. Ambidexterity is an integral
concept to denote the simultaneous pursuit of both activities (Gibson &
Birkinshaw, 2004; Shiue, Tuncdogan, Wang, & Bredican, 2021; Tush­
man & O’reilly III, 1996). Ambidextrous firms are “capable of exploiting
3
Journals considered for inclusion in the literature review were – the
Academy of Management Journal, Industrial Marketing Management, International
Journal of Research in Marketing, Journal of Marketing, Journal of Marketing
Research, Journal of Management, Journal of the Academy of Marketing Science,
Long Range Planning, Organization Science, and Strategic Management Journal.
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Industrial Marketing Management 107 (2022) 238–252
existing competencies as well as exploring new opportunities with equal
dexterity” (Lubatkin et al., 2006, p. 647). The limited research on alli­
ance portfolio ambidexterity focuses on the trade-off between alliance
portfolio exploration and exploitation and its effect on firm performance
(Lavie, Kang, & Rosenkopf, 2011; Wassmer et al., 2017). Prior research’s
focus on the trade-off between alliance portfolio exploration and alli­
ance portfolio exploitation treats them as substitutes. In contrast, we
focus on the simultaneous, yet balanced pursuit of both alliance port­
folio exploration and exploitation as well as its effect on R&D project
performance. In our study, alliance portfolio exploration and exploita­
tion complement each other. We examine exploration, exploitation, and
ambidexterity at the alliance portfolio (firm) level, and ambidextrous
firms engage in moderate levels of alliance portfolio exploration and
exploitation.
2.3. Hypotheses
2.3.1. Alliance portfolio exploration
Alliance portfolio exploration refers to the diversity of product-
markets covered by a firm’s alliances within its portfolio (Wuyts &
Dutta, 2014). Through its alliances, a firm can explore a diverse set of
knowledge and technologies to enter varied product-market domains
(He & Wong, 2004). The more diverse the alliances across product-
markets, the higher the alliance portfolio exploration of a firm. The
higher a firm’s alliance portfolio exploration, the less redundant the
knowledge and technology domains.
This research examines the effect of alliance portfolio exploration on
an alliance’s joint R&D project performance. As a firm diversifies its
product portfolio through its alliances, it gains three advantages. First,
an incumbent firm can acquire more information and learn more across
various domains (Jansen, Van Den Bosch, & Volberda, 2006; Rindfleisch
& Moorman, 2001). This richer knowledge base improves its techno­
logical capabilities and helps it better understand emerging threats and
opportunities that transcend a specific product-market (Levinthal &
March, 1993). Second, alliances in a broad array of product-markets
promote greater flexibility and creativity in organizational actions and
increase firms’ ability to integrate knowledge across various fields (Lee,
Kirkpatrick-Husk, & Madhavan, 2017). It broadens firms’ perspective
and stimulates their creative thinking, and as a result, leads to innova­
tion from integrating knowledge bases and technological fields (Wuyts
& Dutta, 2014). Third, exposure to diverse product domains allows a
firm to associate new knowledge with existing knowledge, which facil­
itates knowledge creation (Cohen & Levinthal, 1990). A diverse alliance
portfolio creates new opportunities for learning from alliance partners
that helps the firm contribute to the success of the collaboration.
Therefore, we hypothesize that.
H1. A firm’s alliance portfolio exploration exerts a positive effect on
joint R&D project performance.
2.3.2. Alliance portfolio exploitation
Alliance portfolio exploitation refers to the extent to which a firm’s
alliances are built within the same product-markets. Alliance portfolio
exploitation enables an incumbent firm to improve and refine existing
skills and to satisfy the demand of current markets (Levinthal & March,
1993). In the R&D context, exploitation extends existing skills and
knowledge, and enhances established technology and products (Jansen
et al., 2006). It also lowers the risk for partners and has more synergy
with a firm’s existing product portfolios. A deeper alliance portfolio
exploitation allows a firm to solidify its current product-market posi­
tions (He & Wong, 2004).
We suggest that alliance portfolio exploitation enhances R&D project
performance in three ways. First, alliance portfolio exploitation builds
upon a firm’s existing learning curve as it operates on its core compe­
tencies and current routines (March, 1991). The firm has already codi­
fied and embodied knowledge and made it available for its current
S. Mani et al. Industrial Marketing Management 107 (2022) 238–252

Table 1
Key empirical research on the impact of alliance portfolios on performance (alliance and firm performance).
Alliance portfolio characteristic examined Contingency factors Performance
level

Study Alliance portfolio Alliance portfolio Alliance portfolio Contingency factor Level of contingency Firm or alliance
exploration exploitation ambidexterity examined factor

Bos et al. (2017) ✓ ✓ Firm Firm

Cui (2013) ✓ ✓ Firm Alliance
Cui and O’connor ✓ ✓ Firm Firm
(2012)
Hoang and Rothaermel ✓ ✓ Firm Alliance
(2010)
Jiang et al. (2010) ✓ Firm
Lavie et al. (2011) ✓ ✓ Firm Firm
Liu and Ravichandran ✓ ✓ ✓ Firm Alliance
(2015)
Rothaermel (2001) ✓ Firm
Subramanian and Soh ✓ ✓ Firm Firm
(2017)
Vasudeva and Anand ✓ ✓ Firm Firm
(2011)
Wassmer et al. (2017) ✓ ✓ Firm Firm
Wuyts and Dutta (2014) ✓ ✓ Firm Firm
Yang et al. (2014) ✓ ✓ Firm and network Firm
This research ✓ ✓ ✓ ✓ Alliance and Alliance
network

products and processes (Hoang & Rothaermel, 2010). The refinement of
interfaces and decision-making development enhance subsequent
cooperation outcomes (Hoang & Rothaermel, 2005). Second, a firm can
better use its partners’ strengths and assets to complement its own (Lavie
& Rosenkopf, 2006). Trials and errors in collaboration on the same
product can better predict the outcomes and increase the chance of
success. Third, a firm can better accumulate and leverage existing
knowledge through repeated engagements in the focal product-market.
Exploitation reinforces the firm’s existing skills and process as it better
understands existing knowledge and deepens its applications (Jansen
et al., 2006). In sum, we hypothesize that.
H2. A firm’s alliance portfolio exploitation exerts a positive effect on
joint R&D project performance.
2.3.3. Alliance portfolio ambidexterity
We now examine the impact of alliance portfolio ambidexterity on
joint R&D project performance (compared to the effects of exploration
and exploitation). While exploration is focused on generating new
knowledge and exploitation is focused on leveraging existing knowledge
(Rothaermel, 2001), we suggest that alliance portfolio ambidexterity
helps firms avoid the costs and dangers of both the “success trap” and the
“failure trap.” A “success trap” occurs when an existing opportunity
leads to early success, encouraging firms to favor this opportunity and
ignore new opportunities (Gupta, Smith, & Shalley, 2006). The “success
trap” of continuously engaging in the same product-market (i.e.,
building a deeper alliance portfolio exploitation) limits a firm’s access to
new technologies and discoveries. A diverse product-market portfolio (i.
e., alliance portfolio exploration) can help avoid this trap by helping the
incumbent with technology updates and knowledge transfer.
By contrast, firms that engage excessively in alliance portfolio
exploration may encounter a “failure trap”, in which “failure leads to
search and change which lead to failure which leads to even more
search” (Levinthal & March, 1993, p.105). This trap may lead an
exploration-focused firm to engage in experimentations and trials
without substantial progress. The firm may fail to leverage the advan­
tages that emanate from a proven and reliable alliance portfolio
exploitation. Alliance portfolio ambidexterity can help avoid the “failure
trap” by allowing a firm to benefit from exploring new opportunities
while also enjoying a high degree of coordination with familiar product-
markets.
We propose that exploration and exploitation complement each
other and provide a synergistic effect that enhances alliance project
performance. Our research examines ambidexterity as the firms’ ability
to balance alliance portfolio exploration with alliance portfolio exploi­
tation (Lin et al., 2007; Luger, Raisch, & Schimmer, 2018). Instead of
substituting exploration with exploitation, or vice versa, the firm can
and should have both. We suggest that moderate levels of alliance
portfolio exploitation and exploration are likely to generate optimal
results for joint R&D projects. Therefore, we hypothesize that,
H3. A firm’s alliance portfolio ambidexterity exerts (a) a positive effect
on joint R&D project performance, and this effect is stronger than that of
(b) alliance portfolio exploration, or (c) alliance portfolio exploitation
alone.
2.3.4. Moderating effects of alliance type (scale vs. link) and network
density
We hypothesize the contingent effects of an alliance-level (alliance
type - scale vs. link) and a network-level (network density) factor. Our
choice of the moderators relies on the importance of knowledge sharing
and learning with the alliance partner and the network in which the firm
is embedded. While the main effects of alliance portfolio exploration and
exploitation stem from firms’ internal strategy, the two moderating
factors reflect their external partnerships.
We use the scale-link alliance typology used in management (Hen­
nart, 1988) and marketing (Kalaignanam et al., 2007; Mani, 2016)
literature. In scale alliances, “the partners contribute similar resources
for the same stage or stages in the value-chain and aim at activities that
firms carry out in collaboration” (Dussauge, Garrette, & Mitchell, 2004,
p. 701). Scale alliances require firms to interact frequently and work
together closely, facilitating collaboration in joint product development.
Scale alliances enable alliance partners to pool their resources for
greater information sharing and joint learning (Furlotti & Soda, 2018;
Van Den Oever & Martin, 2019). In link alliances, by contrast, firms
work independently and there is limited learning (Kalaignanam et al.,
2007). In link alliances, firms rely more on information exchange than
joint learning as in scale alliances.
Network density is defined as the degree of firms’ interconnectedness
in a network (Coleman, 1988). We acknowledge that other network
characteristics may be examined (see Feng et al., 2020 for a review on
other network-level variables), but we focus on network density due to
its strong applicability in the study of alliances (e.g., Feng et al., 2020;
Mani & Luo, 2015). First, our choice of network density is consistent

241
S. Mani et al.
with Feng et al.’s (2020) findings that network density takes a central
role in the extant literature. Second, our investigation of network den­
sity extends the arguments of learning and information sharing from the
alliance portfolio to the network in which a firm is embedded.
We argue that these two external factors intervene the impact of
exploration and exploitation on R&D projects in distinct ways. Because
ambidexterity is a moderate level of exploration and exploitation, we
develop two sets of moderating hypotheses for exploration and exploi­
tation separately. See Fig. 1 for the conceptual framework.
2.3.5. Moderating effect of alliance type (scale vs. link)
Greater collaboration between alliance partners enables firms to
internalize critical knowledge and create a cooperative culture in scale
alliances (Kale, Singh, & Perlmutter, 2000). By reducing competition,
fostering joint learning, and inducing shared commitment (Dussauge
et al., 2004), a scale alliance helps to achieve alliance-specific goals
(Sivadas & Dwyer, 2000). Collaborative working in scale alliances is a
foundation for successful joint R&D projects (Zhao, Wei, Xi, & Wang,
2020). By contrast, link alliances focus on “combining different skills
and resources from each partner” (Dussauge et al., 2004, p. 701). Link
alliances entail independent working arrangements where partners
generally hand-off the work to each other. The agreed-upon tasks are
clear-cut so that each partner makes complementary contributions with
few or no joint activities. Thus, link alliances provide limited opportu­
nities for shared learning and the transfer of tacit know-how (Moorman
& Miner, 1998).
Alliance portfolio exploration allows a firm to explore new oppor­
tunities in diverse product-markets. With high levels of collaboration in
scale alliances, firms gain greater access to their partners’ proprietary
knowledge, facilitating a better understanding of new product-markets
(Kalaignanam et al., 2007). Alliance portfolio exploration demands
various resources and skills for R&D projects. Scale alliances can better
meet this demand because they improve the overall resource availability
to the alliance (Chiambaretto & Fernandez, 2016). In addition, scale
alliances facilitate closer collaboration and joint learning, improving the
R&D project’s performance in a broad alliance portfolio (Dussauge,
Garrette, & Mitchell, 2000). Thus, we hypothesize.
H4a. Scale alliances, as compared to link alliances, strengthen the
Fig. 1. Conceptual framework.
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Industrial Marketing Management 107 (2022) 238–252
positive relationship between alliance portfolio exploration and joint
R&D project performance.
We argue that alliance type also moderates the relationship between
alliance portfolio exploitation and R&D project performance. First,
compared to link alliances, scale alliances favor cooperative behavior
(Dussauge et al., 2004; Zhao et al., 2020). Exploitation aims to take
advantage of firms’ current routines and core competencies, which the
cooperative nature of scale alliances can further strengthen. Tacit know-
how obtained from scale alliance partners enables better utilization of
existing resources (Hennart, 1988). Second, alliance exploitation em­
phasizes continuity and efficiency (Hoang & Rothaermel, 2010). Link
alliances can lead to asymmetric outcomes and even cause one partner
to take over the alliance (Kalaignanam et al., 2007). In contrast, scale
alliances are found to sustain without major changes for longer periods
(Dussauge et al., 2004), which facilitates the success of exploitation
between alliance partners. Thus, the performance benefits accruing to
increases in exploitation are further strengthened through scale alli­
ances. We hypothesize,
H4b. Scale alliances, as compared to link alliances, strengthen the
positive relationship between alliance portfolio exploitation and joint
R&D project performance.
2.3.6. Moderating effect of network density
In this section, we suggest that a firm’s network characteristics
moderate its alliance portfolio’s impact on project performance. A firm’s
behavior is influenced by the network contexts in which it operates
(Granovetter, 1985; Xia, Wang, Lin, Yang, & Li, 2018). A dense network
reflects greater interconnections that increase information sharing
among alliance partners (Feng et al., 2020; Gupta, Kumar, Grewal, &
Lilien, 2019) and provides “informational advantages…[that firms may]
…obtain from their participation in interfirm networks that channel
valuable information” (Gulati, 1999, p. 399).
We argue that the extent to which alliance portfolio exploration
enhances joint R&D project performance depends on network density.
Exploration across product-markets requires alliance partners to share
product-market-specific information (Wuyts & Dutta, 2014). Alliance
partners embedded in a dense network can confidently share such
unique information due to the existing norms of cooperation (Walker,
S. Mani et al.
Kogut, & Shan, 1997). A dense network entails closer connection and
better transfer of diverse and high-quality information (Tse, Wang, &
Zhang, 2019). Alliance partners embedded in a dense network can trust
each other, enabling them to share product-market-specific information.
Furthermore, a dense network deters the opportunistic use of unique
information by collective monitoring and sanctioning (Rindfleisch &
Heide, 1997). Alliance partners can securely share information on new
opportunities to enhance project performance without the risk of misuse
of such information by their counterparts. Firms can also use the re­
sources needed for monitoring and sanctioning to ensure the success of
the common goals (Rowley, Behrens, & Krackhardt, 2000; Zaheer &
Venkatraman, 1995). Thus, the benefits of an alliance portfolio explo­
ration are strengthened when alliance partners can trust one another
because of being embedded in a dense network. Therefore, we hypoth­
esize that.
H5a. Network density strengthens the positive relationship between
alliance portfolio exploration and joint R&D project performance.
By contrast, network density is likely to weaken the positive impact
of alliance portfolio exploitation on joint R&D project performance, for
two reasons. First, as a firm develops more alliances in the same product-
market, it gains extensive product-market specific knowhow. It builds its
own tight-knit alliance network and benefits less from a dense network.
In fact, the interconnectedness through dense networks and alliance
exploitation may substitute each other (Rowley et al., 2000). Second,
alliance value is created by the external non-redundant knowledge
(Swaminathan & Moorman, 2009). However, a dense network is likely
to bring similar information and redundant knowledge (Thomaz &
Swaminathan, 2015) that dilutes scarce resources and hampers firms’
ability to fully leverage the gains from its alliance portfolio exploitation
(Mani & Luo, 2015). Therefore, we hypothesize that,
H5b. Network density weakens the positive relationship between
alliance portfolio exploitation and joint R&D project performance.
3. Research method
We test our hypotheses by examining R&D alliances in the bio­
pharmaceutical sector. On average, it costs $1.4 billion in 2013 dollars
(Dimasi, Grabowski, & Hansen, 2016) and takes up to 12 years (Phrma,
2015) to bring a drug to market. In 2017 alone, pharmaceutical com­
panies in the U.S. engaged in over 150 alliances valued at over $40
billion (Ey, 2018). The cost, time, and risks involved in drug develop­
ment motivate firms to undertake multiple alliances, making alliance
portfolio management an ideal context for testing our hypotheses. In this
context, alliances are formed in distinct, easily identifiable therapeutic
areas (e.g., cardiopulmonary disorders, inflammation, and oncology),
thereby identifying relevant firms in each product-market. The bio­
pharmaceutical industry has been the focus of numerous studies on R&D
performance and alliances (Hardwick & Anderson, 2019; Mani & Luo,
2015; Rampersad, Quester, & Troshani, 2010).
The industry is marked by alliances that have pre-stated alliance
goals of drug discovery, development, or both. Drug discovery is the first
stage of drug development and consists of the discovery of a lead
molecule and subsequent pre-clinical testing in the laboratory. Drug
development is the second and final stage, where the drug undergoes
clinical trials on human volunteers (Prabhu, Chandy, & Ellis, 2005). The
development stage succeeds when the drug receives regulatory approval
(Rothaermel & Deeds, 2004). In each case, we can observe the pre-stated
R&D project objective of the alliance. In this research, R&D alliances
include both discovery and development alliances.
3.1. Data
Our data collection comprised multiple sources and stages. We first
obtained comprehensive alliance formation information from
243
Industrial Marketing Management 107 (2022) 238–252
Recombinant Capital’s http://Recap.com (Hoang & Rothaermel, 2005;
Wuyts & Dutta, 2014). For each alliance, Recap includes information
about participating firms (or institutions), the form of alliance (equity
and non-equity), the month and year of alliance formation, the objective
of the alliance – discovery, development, or both, and a summary of the
alliance. We restricted the sample to non-equity alliances between
publicly listed firms so as to obtain data on participating firms’ resource
endowments, which have a bearing on R&D project success. We
observed each alliance for up to 12 years to allow for a sufficient window
of opportunity to observe the project’s outcome as the drug discovery-
to-approval can take up to 12 years (Medicinenet, 1999). We included
alliances formed in and since 1987; this minimizes the problem of left
censoring. Alliance activity took off in the mid-1980s, and thus the
sample initiates when alliance formation was at its nascent stage in this
industry (Danzon, Nicholson, & Pereira, 2005). To minimize problems
associated with right censoring, we allowed for a sufficient window of
opportunity to observe alliance outcomes as the drug discovery-to-
commercialization, which can take up to 12 years. We thus measured
R&D project performance up to 2010.
In the second stage, we integrated the Recap-sourced data with
complementary data on outcomes for each alliance from Pharmapro­
jects. This database provides information on drug development efforts
with information on the names of the firms, the details of the drug, the
name of the alliance partner, and the outcome of the drug development
effort (Hess & Rothaermel, 2011). Although effort- and time-intensive,
our approach represents a comprehensive effort to successfully inte­
grate these very large and distinct databases to measure observed joint
R&D project performance. This matching exercise yields 596 alliances
for which the specific outcome of success or failure is determined with
certainty.
Finally, in the third stage of data collection, we gathered firm-level
data from COMPUSTAT, Datastream, and Mergent Online. Each of
these multiple data sources compensates for information missing from
the others. Our multi-sourced multi-stage data collection process pro­
vides rich data on a sample of 596 alliances formed by 83 bio­
tech–pharmaceutical industry firms. Consistent with similar
examinations, we operationalized the portfolio and network variables
using all alliances formed in the pharmaceutical-biotech industry and as
reported in the Recap data, and not only the alliances included in the
study (Hoang & Rothaermel, 2010).
3.2. Measures
3.2.1. Joint R&D project performance
Joint R&D project performance takes a value of 1 for success and
0 otherwise. A R&D project is coded as successful when the pre-
determined goals of the alliance have been achieved. A firm’s alliance
portfolio includes alliances for drug discovery and/or development.
Consistent with Prabhu et al. (2005) and practice, we deem R&D pro­
jects with a pre-specified goal of discovery successful when the drug
reaches clinical trials. Moreover, R&D projects with the goal of either
development or discovery and development are deemed successful if the
drug receives regulatory approval. We find that 26% of joint R&D pro­
jects were successful.
3.2.2. Predictor variables
Table 2 summarizes the operationalization of each of the hypothe­
sized predictors of joint R&D project performance.
Alliance Portfolio Exploration: Alliance portfolio exploration is the
extent to which the focal firm undertakes alliances across different
product-markets (Wuyts & Dutta, 2014). Following Powell, Koput, and
Smith-Doerr (1996) and similar to the well-known Herfindahl-Hirsch­
man index of industry concentration, we measure portfolio exploration
as.
S. Mani et al. Industrial Marketing Management 107 (2022) 238–252

Table 2
Variable operationalizations and data sources.
Construct Measure Data source

R&D project performance Alliance objective achieved: Yes/no? Pharmaprojects

Alliance Portfolio Characteristics

Alliance Portfolio
Exploration
Alliance Portfolio
Exploitation
Alliance Portfolio
Ambidexterity
∑ 2
(PBj.t) = 1- ρjt.m http://Recap.com
th
For the j firm, ρjt.m is the ratio of the cumulative surviving alliances in product-market segment m for firm j up to time t and
the total number of surviving alliances of firm j up to time t.
Number of prior alliances in the product-market segment for firm j up to time t http://Recap.com
Alliance portfolio ambidexterity = 1 and 0 otherwise
An alliance portoflio is considered ambideterous if alliance portfolio exploraiton and exploitation are between 0.2 and 0.8.

Contingency factors
Alliance Type Scale or link alliance, where scale =1and link = 0 http://Recap.com
Network Density Number of alliances in product-market m http://Recap.com
Number of potential alliances in product-market m

Controls
Firm age COMPUSTAT and Web
Assets and Working Capital Searches
Slack resources (return on sales) COMPUSTAT
Pharmaceutical firm as focal firm: Yes/no? COMPUSTAT,
Biotech firm as partner firm: Yes/no? Datastream,
Cultural fit: Yes/no? http://Recap.com
Relationship history: Yes/no? http://Recap.com
Alliance objective: discovery, development, or both http://Recap.com
Product-market of the alliance http://Recap.com
Year of alliance formation http://Recap.com
http://Recap.com
http://Recap.com

( ) ∑
PBj .t = 1 − ρ2 jt.m markets (exploitation).
m Alliance Type: we operationalize alliance type as a binary variable to
indicate whether the alliance is either scale or link. Scale alliances are
For the jth firm, ρjt.m is the ratio of the cumulative surviving alliances
noted in the Recap database as collaborative alliances that require close
in product-market m for firm j up to time t and the total number of
working arrangements between the firms in the alliance. In contrast, link
surviving alliances of firm j up to time t. A product-market refers to a set
alliances are defined in the Recap database as alliances that only require
of goods or services that serve similar functions and is used by similar
alliance partners to hand-off information to the counterpart. Alliance
consumers (Wuyts, Dutta, & Stremersch, 2004). Accordingly, we oper­
type takes a value of 1 for scale alliances and 0 otherwise.
ationalize the product-market m as the therapeutic area of the alliance.
Network Density: To capture interconnectedness among firms, we
Portfolio exploration includes all prior alliances of the firm; therefore,
articulate the network to include all firms with at least one alliance in
portfolio exploration equals 0 when a firm operates in a single product-
product-market m at time t. Network density is a ratio of all existing
market and tends toward 1 as firms operate in more product-markets.
alliances in a product-market to the maximum possible alliances in a
Our sample comprises 12 therapeutic areas (product-markets),
product-market (Mani & Luo, 2015). A high score indicates greater
including cancer, cardiovascular, and diabetes, among others. The use of
network density. The network density measure was computed using
product-markets to understand alliance portfolio management is
UCINET 5 for Windows (Borgatti, Everett, & Freeman, 1999).
consistent with practice, where alliances are managed by product-
markets (The Post, 2022).
3.2.3. Control variables
Alliance Portfolio Exploitation: alliance portfolio exploitation is the
We control for numerous firm- and alliance-level variables that have
total number of alliances the focal firm undertakes in one product-
been shown to affect R&D project performance. We control for the
market (Cui, 2013; Hoang & Rothaermel, 2005). Consistent with prior
following firm-level variables – firm age, assets, working capital, slack
measures, we assess this variable as the cumulative number of surviving
resources, and the firm type. Firm age is the age of the firm, in years.
alliances for each firm j up to time t. This measure, therefore, records the
Assets are measured as the total assets of the firm (millions of dollars).
complete history of then-current non-equity alliances in a product-
We also control for the availability of slack resources by including firms’
market, and is not limited to alliances for which we have R&D project
return on sales. To control for firm type, we create two dummy variables
performance data.
to control for the involvement of pharmaceutical or biotech firms in the
Alliance Portfolio Ambidexterity: Alliance portfolio ambidexterity is
alliance. The variable pharmaceutical equals 1, if the focal firm is
measured using a categorical variable based on both alliance portfolio
pharmaceutical and 0 otherwise. Similarly, the variable biotech equals
exploration and exploitation. Alliance portfolio exploration is an index
1, if the alliance partner is a biotech firm and 0 otherwise.
between 0 and 1. We also create an index between 0 and 1 for alliance
We control for alliance-level variables including — cultural fit,
portfolio exploitation to compute the measure of alliance portfolio
relationship history, the objective of the R&D project (alliance objec­
ambidexterity. We divide the number of alliances within a product-
tive), and the year of alliance formation. Prior research posits that cul­
market by the total number of alliances. Following Lin et al. (2007),
tural fit or similarity between organizations is an important determinant
we then compute alliance portfolio ambidexterity as a categorical var­
of R&D project success (Sivadas & Dwyer, 2000). Accordingly, alliances
iable =1, where both the alliance portfolio exploration and exploitation
between two pharmaceutical firms or two biotechnology firms are more
indices are between 0.2 and 0.8. This captures the moderate levels of
likely to succeed. Cultural fit takes the value of 1 where alliances are
alliances in diverse product-markets (exploration) and within product-

244
S. Mani et al. Industrial Marketing Management 107 (2022) 238–252

between either pharmaceutical firms or biotech firms. And it takes a

− 0.57
value of 0 for alliances between pharmaceutical and biotech firms.

15
Firms that have worked together in the past learn from each other
and have a greater understanding of the working arrangements thereby
improving their odds of success (Zollo, Reuer, & Singh, 2002). We thus

− 0.07
0.03
control for the relationship history between the alliance partners using a

14
dichotomous measure, coded 1 if the firms had prior alliances and
0 otherwise. Alliances formed with different objectives, whether dis­

− 0.10
− 0.04
0.04
covery, development, or discovery and development, involve varied

13
skills and different time lengths for execution. To account for any per­
formance differences attributable to the alliance objective, we control

− 0.34

− 0.17
0.13
0.10
for specific objective(s) with additional dummy variables to account for

12
discovery only, development only, relative to the base category of dis­
covery and development alliances. We also control for different product-

− 0.05
− 0.81
markets using dummy variables. Finally, we control for the year of

0.06
0.00
0.04
11
alliance formation to control for any time effects. In Table 3 we report
the summary statistics.

− 0.02
− 0.12
0.14

0.04
0.01
0.02
10
3.3. Model specification

Our model specification accounts for our research objectives and

− 0.08
− 0.05

− 0.04
0.01

0.10
0.01

0.08
three key features of our data. First, the model specification accounts for

9
the dichotomous nature of the outcome, whether the joint R&D project
is successful or not. Second, firms also engage in multiple alliances, and

− 0.22
− 0.04

− 0.06
0.84
0.01

0.20
0.02

0.07
unobserved firm-specific idiosyncrasies are common to all the alliances

8
of that firm. Third, the decision to engage in multiple alliances is not
random, but rather, a strategic choice made by firms. Thus, alliance

− 0.14
− 0.10

− 0.11
− 0.19
− 0.01

− 0.05
0.12
0.27

0.05
portfolio exploration, alliance portfolio exploitation, and alliance port­

7
folio ambidexterity are all endogenous in nature. Ignoring the endoge­
neity of these strategic decisions of the firms may lead to biased and

− 0.05
0.03
0.03
0.05
0.03
0.03
0.05

0.04
0.00
0.07
misleading conclusions (Angrist & Pischke, 2008). To address these, we
6

specify a random-effects logit model that accounts for the dichotomous

nature of the dependent variable and the unobserved firm-specific idi­

− 0.04

− 0.04
− 0.09

− 0.31
osyncrasies. We use the control function approach to account for the

Note: All correlations greater than the absolute value of 0.08 are significant (p < .1).* in millions of dollars.
0.04
0.00
0.03

0.02
0.07
0.03
0.22
endogenous nature of the alliance portfolio characteristics.
5

− 0.13

− 0.02
− 0.10
3.3.1. Endogeneity correction
0.01
0.00
0.11
0.04

0.06
0.09
0.02
0.05
0.02
We correct for potential endogeneity of alliance portfolio charac­
4

teristics with the control function approach (Petrin & Train, 2010; York,
Vedula, & Lenox, 2018). The control function approach is appropriate
− 0.35

− 0.17
− 0.17

− 0.06
− 0.01

− 0.05
0.02
0.01

0.01

0.07
0.08
0.06

0.02
when researchers are interested in the heterogeneous effect of endoge­
3

nous regressors (Gretz & Malshe, 2019). We account for the endogeneity
of alliance portfolio exploration, exploitation, and ambidexterity with
− 0.14

− 0.27

− 0.20
− 0.15

− 0.01
− 0.11

− 0.08
0.35

0.09

0.18

0.19
0.19

0.10
0.07
three first-stage auxiliary regressions, where the endogenous alliance
2

portfolio characteristic is the dependent variable. In each of the first-

stage regressions for alliance portfolio exploration and exploitation,
− 0.08

− 0.14
0.01
0.01
0.09
0.04
0.00
0.03
0.02
0.02

0.05

0.00
0.01
0.11
0.07

we use the corresponding mean level of the portfolio characteristic

1

across all firms excluding the focal firm j, lagged one year as the in­
strument (Antia, Mani, & Wathne, 2017). We expect firms to imitate
53.42
248.6
759.6
0.44
0.21
3.51
0.34

0.01

1.25
0.43
0.27
0.46
0.47
0.45

other firms in the industry in their alliance portfolio decisions (Ger­

0.5

0.5
SD

mann, Ebbes, & Grewal, 2015). The industry-level mean portfolio

characteristic (exploration and exploitation) is likely to affect the focal
200.20
81.94
76.75

firm’s alliance portfolio, but not on the performance of one individual

Mean

0.27
0.76
3.12
0.13
0.47
0.01

0.01
0.76
0.92
0.30
0.33
0.29
0.45
Descriptive statistics and correlations table.

R&D project. Thus, for the two first-stage regressions (Eqs. (1) and (2)),
we regress alliance portfolio exploration and exploitation on the corre­
sponding instrument, alliance type, and network density, and all the
(16) Alliance objective – Development
(4) Alliance portfolio ambidexterity

(15) Alliance objective – Discovery

control variables (controls). For alliance portfolio ambidexterity, we

(3) Alliance portfolio exploitation
(2) Alliance portfolio exploration

regress the endogenous regressor on the industry-mean levels of alliance

(1) R&D project performance

portfolio exploration and exploitation (Eq. (3)) along with alliance type,
(11) Pharmaceutical firm

(14) Relationship history

network density, and controls.

(9) Working capital*
(10) Slack resources
(6) network density

(12) Biotech Firm

(5) Scale alliance

Explrij = β10 + β11 MeanExplrjt− 1 + β12 Sci + β13 Denjt + Σβ1k controls + ε1ij
(13) Cultural fit

(1)
(7) Firm age
(8) Assets*
Variables
Table 3

Expltij = β20 + β21 MeanExpltjt− 1 + β22 Sci + β23 Denjt + Σβ2k controls + ε2ij
(2)

245
S. Mani et al.
Ambiij = β30 + β31 MeanExplrjt− 1 + β33 MeanExpltjt− 1 + β33 Sci + β34‘ Denjt
+ Σβ3k controls + ε3ij
(3)
where, Explr is alliance portfolio exploration of alliance i of firm j, Explt
is alliance portfolio exploitation of alliance i of firm j, Ambi is alliance
portfolio ambidexterity of alliance i of firm j, Sc is alliance typei (scale),
Den is network density of firm j in year t, and controls is a vector of both
firm- and alliance-level control variables.
We empirically tested if the instruments met the requirements of
relevance. First, the Cragg Donald Wald F-statistic for each of the three
first-stage auxiliary equations was above the rule of thumb of 10 (Staiger
& Stock, 1997). This suggests that our instruments were valid as our
excluded instruments were strongly correlated with the corresponding
endogenous regressors. Following Petrin and Train’s (2010) procedure
for each of the three endogenous regressors, we retain the residuals
explrresij, expltresij, and ambrresij from Eqs. (1), (2), and (3). We add
these residuals as control variables in the final model (Eq. (4)). Our
regression model also accounts for the dichotomous nature of the
outcome variable and firm-specific unobserved heterogeneity by speci­
fying a random intercept logit model (Greene, 2001).
Y* ij =β40 + β41 Explrij + β42 Expltij + β43 Ambiij + β44 Sci + β45 Denjt + β46 Explrij x Sci + β47 Expltij x Sci + β48 Explrij x Denjt + β49 Expltij x Denjt + β410 Explrresij
+ β411 Expltresij + β412 Ambrresij + Σβ4k controls + μj + ε4ij
where, yij = 1 if yij* > 0, and 0 otherwise; yij = 1 if alliance i of firm j’s
R&D project is successful; where k ranges from 13 to 34. The probability
of alliance i of firm j being successful is given by:
( ′ )
( ) exp β xij
Pr yij = 1 = ( ′ )
1 + exp β xij
We estimate the parameters using maximum likelihood estimation
using Stata 17.0. We estimate the model with 575 alliances because of
the inclusion of lagged instruments in Eqs. (1), (2), and (3).
The variance inflation factor (VIF) was well below the standard
cutoff of 10. This suggests multicollinearity is not a problem. Prior to
estimating the regression model, we standardize the hypothesized var­
iables of alliance portfolio exploration, alliance portfolio exploitation,
and network density so that coefficients can be easily interpreted and
compared. Alliance portfolio ambidexterity and alliance type are binary
variables and thus are not standardized.
4. Results
This study assesses the impact of alliance portfolios on the likelihood
of R&D project success, which we refer to as R&D project performance.
To rule out alternative explanations of the drivers of R&D project per­
formance, we specify the models sequentially, including the main effects
and the control variables (see Model I of Table 4). To avoid high cor­
relations between the interaction terms, we test the hypotheses using a
blockwise hierarchical model (Elvira & Cohen, 2001; Wang et al., 2020).
In the second model, we add the hypothesized interaction terms be­
tween alliance portfolio exploration and exploitation and alliance type,
(see Model II of Table 4). Finally, we specify a third model, which in­
cludes the hypothesized interaction terms with network density. The
results appear in Model III of Table 4. We assess the model-fit using the
McKelvey & Zavoina Pseudo R-square for the random effects logit model
using the r2_mz command in STATA (Enzmann, 2012). The r-square for
246
Industrial Marketing Management 107 (2022) 238–252
models I, II, and III are 0.22, 0.24, and 0.31, respectively. The tables
were created using the asdoc command in STATA (Shah, 2018).
We test hypotheses H1, H2, and H3a using Model I. In H1, H2, and H3a,
we argue that alliance portfolio exploration, exploitation, and ambi­
dexterity positively affect R&D project performance. We find support for
these three hypotheses, as the coefficients are positive and significant
(b41 = 0.583, p < .1; b42 = 9.688, p < .01; b43 = 10.368, p < .01,
respectively).
In hypotheses H3b and H3c, we hypothesize that a firm’s alliance
portfolio ambidexterity exerts a positive effect on R&D project perfor­
mance and this effect is stronger than that of alliance portfolio explo­
ration (H3b) or exploitation (H3c). We conduct a post estimation test in
STATA, where the null hypothesis is that the coefficients are equal. For
both H3b and H3c, we reject the null hypotheses of equal coefficient (p <
.001 and p < .1). Comparing the standardized coefficients from Model I
of Table 4, we can state that alliance portfolio ambidexterity exerts a
stronger positive influence on R&D project performance after account­
ing for alliance portfolio exploration and exploitation, in support of H3b
and H3c.
In H4a, we hypothesize scale alliances, as compared to link alliances,
strengthen the positive relationship between alliance portfolio explo­
ration and joint R&D project performance. We find support for H4a,
(4)
using Model II, as the coefficient is positive and significant (b46 = 0.683,
p < .05). We do not find support for H4b, in which we hypothesize that
scale alliances strengthen the relationship between alliance portfolio
exploitation and R&D project performance; the coefficient is negative
and significant (b47 = − 0.471, p < .05). We find evidence for H5a and
H5b, using Model III, as the interaction terms are significant in the hy­
pothesized direction (b48 = 0.639, p < .05 and b49 = − 0.516, p < .1,
respectively). Thus, network density positively moderates the alliance
portfolio exploration (H5a)- and negatively moderates the alliance
portfolio exploitation (H5b)- and joint R&D project performance
relationship.
We control for firm- and alliance-level factors that can influence the
joint R&D project performance. Firm age (b13 = 0.007, p < .05), assets
(b14 = 0.000, p < .1) and working capital (b15 = 0.000, p < .05) posi­
tively affect R&D project performance. As indicated by return on sales,
the availability of slack resources negatively affects R&D project per­
formance (b16 = − 0.707, p < .05). If the focal firm is a pharmaceutical
firm rather than a biotech firm (b17 = − 3.450, p < .01) and alliances
formed with biotech firms as partner firms (b18 = − 5.569, p < .01)
negatively influence R&D project performance.
We find that alliance-level factors also influence R&D project per­
formance. A cultural fit between the alliance partners (i.e., both the focal
firm and its partner are of the same type – pharmaceutical or biotech),
negatively influences R&D project performance when there is a lack of
such fit (b19 = − 3.012, p < .01). Relationship history between alliance
partners has no effect on R&D project performance (b20 = − 0.168, n.s.).
We find that alliances with a single objective of development do not
have a different effect on R&D project performance than the alliances
with a dual objective of both discovery and development (b21 = 0.608,
n.s.). However, we find that alliances with a single objective of devel­
opment positively affects R&D project performance than do alliances
with a dual objective of both discovery and development (b22 = 1.112, p
< .01). Finally, the product-market dummy variables and year of alli­
ance formation also influence R&D project performance.
S. Mani et al. Industrial Marketing Management 107 (2022) 238–252

4.1. Robustness checks Table 4

Random effects logit model – R&D project performance (N = 575).
We conducted four robustness checks by re-estimating Eq. (4). First, (Model I) (Model II) (Model III)
we conducted residual analysis and removed outlier observations (95th
Main Interactions - Interactions -
percentile and above) with respect to alliance portfolio exploration and effects alliance type network density
exploitation and find that the hypothesized results hold. Second, we also
Intercept 13.030*** 13.178*** 11.085**
estimated a random-effects model, ignoring the dichotomous nature of (3.002) (3.012) (2.419)
the dependent variable; the results were substantively similar to the Alliance Portfolio 0.583* 0.344 0.308
ones reported in Table 4. All results hold, except the interaction between Exploration
alliance portfolio exploitation and network density is not significant. (1.913) (1.080) (0.916)
Alliance Portfolio 9.688*** 9.940*** 7.715**
Third, we observed that the bivariate correlations between two sets of
Exploitation
control variables were greater than 0.8. Even though the VIF for the full (3.269) (3.307) (2.545)
model was less than 10, we checked if dropping the control variables Alliance Portfolio 10.368*** 10.367*** 8.155**
affected the results. Specifically, the correlation between working cap­ Ambidexterity
ital and assets and the correlation between cultural fit and firm type (3.228) (3.184) (2.553)
Scale Alliance 0.960*** 0.904*** 0.923***
(pharmaceutical) were high. In each case, we dropped one of the control (3.265) (3.005) (3.248)
variables that have high correlation and re-estimated the model. For Network Density − 1.621*** − 1.655*** − 1.835***
example, we dropped assets and re-estimated the model. Similarly, we (− 3.155) (− 3.183) (− 2.837)
dropped cultural fit and re-estimated the model. In each case, we find Alliance Portfolio 0.683**
Exploration x Scale
that there was no change in the substantive results. Finally, we assessed
Alliance
the robustness of the results to the measure of ambidexterity. Alliance (2.048)
portfolio ambidexterity was given a value of 1, where both the alliance Alliance Portfolio − 0.471**
portfolio exploration and exploitation indices were between 0.25 and Exploitation x Scale
0.75 (and between 0.3 and 0.7). All results were as reported in Table 4, Alliance
(− 2.060)
except for the interaction of alliance portfolio exploitation and network Alliance Portfolio 0.639**
density. Thus, our results are robust to potential outliers, alternate Exploration x Network
model specifications, potential collinearity between the control vari­ Density
ables, and alternate measures of ambidexterity. (2.452)
Alliance Portfolio − 0.516*
Exploitation x Network
4.2. Post hoc probing of significant moderators Density
(− 1.750)
As R&D project performance is a binary variable, the likelihood of Residuals - Alliance − 9.625*** − 9.681*** − 7.869***
R&D project success is between 0 and 1. In Fig. 2, Panel A (Panel B) Portfolio Exploration
(− 3.250) (− 3.236) (− 2.602)
graphically depicts the interaction between alliance portfolio explora­ Residuals - Alliance − 0.650* − 0.600* − 0.423
tion (portfolio exploitation) and scale alliances. We conducted a simple Portfolio Exploration
slopes analysis to assess the significant interactions (Aiken & West, (− 1.931) (− 1.769) (− 1.187)
1991). We plotted high (mean + 1 standard deviation) and low network Residuals - Alliance − 9.761*** − 9.744*** − 7.550**
Portfolio Ambidexterity
density (mean − 1 standard deviation). Under the condition of high
(− 3.037) (− 2.988) (− 2.359)
network density (mean + 1 SD), alliance portfolio exploration (1.13, p < Firm Age 0.007** 0.007** 0.006*
.01; Fig. 3, Panel A) and alliance portfolio exploitation (6.45, p < .01; (2.078) (2.176) (1.887)
Fig. 3, Panel B) positively affect R&D project performance. Under con­ Assets 0.000* 0.000 0.000*
ditions of low network density, portfolio exploration had no effect on the (1.789) (1.634) (1.730)
Working Capital 0.000** 0.000** 0.000*
R&D project performance (0.00, n.s.; Fig. 3, Panel A), while alliance
(2.394) (2.435) (1.727)
portfolio exploitation continued to exert a positive influence on R&D Slack Resources − 0.707** − 0.744** − 0.595**
project performance (7.24 p < .01; Fig. 3, Panel B). (− 2.102) (− 2.114) (− 1.992)
Pharmaceutical Firm − 3.450*** − 3.488*** − 2.571**
(− 2.932) (− 2.931) (− 2.145)
5. Discussion
Biotech Firm − 5.569*** − 5.600*** − 4.626***
(− 4.031) (− 4.008) (− 3.317)
5.1. Conclusion Cultural Fit − 3.012*** − 3.040*** − 2.354**
(− 3.292) (− 3.275) (− 2.554)
This research examines the effects of firms’ alliance portfolio char­ Relationship History − 0.168 − 0.150 − 0.025
(− 0.683) (− 0.604) (− 0.098)
acteristics on joint R&D project performance. We carefully collect data
Alliance Objective - 0.608 0.649* 0.749*
on observed R&D project performance and correct for the endogeneity Discovery
of portfolio characteristics and have three main findings. First, we find (1.558) (1.652) (1.899)
that alliance portfolio exploration and exploitation improve joint R&D Alliance Objective - 1.112*** 1.194*** 1.134***
Development
project performance. Second, alliance portfolio ambidexterity generates
(3.363) (3.562) (3.408)
better outcomes than either portfolio exploration or exploitation. Year Dummy & Product- YES YES YES
Finally, we find two moderators that intervene the impact of alliance Market Dummy
portfolios on R&D project performance. Specifically, scale alliances and R-square 0.22 0.24 0.31
network density reinforce the positive effect of portfolio exploration on t-values are in parentheses; *** p < .01, ** p < .05, * p < .1 (two-tailed).
R&D project performance. However, scale alliances and network density
diminish the impact of portfolio exploitation on R&D project
5.2. Theoretical implications
performance.
Our first contribution is the concurrent examination of alliance
portfolio exploration and exploitation’s effect on R&D project

247
S. Mani et al.
Fig. 2. Interaction effects –alliance type.
Alliance portfolio exploration and alliance type (Panel A).
Alliance portfolio exploitation and alliance type (Panel B).
performance. We theorize and empirically examine the role of both
portfolio exploration and exploitation. Because individual alliances are
part of a firm’s overall alliance portfolio, they learn from other alliances
in the portfolio. Our examination of alliance portfolio exploration and
exploitation contributes to the extant body of research using the
exploration-exploitation framework (Cui, 2013; Griffith, Dean, & Yal­
cinkaya, 2021; Wuyts & Dutta, 2014). We find that alliance portfolio
characteristics play a role in the success of the joint R&D projects — a
critical non-financial operational performance variable. In doing so, our
research extends the multi-level research on marketing and manage­
ment phenomena by putting the lens on the alliance portfolios and
performance (Makkonen, Aarikka-Stenroos, & Olkkonen, 2012; Ojasalo,
2004). Research on alliance portfolios has mostly focused on firm-level
outcomes such as stock returns. However, findings from the firm level
248
Industrial Marketing Management 107 (2022) 238–252
may not apply to other levels such as alliance level (Ployhart & Moli­
terno, 2011). Our study examines the effect of firm-level alliance port­
folio characteristics on alliance-level outcome — joint R&D project
performance. It also examines contingency factors at the alliance- and
network-levels. The nuanced findings highlight the need to examine
alliance portfolio characteristics and contingency factors at multiple
levels (alliance and network).
Our second contribution is the confirmation of alliance portfolio
ambidexterity’s positive impact on R&D project performance. We treat a
firm’s alliance portfolio ambidexterity as moderate level of alliances
across different and within product-markets. We find that alliance
portfolio ambidexterity improves R&D project performance, and this
effect is stronger than alliance portfolio exploration or exploitation
alone. This finding adds to the growing literature on the prominence of
S. Mani et al.
Fig. 3. Interaction effects – network density.
Alliance portfolio exploration and network density (Panel A).
Alliance portfolio exploitation and network density (Panel B).
an organization’s capability to simultaneously perform two different
activities (e.g., Luger et al., 2018; Tse et al., 2019). Prior research on
ambidexterity has “focused on the identification of antecedents of
ambidexterity” (Zhang et al., 2016, p. 140), and our research contributes
to the literature by shedding light on the outcome of ambidexterity. It
suggests that firms avoid both the “success trap” and the “failure trap”
through alliance portfolio ambidexterity.
The third contribution is with respect to our findings on network
density. Prior work on networks discusses the upside and downside of
dense networks (Mani & Luo, 2015). Dense networks create opportu­
nities to share fine-grained tacit knowledge while enforcing behavioral
norms to reduce the risk of partner opportunism among firms embedded
249
Industrial Marketing Management 107 (2022) 238–252
in them (Tse et al., 2019). We find that firms in dense networks, as
compared to those in sparse networks, can better leverage the strengths
of alliance portfolio exploration to improve R&D project performance.
Alliance partners embedded in a dense network are more willing to
share unique information with their counterparts. Partners’ sharing of
unique information makes joint R&D projects more likely to succeed.
Our finding extends Tse et al.’s (2019) finding on network density’s role
in improving relational performance. Specifically, Tse and colleagues
show how network density mitigates opportunism while we show that
network density can strengthen or mitigate R&D project performance.
Firms managing many alliances within a product market (i.e., high
alliance portfolio exploitation) are likely to receive redundant
S. Mani et al.
information from their alliance partners; being embedded in a dense
network increases access to even more redundant information. There­
fore, network density intervenes the impact of alliance portfolio explo­
ration and exploitation in opposing directions.
Fourth, this study contributes to our understanding of alliance type
and its implication on R&D project performance. The results of our study
show that scale alliances strengthen the impact of alliance portfolio
exploration on project performance. Consistent with prior research, we
find support for the complementary role of scale alliances (Kalaignanam
et al., 2007). Contrary to our hypothesis, however, scale alliances
weaken the relationship between alliance portfolio exploitation and
R&D project performance. Although scale alliances create greater op­
portunities for joint working, they demand higher coordination costs
than link alliances (Van Den Oever & Martin, 2019). This weakening
effect of scale alliances is consistent with White and Siu-Yun Lui (2005)
and Mani (2016), which find that the easy transfer of know-how through
a link alliance reduces coordination costs. Our results suggest that alli­
ance portfolio (exploration and exploitation) should be a good fit with
alliance type (scale vs. link) to achieve optimal results in joint R&D
projects.
5.3. Managerial implications
We offer several recommendations to managers involved in forming
and managing alliances in high R&D intensive industries. First, man­
agers building an alliance portfolio should pay attention to both the
number of alliances within a product-market and the diversity of alli­
ances across product-markets. The benefits of efficiency from exploita­
tion and flexibility from exploration contribute to the success of joint
R&D projects. More importantly, as alliance portfolio ambidexterity
enhances R&D project performance to a greater extent, managers are
recommended to maintain a moderate level of alliances within and
across product-markets. This approach can mitigate the risk of over-
refinement (excessive alliance portfolio exploitation) as well as reduce
the risk of overly experimentation (excessive alliance portfolio explo­
ration). Maintaining alliance portfolio ambidexterity allows firms to
balance and learn from both alliance portfolio exploration and
exploitation.
Second, our findings on alliance type shed light on work-sharing
arrangements (i.e., how alliance partners share the work between
themselves) that are critical in alliance management. According to the
Association of Strategic Alliance Professionals, “work-sharing will be an
issue. Talk about it” (Strategicalliances.Org, 2022). Our findings suggest
that alliance managers should pursue scale alliances rather than link
alliances when working in diverse product-markets. In their negotia­
tions with alliance partners, firms with a diverse alliance portfolio
should focus on a collaborative work-sharing arrangement (scale alli­
ance). While firms with large number of alliances within a product-
market should focus on a more hands-off approach (link alliance).
Our findings on the performance benefits of being in a dense network
contradict managers’ tendency to avoid too much competition, and our
results encourage firms to seek out the competition. Specifically, when
firms engage in alliances in diverse product-markets, they should pursue
markets that are characterized with close ties among competitors.
Participating in product-markets with dense networks can provide
unique and valuable information, and the dense networks secure trust­
worthy relationships and reduce the costs of alliance monitoring.
Finally, there are also some words of caution for managers. The cost
of managing alliances across and within product-markets are not trivial.
Our research suggests that the downsides of alliance portfolios may
emerge under certain conditions. Specifically, the cost of redundant
information from scale alliances or a dense network adversely affects
R&D project performance for firms with alliance portfolios that are
exploitative in nature. Thus, firms need to simultaneously evaluate their
alliance portfolio (exploration vs. exploitation), alliance cooperation
strategy (e.g., scale vs. link) and network characteristics (e.g., network
250
Industrial Marketing Management 107 (2022) 238–252
density).
In conclusion, firms are more likely to reap additional benefits of
alliance portfolio exploration if they can engage in collaborative re­
lationships with their alliance partners or when they are embedded in a
network of dense ties. Following the best practices recommended in this
study can significantly improve alliance success.
5.4. Limitations and future research
Our study is subject to a few limitations. First, we test our hypotheses
in the context of a single industry. The biopharmaceutical industry,
despite its unique characteristics, is comparable to other high-tech in­
dustries whose survival is dependent on continuous research and
development (Sharma, Saboo, & Kumar, 2018). The internal validity of
this research is enhanced by its confinement within a single industry, as
it reduces the level of exposedness to causes of extraneous variance.
Future research can examine R&D projects across multiple industries
and improve the generalizability of this study’s findings. Second, this
research assumes all alliances within an alliance portfolio are equally
important for the firm. However, as R&D alliances usually last for many
years, priorities are likely to change. Understanding the relative
importance of an alliance within an alliance portfolio will require in-
depth measures of alliance characteristics; this is not feasible with the
current research design. Therefore, future research can conduct a lon­
gitudinal study that employs both survey-based and archival data to
determine the relative importance of every alliance in an alliance
portfolio and examine how it affects project performance. Third,
alliance-based R&D project performance is a long-term performance
measure, and like any other performance measure, it has its limitations.
Future research can evaluate the effect of alliance portfolio character­
istics on other short-term alliance-level performance variables, such as
satisfaction with the alliance relationship and the achievement of annual
alliance-based goals.
Data availability
The authors do not have permission to share data.
Acknowledgements
The authors thank Kersi Antia and Rajesh Chandy for their sugges­
tions on a previous version of this research. The first author acknowl­
edges the financial support from the Ivey Biotechnology Center, Western
University. The authors thank Karan Gupta and Nosheen Munir for their
assistance. They also sincerely thank the review team for their insightful
comments.
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