04.05.2011, Seminar Room, Department of Economics

“Exploration and Exploitation Alliances in Bio-Pharma: Do they Increase Innovation Performance?” (with Silvia Massini)

This study distinguishes between exploitation and exploration alliance portfolios to shed new light on the nature of firm innovation returns from alliances. Extant literature provides conflicting findings on innovation returns from alliances, while the role of alliance portfolios is little explored. This study develops two arguments. First, it contends that the relationship between alliance exploitation portfolios and firm innovation to resemble an inverted U. Second, it argues the effect of exploration alliance portfolios on firm innovations to be U-shaped. Testable hypotheses are explored in the context of the UK bio-pharmaceutical sector between 1991 and 2001. The results provide only weak support for the first hypothesis, while the second hypothesis is strongly supported. We derive important insights for the management of portfolios of innovation alliances.