ALLIANCE PORTFOLIO DIVERSITY AND FIRM PERFORMANCE

Group 1

This Paper Represents…Comprehensive Construct of Alliance Portfolio Diversity

Introduction

• Strategic Alliance

• Alliance Portfolio Diversity

• Firm’s Performance

A Strategic Alliance is a relationship between two or more parties to pursue a set of agreed upon goals or to meet a critical business need while remaining independent organizations.

Variance in partner’s resources, capabilities & background.

Performance factors include variables: Economic Variables Organizational Variables Integrated Variables

Major Category of this literature

Firm Level Perspective

Network Perspective

Principle Unit Analysis

Theory & HypothesisPartner Diversity

Partner Diversity

Type 1

Type 2

Theory and Hypothesis (contd.)

• Industry Diversity• Partnering in Upstream or Downstream

Theory and Hypothesis (contd.)

• Hypothesis 1a:

• Industry Diversity and Firm Performance

Fahim takes over

Theory and Hypothesis (contd.)

• National Diversity

• Five dimensions of pitfalls

• Societal Cultural

• National Context

• Corporate Culture

• Strategic Direction

• Management Policies

Theory and Hypothesis (contd.)

• Hypothesis 1b:

• National Diversity and Firm Performance

Theory and Hypothesis (contd.)

• Organizational Diversity

• Benefits:

• Learning capabilities

• Resource access

• Pitfalls: Different Goals & Decision making process cause

• Coordination & Communication Difficulties; hence

enhanced managerial costs

Theory and Hypothesis (contd.)

• Hypothesis 1c

• Organizational Diversity and Firm Performance

Imtiaz kicks in…

Theory and Hypothesis (contd.)

• Functional Diversity

• MMD alliances [exploitation]

• R&D [exploration]

R&D MMD

Theory and Hypothesis (contd.)

• Hypothesis 2:

• Functional Diversity & Firm Performance

GS

Performance

FD

Performance

Theory and Hypothesis (contd.)

• Governance Diversity

• Different structures - Different implications

Governance Structure

cture

re

Theory and Hypothesis (concludes)

• Hypothesis 3:

• Governance Diversity and Firm Performance

GS

Performance

Method• Dependent Variable: Performance Measure

• Performance Measure: Average Net Profit of 5 years

• Independent & Control Variables: • Industry Diversity

• Organizational Diversity

• Functional Diversity

• Governance Diversity

• National Diversity

• Method Used: Generalized Least Square Regression Analysis

• Hypothesis 1a:

• Industry Diversity and Firm Performance

Results

Theory and Hypothesis (contd.)

• Hypothesis 1b:

• National Diversity and Firm Performance

Theory and Hypothesis (contd.)

• Hypothesis 1c

• Organizational Diversity and Firm Performance

Theory and Hypothesis (contd.)

• Hypothesis 2:

• Functional Diversity & Firm Performance

GS

Performance

FD

Performance

Theory and Hypothesis (concludes)

• Hypothesis 3:

• Governance Diversity and Firm Performance

GS

Performance

Khalid Concludes!

Discussion & Conclusion

• Relationship is complex

• Results highlight the tradeoffs

• Greater Org. & Fn. Diversity

• Greater Gov. Diversity

Discussion & Conclusion (contd.)

Discussion & Conclusion (contd.)

• Should consider collaboration

• to access diverse pool of resources and knowledge

• Use alliances for different value chain activities

• to enhance value creation and flexibility

Discussion & Conclusion (concludes)

• Overly Zealous in creating too much diversity

• One industry design