Managing Exploration and Exploitation in Alliance Portfolio: When one plus one is more than two

This study advances the on-going debate on importance of balancing exploration and exploitation activities across their organizational boundaries. Basing our work on the assumption that balance is needed ; we empirically test whether firms need to forward their attention to exploration and/or exploitation activities in alliance context. Using a large panel of innovative firms in the 13 countries, this study shows that exploration oriented alliances in a firm’s alliance portfolio have a positive effect on firm’s innovation performance, while exploitation oriented alliances exhibit negative ones. Our analysis confirm foundation in earlier work, that balancing exploration and exploitation activities are beneficial, and that exploring via externally oriented levels such as alliances enhances firms innovation performance, but not vice versa.