1044 N. I-ahiri and S.
Narayanan
(e.g., Armour and Teece, 1980; Wemerfelt, 1984).
Recent work also suggests that VI firms engage
in a portfolio of alliances in activities that they
pursue in-house (e.g., Harrigan, 1984; Rothaer-
mel et al-,2006)- Accordingly, vertical scope is
an important choice that detemrines the extent to
which focal firms benefit from ailiance portfo-
lio configuration in both innovation and financial
performance. However, current literature offers
limited understanding of how VI firms differ
from VS firms in their ability to utilize alliance
portfolios to increase innovation and financial
performance.
Third, much of thc prior work on the impact of
APS focuses on innovation performance as an out-
come. In comparison, relatively little attention has
been paid to a firm's financial performance (Lavie,
2AO7). Moreover, the existing evidence of the
impact of APS on financial performance is mixed
(Lavie, 2ffi1). Research indicates that partner-
specific experience may have limited influence in
driving economic performance of the focal firm
(Goerzen, 2007; Hoang and Rothaermel, 2005).
For example, on one hand, Goerzen (2@7) finds
that repeated equity-based partnerships result in
inferior economic perforrnance for the focal fum.
Similarly, Hoang and Rothaermel (2005) find a
diminishing effect of firms' alliance experience
on R&D project performarce. On the other hand,
prior studies that have identified firms' ability to
manage alliance porttblios, and the relevant experi-
ence that alliance portfolios bring as a predictor of
alliance perfonnance, have revealed mixed or lim-
ited ernpirical support (Anand and Khanna, 2000;
Merchant and Schendel, 20m). Anand and Khanna
(2000) find significant leaming erTects for focal
firnrs but only in marraging a large number of
alliances of certain types, such as R&D alliances
and joint ventures. Our research contributes to the
understqnding of the impact of APS by focusing
on boundary conditions.
Finally, the importance cf our research needs to
be evaluated in the context of trade-offs that firms
face in using a portfolio of alliances as means to
gain capabilities. On one hand, engaging simul-
taneously in multiple alliances helps firms remain
flexible in response to changes in technology,
demand uncertainty, and reducing product-market
cycle times by accessing partner capabilities
(D'Aveni and llinitch, 1992; Hanigan, [984). On
the other hand, engaging in multiple alliances
simultaneously may also result in the depreciation
Copyrighr O 2013 John Wiley & Sons, Ltd.
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All
of existing capabilities and the failure to seize new
opportunities, leading to a drop in firm perfor-
mance (Bettis, Bradley, and Hamel, 1992; Quinn
and Hilmer, 1994). These have implications for
firms aspiring to utilize their internal knowledge
in combination with external knowledge from
multiple alliance partners to improve performance.
Our research attempts to investigate these trade-
offs by examining the contingencies that underpin
the impact of APS on innovation performance
and financial performance of the focal firm.l
We test our hypotheses using an unbalanced
panel of 282 publicly traded semiconductor firms
between 1991 and 2002. Our data comes from
multiple sources, including (l) SDC Thomson,
(2) Compustat and Global Vantage, (3) firm
boundary data collected tiom the semiconductor
industry association databases, and (4) patent data
from the United States Patents and Trademarks
Oflice (USPTO). Furthermorc, in line with the
objective of comparing portfolios of alliances
whose activities are performed in-house by VI
firms and not by VS firms, we focus on alliances
where the scope of activity is manufacturing. In
our sanrple, VI firms engage in both design and
manufacturing activities in-house while VS firms
engage only in design activities in-house.
The remainder of the paper is structured as fol-
lows. In the next section, we develop theory and
hypotheses. Following, we dcscribe our research
setting. data sources, measures, and the econo-
ntetric specification. We then describe the resuhs.
Finally, we discuss the theoretical and managerial
implications of our work and conclude.
THEORY AND HYPOTHESES
We define an alliance zls any independently initi-
ated interfirm link that involves exchange sharing
or codevelopment (Gulati, 1995). These include
joint ventures, R&D or production agreements,
marketing or distribution agreements, or technol-
ogy exchange. For the purpose of our analysis,
we consider only those alliances that have man-
ufacturing identified in their scope of activities.
The reasons for this are developed in detail in the
Measures section.
I In this papeq we use the terms financial performance
and firm
performance interchangeably.
Srrar. Mgmt. J.. 34: 1tX2- t064 (2013)
DOI: l0.lO02/smi
use subject to irttps:/lahout..istor org//ternls