The role of diversification profiles and dyadic characteristics in the formation of technological alliances: Differences between exploitation and exploration in a low-tech industry

Abstract

This paper posits that corporate and technological diversification of firms and their relatedness in terms of products and technologies will impact their propensity to form technological alliances. It argues that both higher levels of diversification and greater relatedness signal superior capabilities and available resources to prospective partners that will facilitate exploration and exploitation of technological assets in an alliance. These theoretical conjectures are tested using a dataset of all tire producers worldwide between 1985 and 1996 that combines detailed firm data on establishment, patenting, and alliance activities. The results indicate that complementarity in terms of corporate and technological diversification strategies, as well as partner characteristics (e.g., size, age, and technological capabilities) drive exploitation alliances. Moreover, firms with similar product portfolios are more likely to engage in exploitative interactions. In contrast, exploration alliances exhibit strong partner similarity across all firm characteristics. Both corporate and technological diversification have positive effects on firms' propensity to engage in exploration, while technological distance has a negative nonlinear one.