Allying with large partners : Small firms’ alliance strategy in exploration and exploitation

Research output: Conference Papers (RGC: 31A, 31B, 32, 33)32_Refereed conference paper (no ISBN/ISSN)Not applicablepeer-review

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Original languageEnglish
StatePublished - 3 Aug 2012

Conference

TitleAnnual Conference of Academy of Management
PlaceUnited States
CityBoston, MA
Period3 - 7 August 2012

Abstract

How do small firms manage their alliance strategies with large firms? This study compares the relative impacts of exploration and exploitation alliances with large firms on the valuation of small firms. Specifically, we argue that exploitation alliances with large firms will usually generate greater benefits for small firms than exploration alliances given the inability of small firms to manage high-variance and high-return exploration alliances. However, if small firms are equipped with strong capabilities in technology and financing, they will better rein in exploration activities with large firms, leading to higher valuations from exploration alliances than from exploitation alliances. In addition, we argue that a match between alliance strategies (i.e., exploration versus exploitation) and appropriate governance modes (i.e., equity versus non-equity) increases the valuations of small firms. Analyses of the U.S. biotechnology industry from 1983 to 2001 largely support our hypotheses.

Citation Format(s)

Allying with large partners : Small firms’ alliance strategy in exploration and exploitation. / YANG, Haibin; Zheng, Yanfeng; Zhao, Xia.

2012. Paper presented at Annual Conference of Academy of Management, Boston, MA, United States.

Research output: Conference Papers (RGC: 31A, 31B, 32, 33)32_Refereed conference paper (no ISBN/ISSN)Not applicablepeer-review