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This paper explores how geographical diversity of an alliance portfolio benefits resource-based firm innovation. We propose that there are inverted U-shaped relationships between geographical diversity of an alliance portfolio and a firm’s radical and incremental innovation. In addition, resource characteristics and alliance governance structures are considered as important moderators between geographically diverse alliances and innovation. Relevant resources of alliance partners help focal firms to acquire valuable resources from different locations, thus improving organizational capabilities and achieving innovation. Governance structure choices concentrate on opportunism and transaction cost in coordinating resource sharing and recombination activities, which determine focal firms’ cost of knowledge management and then innovation outcome. Our research could advance the literature on alliance portfolio diversity by studying how firms use their alliance portfolio from diverse locations to recombine resources and then to enhance innovation, which remains less explored.

This paper analyzes the phenomenon of open innovation in three Brazilian Agricultural Research Corporation (Embrapa) units through the interaction of their alliance networks, internal resources, and capabilities through a multiple case study analysis. The results show the importance of open innovation for an agribusiness public research institute because balancing internal and external resources and capabilities improves innovation. A well-structured alliance portfolio helps to mitigate the most relevant internal weaknesses related to the innovation processes, leading to a better innovative capacity. This work finds evidence for the existence of complementarity between internal and external resources and capabilities. However, the organization must present some level of internal capabilities, especially related to innovative culture, if they wish to take full advantage of this complementarity.

Alliance portfolios are an important source of competitive advantage for firms. Diverse resources of partners contribute to enhancing firms' performance, but relationships among the firms' partners also influence the performance. This paper, employing an embeddedness lens, aims to examine how these relationships influence the firms' innovation performance. We confirm two-sided effects of embeddedness within alliance portfolios. While the focal firms increase the size of their portfolios, dense relationships among their partners increase the performance and competitive relationships weaken the performance. For the empirical test, we collected data on 1863 technology alliances between US biotechnology and multinational pharmaceutical companies. This study highlights how firms have to consider relationships among their partners when configuring their alliance portfolios to maximise innovation performance.

Building an alliance portfolio is an important knowledge-sourcing strategy for firms to create exploratory innovation. By proposing a framework of knowledge flow and search flexibility, we examine the effects of a firm’s network position and knowledge composition of the alliance portfolio on the creation of exploratory innovation. Particularly, we explore their interactions that create synergy and offset mutual disadvantages. Using panel data of 142 pharmaceutical companies from 1996 to 2010, we find that central and brokering positions have an inverted U-shape relationship with the creation of exploratory innovation. We also find two combinations of network position and knowledge composition advantageous for increasing exploratory innovation: a central position with partners’ wide scope of new knowledge, and a brokering position with partners’ wide scope of shared knowledge. This study contributes to the literature by identifying interaction effects between social network theory and the knowledge-based view and suggests implications for designing a firm’s alliance strategy.