Industry Cognitive Distance in Alliance Portfolios and Firm Innovation Performance

Filiou, Despoina and Massini, Silvia (2016). Industry Cognitive Distance in Alliance Portfolios and Firm Innovation Performance. In: 76th Annual Meeting of the Academy of Management 2016 Theme: Making Organizations Meaningful, 5-9 Aug 2016, Anaheim, California.



Drawing from the literature on attention-based view of the firm, knowledge base diversity and cognitive distance in alliances, this paper distinguishes between intra- and inter- industry alliances and investigates the effect of increasing numbers of such alliances on firm innovation performance. Intra-industry alliances offer lower opportunities for innovation compared to inter-industry alliances and are less demanding on firm management due to higher cognitive similarity between partners from the same industry. We propose that trade-offs between innovation opportunities and management efforts will result in an inverted U and a U shaped relationship between the number of intra- and inter-industry alliances and innovation returns respectively. We explore our hypotheses in the context of the UK bio-pharmaceutical sector, and obtain support for both hypotheses.

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