The effects of ambidextrous alliances on product innovation

With increasing levels of industrial complexity and advantages of economies of scale, individual firms often find it difficult to deal with every aspect of their business activities. Consequently, firms form alliances with other organizations to overcome the barrier of limited resources. This article, employing the exploration and exploitation lens, classifies alliances according to their objectives and investigates their impacts on providing innovative products to customers. Using data from a nationwide innovation survey of Korean manufacturing firms, we show that exploratory alliances positively affect firms’ radical product innovation while exploitative alliances positively affect firms’ incremental product innovation. More importantly, we confirm the interaction effect between exploratory alliances and exploitative alliances, which contributes to both radical and incremental innovation. This study highlights the importance of ambidexterity in implementing alliances which contribute to new product development.