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

This paper posits that firms' corporate and technological diversification profiles and their relatedness in terms of products and technologies impact their propensity to form alliances for exploitation and exploration. The empirical investigation employs a dataset of all tire producers worldwide between 1985 and 1996 that combines detailed firm level data on establishment, patenting, and alliance activities. The results support these theoretical predictions and indicate that exploitative alliances are driven primarily by complementarity in terms of corporate diversification strategies, as well as partner characteristics (e.g., size, age, and technological capabilities). Moreover, firms with similar product portfolios but uneven technological performance are more likely to engage in exploitative interactions. In contrast, exploration alliances are driven by strong partner similarity across all firm characteristics and product portfolios. Both market and technological diversification have positive effects on the propensity to engage in explorative alliances while technological distance has a negative one.