Capturing Value from Alliance Portfolio Diversity: The Mediating Role of R&D Human Capital in High and Low Tech Industries

Research has demonstrated the value of external linkages to augment in-house R&D efforts; however, very little is known about how managers can operationally leverage the potential benefits of open innovation to create an innovative edge. This paper examines the value of alliance portfolio diversity and whether R&D human capital is the pathway through which alliance portfolio diversity influences innovation novelty. We reason that the absorptive capacity of R&D human capital determines a firm’s potential gains from highly diverse alliance portfolios. Using data from the Spanish Technological Innovation Panel (PITEC) for the period 2005–2012, results support the curvilinear (inverted U-shaped) association between alliance portfolio diversity and firm innovation performance reported in studies, suggesting that not only too little, but also too much alliance portfolio diversity may be detrimental to firm innovation performance. Findings emphasise the value of alliance portfolio diversity in high-technology industries to achieve explorative performance objectives, given the technological complexity, market uncertainty and the divergent skill sets required for breakthrough innovations in these sectors. Further, we find evidence that R&D human capital plays an important role in innovation novelty by partially mediating the relationship between alliance partner diversity and firm innovation performance, emphasising the importance of internal capabilities to harness external knowledge assets. This study provides valuable insights to managers aiming to increase the effectiveness of their alliance portfolios.