Casting a wide net for innovation: The mediating effect of R&D human and social capital to unlock the value from Alliance Portfolio Diversity

This paper examines the performance effects associated with different alliance portfolio configurations in terms of geographical location and partner type. Based on these distinctions, we hypothesise that more diverse alliance portfolios enable firms to gain and exploit innovation opportunities. Additionally, the mediating effects of R&D human and social capital on the R&D alliance portfolio diversity-innovation performance relationship are explored. We reason that the absorptive capacity of R&D intellectual capital determines a firm’s potential gains from highly diverse alliance portfolios. Using panel data of manufacturing firms in Spain for the period 2008-2013, our results confirm the inverted U-shaped relationship between alliance portfolio diversity and firm innovation performance, implying that both insufficient and excessive alliance portfolio diversity may be detrimental to firm innovativeness. Additionally, R&D human and social capital partially mediates the R&D alliance diversity-innovation performance relationship emphasising the importance of internal capabilities to leverage the benefits of highly diverse alliance portfolios. These findings add a dynamic dimension to the conceptualisation of alliance portfolios and how firms create value by balancing explorative and exploitative alliances.