Strategic choices of exploration and exploitation alliances under market uncertainty
ISSN: 0025-1747
Article publication date: 25 January 2019
Issue publication date: 30 October 2019
Abstract
Purpose
The purpose of this paper is to provide a better understanding of what drives firms’ choice between exploration alliances and exploitation alliances by examining the role of organizational slack and its interaction with market uncertainty.
Design/methodology/approach
An empirical study is conducted based on 1,614 alliances formed by 581 US biotechnology firms, and the hypotheses are tested using a zero-inflated multilevel Poisson model.
Findings
The results indicate that firms’ strategic choice to pursue exploration or exploitation alliances is a reflection of organizational intention and adaptation to environmental turbulence. More specifically, firms with more financial slack tend to form more exploration alliances and fewer exploitation alliances. However, under high market uncertainty, firms with financial slack tend to establish more exploitative partnerships and avoid exploration collaborations.
Originality/value
This paper contributes to the literature on exploration–exploitation alliances, which tends to fall short of providing an understanding of why organizations pursue such alliances. By identifying the impact of organizational slack and its interaction with market uncertainty, this study shows that organizations are able to respond to environmental change, and those with capabilities are likely to craft their strategic choice configurations based on their own characteristics.
Keywords
Citation
Li, W. and Wang, L. (2019), "Strategic choices of exploration and exploitation alliances under market uncertainty", Management Decision, Vol. 57 No. 11, pp. 3112-3133. https://doi.org/10.1108/MD-01-2017-0073
Publisher
:Emerald Publishing Limited
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