Proactive cooperation with strangers: Enhancing complexity of the ICT firms' alliance portfolio and their innovativeness

This study explores links among firms' cooperation strategies, the complexity of their alliance portfolios, and their innovativeness in the context of the ICT industry in emerging markets. Alliance portfolio formation has been increasingly recognized as a major element influencing firms' performance as well as innovativeness. However, little attention has been focused thus far on methods of alliance portfolio creation and its impact on the complexity of alliance portfolios or firms' innovativeness. This study aims to fill this gap by analyzing the impact of cooperation forming (both market-focused strategy and relationship-focused strategy) as well as managers' proactiveness and trust on the complexity of alliance portfolios and, consequently, on firms' innovativeness. The empirical models are examined using data collected in 146 firms (SME) from the ICT industry and 4006 ties in their alliance portfolios. The results suggest that a proactive, market-focused cooperation strategy (proactively searching for and selecting “strangers” from the market as potential partners) positively affects the complexity of alliance portfolios (specifically: functional, geographic, governance complexity, as well as a number of ties) and might enhance firms' innovativeness. However, relying on friends, acquaintances, and their recommendations in partnership forming might result in decreasing the alliance portfolio complexity. Moreover, managers' trust in existing partners seems not to be of crucial importance when creating diverse and complex alliance portfolios. In other words, existing ties that bind can also blind and might limit the possibility of creating numerous, diverse partnerships and, consequently, reduce firms' innovativeness.