Returns to alliance portfolio diversity: The relative effects of partner diversity on firm's innovative performance and productivity

This study considers the impact of diversification in types of technological alliances, resulting in alliance portfolio diversity, on various dimensions of a firm's performance, as they relate to exploration and exploitation. Using a large panel of innovative firms in the Netherlands, this study shows that partner type diversity in a firm's alliance portfolio has an inverted U-shaped relationship with productivity and radical innovative performance and a positive relationship with incremental innovative performance. Moreover, the results suggest that a lower level of diversity is needed to achieve an optimal level of productivity compared to radical innovative performance, whereas for incremental innovative performance a higher level of portfolio diversity appears to give the best performance.