Portfolio Dynamics and Alliance Termination: The Contingent Role of Resource Dissimilarity

Abstract

This article takes a portfolio approach to examine how an alliance's propensity of termination is influenced by its resource relationships with other alliances of the firm. Whereas previous research has suggested that similar partner resources in a portfolio create redundancy and that dissimilar resources are beneficial, this study argues that redundancy may be necessary to ensure stable access to resources and that synergies from dissimilar resources may be difficult to realize. Thus, under some conditions, resource dissimilarity may be less supportive of, or even detrimental to, the continuity of an alliance. The author identifies several conditional factors that change the role of resource dissimilarity. While relational connectedness between the focal partner and other partners of the firm is found to strengthen the supporting effect of resource dissimilarity on alliance continuity, vertical connectedness of alliance activities, formation of substituting alliances by the focal partner, and market uncertainty weaken the supporting effect of resource dissimilarity. The findings reveal alliance termination factors beyond dyadic interactions and provide important implications for managing interdependencies within an alliance portfolio to enhance alliance stability.