ALLIANCE PORTFOLIO DIVERSITY AS A LEVER OF PRODUCT INNOVATION IN DEVELOPING COUNTRIES

Abstract

Most authors agree that alliance portfolio diversity (APD) has an inverted U-shaped influence on innovation performance and is particularly important for firms with a high absorptive capacity (AC), which moderates this relationship positively. However, the reality of developing countries with weaker national innovation systems (NIS) and firms with lower AC may influence these relationships. To test these hypotheses in such a context, we tested a longitudinal structural model in a sample of 1,237 Colombian manufacturing firms. The results indicated that, in a developing country context, APD at the appropriate level is especially relevant for firms with low AC, even the letter maintaining the positive moderation effect on the inverted U-shaped relationship of the former with innovation. Besides, the longitudinal structural equation modelling (SEM) chosen to conduct the analysis mitigates endogeneity issues presented in more commonly used cross-section analyses.