Industry cognitive distance in alliance portfolios and firm innovation performance

Filiou, D and Massini, S (2017) Industry cognitive distance in alliance portfolios and firm innovation performance. In: Academy of Management Annual Meeting 2016, 05 August 2016 - 09 August 2016, Anaheim, California.

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Abstract

Drawing from the literature on attention-based view of the firm, knowledge base diversity and cognitive distance in alliances, this paper distinguishes between intra- and inter- industry alliances and investigates the effect of increasing numbers of such alliances on firm innovation performance. Intra-industry alliances offer lower opportunities for innovation compared to inter-industry alliances and are less demanding on firm management due to higher cognitive similarity between partners from the same industry. We propose that trade-offs between innovation opportunities and management efforts will result in an inverted U and a U shaped relationship between the number of intra- and inter-industry alliances and innovation returns respectively. We explore our hypotheses in the context of the UK bio-pharmaceutical sector, and obtain support for both hypotheses.