The first two authors contributed equally.
RESEARCH NOTES AND COMMENTARIES
Exploration or exploitation? Small firms' alliance strategies with large firms
Article first published online: 29 MAR 2013
Copyright © 2013 John Wiley & Sons, Ltd.
Strategic Management Journal
Volume 35, Issue 1, pages 146–157, January 2014
How to Cite
Yang, H., Zheng, Y. and Zhao, X. (2014), Exploration or exploitation? Small firms' alliance strategies with large firms. Strat. Mgmt. J., 35: 146–157. doi: 10.1002/smj.2082
- Issue published online: 2 DEC 2013
- Article first published online: 29 MAR 2013
- Accepted manuscript online: 31 JAN 2013 08:14AM EST
- Manuscript Accepted: 29 OCT 2012
- Manuscript Revised: 3 OCT 2012
- Manuscript Received: 13 JUL 2011
- Research Grants Council of the Hong Kong Special Administrative Region. Grant Number: 151810
- exploration alliances;
- exploitation alliances;
- small firms;
- large firms;
- alliance strategy
How do small firms manage their alliance strategies with large firms? This study compares the relative impacts of exploration and exploitation alliances with large firms on small firms' valuation. Integrating the literatures on the exploration/exploitation paradigm and alliance governance, we argue that exploitation alliances with large firms will on average generate higher values for small firms than exploration alliances with large firms due to a heightened risk of appropriation in exploration alliances. However, if small firms can manage their alliances with large firms via proper alliance governance, they will increase their valuations from exploration alliances with large firms. Analyses of the U.S. biopharmaceutical industry from 1984 to 2006 largely support our hypotheses. Copyright © 2013 John Wiley & Sons, Ltd.