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Hybrid alliances and radical innovation: the performance implications of integrating exploration and exploitation

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Abstract

In this paper we examine the innovation performance of hybrid alliances, that is, alliances that combine exploration and exploitation activities. While previous research has emphasized the tensions engendered by the combination of exploration and exploitation, we claim that the integration of these two types of activities can generate synergies as well. We argue that, in the case of alliances involving academic spin-offs (ASOs), these synergies may outweigh the tensions under specific conditions, and thus improve alliance innovation performance. Specifically, we hypothesize that the relative performance of exploitation activities is greater in hybrid alliances when the alliance has radical innovation outcomes. Conversely, the relative performance of exploration activities is greater in hybrid alliances when the alliance has incremental innovation outcomes. These hypotheses are tested using fine-grained data on a sample of 149 alliances involving European ASOs.

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Notes

  1. Lavie and Rosenkopf (2006) adopt a multi-dimensional view of exploration and exploitation alliances, which considers three domains: function exploration–exploitation (i.e., defined on the basis of the value-chain function that the alliance serves), structure exploration–exploitation (i.e., defined on the basis of partners’ network positions), and attribute exploration–exploitation (i.e., defined on the basis of partners’ organizational attributes). In this paper, we focus on the first domain: function exploration–exploitation.

  2. Most ASOs are established by an entrepreneurial team (at least partially) formed by PhD students or research personnel of universities or other public research centers. However, ASOs may have no academic founders but obtain the right to exploit the knowledge developed within a public research organization and received through a formal transfer (e.g., a license agreement).

  3. Dahlin and Behrens (2005) also argued that, once a ‘potentially radical’ invention has been identified, one can ex post claim that this invention is a ‘successful change agent’ if it influences the content of future inventions. In this paper, for the sake of simplicity, we explore the degree of radicalness of alliance innovation outcomes without considering this ‘future impact’ criterion. This choice is not unconventional in the innovation literature. In particular, distinguishing between new to the market and new to the firm products and services to discriminate between radical and incremental innovation is quite common (Schneider and Veugelers 2010; Czarnitzki et al. 2011).

  4. We are aware that branching is an unconventional measure of the innovation outcome of exploration activities. Most previous studies used patent-based indicators, that reflect the extent to which a firm’s patenting activity builds on technological knowledge that it did not previously have, and notably patenting in technological classes in which it did not previously patent (e.g., Phelps 2010). In the present study, we do not use patent-based indicators because of the cross-industry nature of our analysis. We indeed aim to develop hypotheses valid also for ASOs that operate in industries where patenting activity is scarce (e.g., service industries).

  5. In the CIS4 (http://epp.eurostat.ec.europa.eu/portal/page/portal/microdata/cis), respondents are asked: i) whether during the last three years their company introduced any new or significantly improved goods/services, and ii) whether any of these goods/services were new to the firm’s market or new to the firm.

  6. We also performed an ANOVA on the length of the relationship against the type of alliance (exploration, exploitation, or hybrid). The results indicate the absence of any correlation (F(2, 144) = 1.44): in our sample, hybrid alliances did not last longer (or shorter) than specialized alliances.

  7. As one may argue that the values of our dependent variables may be ordered according to the radicalness of the innovation outcome under scrutiny (1 = no innovation outcome, 2 = incremental innovation, 3 = radical innovation), we estimated Eq. (1) also through an ordered probit model. The results are in line with those presented below. For the sake of synthesis, we do not include these alternative estimates in this paper. However, they are available from authors upon request.

  8. For the sake of synthesis, the results of these checks are not reported here. They are available from authors upon request.

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Acknowledgments

We thank two anonymous reviewers and the editors of the special issue for their valuable feedback. We also thank participants in the DIME conference “Organizing for Networked Innovation”, the DRUID Summer Conference 2009 and the PICO project final conference where earlier versions of this paper were presented. This research was supported by the Sixth Framework Program of the European Commission (PICO project “Academic entrepreneurship, from knowledge creation to knowledge diffusion”). We thank the other project participants, Bart Clarysse, Margarida Fontes, Mike Wright, and their teams, for their help with data collection and analysis.

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Authors and Affiliations

  1. Department of Management, Economics and Industrial Engineering, Politecnico di Milano, Via Lambruschini 4/B, 20156, Milan, Italy

    Massimo G. Colombo & Evila Piva

  2. MINES ParisTech, PSL Research University, CSI - Centre de sociologie de l’innovation, CNRS UMR 7185, 60 Bd St Michel, 75006, Paris, France

    Liliana Doganova

  3. Dipartimento di Ingegneria dell’Informazione, Università Politecnica delle Marche, Via Brecce Bianche, 60131, Ancona, Italy

    Diego D’Adda

  4. MINES ParisTech, PSL Research University, POLLEN - Pôle Entrepreneuriat, 60 Bd St Michel, 75006, Paris, France

    Philippe Mustar

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Colombo, M.G., Doganova, L., Piva, E. et al. Hybrid alliances and radical innovation: the performance implications of integrating exploration and exploitation. J Technol Transf 40, 696–722 (2015). https://doi.org/10.1007/s10961-014-9363-x

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