ABSTRACT
This paper discusses how small technology-based firms (STBFs) effectively manage vertical alliances by choosing proper alliance structures to both manage challenges and pursue higher performance. We consider the main challenges of STBFs’ vertical alliances as opportunistic risk and coordination concern between partners, and derive four types of vertical alliance portfolios with different extents of risk and return based on the relational perspective. We then examine the impact of each portfolio on performance and the moderating effect of STBFs’ age and technological capability. The results show the portfolio focusing on bilateral alliances is not helpful for STBFs, while the others are useful. The portfolio focusing on unilateral alliances promises young firms better performance, while hybrid portfolios of unilateral and bilateral alliances are more helpful for older STBFs. In hybrid portfolios, bilateral alliance in the upstream is beneficial to specific technology-focused firms, while bilateral alliance in the downstream is recommended to STBFs whose technology covers a wider range.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes on contributors
Hye-Seon Moon is a research fellow at Korea Institute for Industrial Economics & Trade (KIET). She has various research experiences in innovation, R&D, firm strategy, and strategic alliance and has published many academic papers in the field of management and economics. Her current research interests are organisational learning, knowledge transfer, strategic management, and entrepreneurship.
Sang-Myung Lee is an associate professor at the department of management at Hanyang University. His main research interests are small- and medium-sized firms, information technology management, entrepreneurship, and strategic management. He has published many articles in these fields.
Notes
1. This study targets STBFs who conduct vertical alliances based on their core technology. We considered the target firms had registered IPRs, because mainly through the STBFs’ IPRs can outside partners recognize the values of STBFs’ technology and try building alliances. However, there may be STBFs who build alliances without registered IPRs. Our study does not include these cases because of the limitation of data source.
2. Among the five high-technology industries, aircraft and spacecraft industry was excluded because no STBF in the area was on the list.