Turorial 4: Alliance And Innovation

Question 1

Alliance portfolio building style

Answer 1

Consistent pattern of alliance formation over time.

Question 2

Patterns matter

Answer 2

Give firms stability and reliability ensuring that they fulfil the expectations of their alliance partners while producing network advantage for themselves. The patterns also form the foundation for learning and transfer lessons from each alliance to subsequent partners.

• > support internal capabilities (routines increase efficiency)
• > provide external predictability

Question 3

To change you partnering pattern you can:

Answer 3

• hire people from companies that have the right partnering pattern
• partner with a firm that has the right pattern
• form ties for small wins

Question 4

The impact of large scale network structure on firm innovation

Answer 4

Networks that have both high information transmission capacity enabled by clustering and high quantity and diversity of information provided by reach have a greater innovation output.

Question 5

Costly signalling

Answer 5

To mitigate the adverse selection risk that potential partners face and reduce uncertainty

• sell shares at discount price to prominent VC
• engage in a first alliance in less favorable terms
• underprice securities when going public

Question 6

VC syndicate network

Answer 6

VCs form webs of relationships through joint investments to facilitate the exchange, pooling, and dissemination of information about new ventures.

Question 7

VC Prominence and Venture prominence

Answer 7

The positive effect of VC prominence in determining a new venture’s future alliance formation diminishes as the new venture prominence in alliance network increases (has already distinguished itself + cost)