3.1. Mediation of the Alliance Portfolio Value in the Relationship of the Alliance Portfolio Management Capability and Sustainability
Prior research has argued that the alliance portfolio management capability is associated with portfolio-level outcomes and firm-level performance. It is acknowledged that firms can finish the complex task of alliance portfolio management [
43], maximize alliance success [
44], and obtain cooperative benefits and competitive advantages [
32] through their alliance portfolio management capability. However, the relationship between the alliance portfolio management capability and performance has been discussed on the portfolio level and the firm level separately, with little consideration on the combined effect of the different levels of performance, nor of the internal mechanism of the relationship between capability and firm-level performance. We believe that firms with a high capability of managing an alliance portfolio may acquire a better alliance portfolio value, and then a firm-level sustainability.
Alliance portfolio value refers to the overall alliance capital and success that is more than the sum of the individual alliance performances [
9]. The value of the alliance portfolio is linked to a firm’s dedicated capability to manage the whole alliance portfolio. From network theory and the system view, the dedicated alliance portfolio capability is an effective system for firms to coordinate multiple alliances across the boundary of alliances and monitor the strategic objectives and operational tasks. Following the recent research on the concept and framework of alliance portfolio management capability [
14,
15], we divide it into three dimensions: partnering proactiveness, relational governance, and portfolio coordination.
3.1.1. Partnering Proactiveness
Partnering proactiveness is defined as the capability of a firm to identify new opportunities for alliances and to respond to them [
14]. The new opportunities include new projects that can bring value to a firm’s existing business and new partners with a high status and valuable and rare resources. Firms proactively exploring and exploiting new alliance opportunities are more likely to obtain competitive advantages compared to those that are inactive in partner pursuits [
45]. Through providing “helpful partners”, partnering proactiveness makes entrepreneurial firms perform better in opportunity exploitation for two reasons. Firstly, entrepreneurial firms which actively seeking and selecting partners may know more about the partners such as their implicit knowledge and alliance intention, decreasing the risk of asymmetric information [
46]. Secondly, a scarcity of potential high-quality alliance partners will be created by the proactive activity of entrepreneurial firms. In particular, when the “partner market” is an uncompetitive or rare market, partnering proactiveness may exaggerate the preemptive partner advantage [
47], resulting in a first-mover advantage in alliance portfolio formation.
Being active in partnering activities is quite important for entrepreneurial firms in the context of high uncertainty. On the one hand, due to the limited time value of new opportunities, entrepreneurial firms should act on the opportunity as soon as possible [
48]. Entrepreneurial firms which are resource-constrained and lack legitimacy cannot respond to new opportunities quickly with a high velocity. From an RBV (Resource Based View), valuable and rare resources of the partner are critical to trigger a sustainable advantage [
49], which enables entrepreneurial firms to act on new opportunities in time and survive sustainably. On the other hand, through active partner selection, entrepreneurial firms can achieve a first-mover advantage on the partner-side, which guarantees high-status partner relationships and compatible resources. Meanwhile, a weakened risk of asymmetric information can improve the high-quality communication between entrepreneurial firms and their partners. Excellent partners and better communication with them will bring a better portfolio value and firm sustainability. Consequently, we hypothesize the following:
Hypothesis 1a (H1a). The relationship between partnering proactiveness and firm sustainability is fully mediated by alliance portfolio performance.
3.1.2. Relational Governance
Relational governance refers to the relation-oriented commitment that a firm would like to make, which may lead to trustful and resilient relations [
50]. Being cooperative in nature, the aim of relational governance is to bind together and lock in partners through informal interactions and relation-specific investments [
51]. With the same interests in relationships, the capability of relational governance facilitates the establishment of strong ties between the focal firms and partners, and develops self-enforcing safeguards as the basis of alliance execution.
Relational governance is a solution to opportunism, which is the main risk that entrepreneurial firms often encounter when they initiate alliances. Given the liability of legitimacy, entrepreneurial firms do not have a high status or reputation in the market, which may induce opportunistic behavior from the partners [
52]. The threat of opportunistic behavior in alliance portfolios can be minimized by relational governance [
53]. Based on transaction cost theory, relational governance can develop trust, a high-quality information flow, and a joint-problem solution [
54]. These factors may dispel opportunistic behavior and improve the cooperation among partners. Further, through relation-specific investment, relational governance also lowers the cost of contracting and monitoring [
55], and increases the efficiency of alliance execution. It encourages partners to focus on resources and knowledge exchange which are fundamental for the value of the alliance portfolio. In sum, the capability of managing relations with partners will decrease the governance cost and facilitate partners to engage in cooperation. This will lead to an efficient alliance process and a high-quality alliance execution, which is associated with the sustainable performance of entrepreneurial firms. Consequently, we hypothesize the following:
Hypothesis 1b (H1b). The relationship between relational governance and firm sustainability is fully mediated by alliance portfolio performance.
3.1.3. Portfolio Coordination
Different from partnering proactiveness and relational governance that are the fundamental capabilities of architecture construction (i.e., the partner structure and relations structure), portfolio coordination points to portfolio enhancing based on a certain structure [
14]. Taking a holistic approach, portfolio coordination focuses on managing the synergy of multiple alliance activities and the mobilization of different resources from different partners [
10]. Ozcan and Eisenhardt [
9] argued that “Portfolios… have aggregate properties [synergies] that affect performance, but not meaningful for single ties”. Therefore, portfolio coordination is the capability of comprising complementary strategy, activity interaction, knowledge flow, etc., from the perspective of the portfolio instead of an atomistic dyad.
Portfolio coordination improves the interdependency effect, which is the core of an alliance portfolio. The extent of coordination across different alliances determines whether synergies can be stimulated and whether conflicts can be minimized. Synergies in portfolio comprise of the economy of scale and scope, knowledge flow, and resources complementarities [
56,
57]. Conflicts in portfolios include redundancies originating from resources similarities or overlapping competition between partners [
58,
59]. A high level of synergy and a low level of conflict makes the value created by the alliance portfolio greater than the sum of individual alliances, which is associated with the performance of firms.
Portfolio coordination can help entrepreneurial firms achieve high alliance portfolio value and improve their sustainability in survival and growth. For entrepreneurial firms, entrepreneurial activities or projects in the early stage are usually complex tasks because of their constrained resources. Thus, they need to mobilize a series of special organizations into a collective entity and create synergies across organizations [
6]. Accordingly, inter-alliance coordination is necessary for entrepreneurial firms to manage a complex task in order to create synergistic value by coordinating alliance activities and knowledge flows in the portfolio. From synergy theory, a high level of synergy can motivate concerted actions between focal firms and their partners [
57], which are helpful for dyadic cooperation and problem solving. Further, resource complementarities among multiple alliances will emerge through the focal firm’s coordinating activity, which ensures an abundant and differentiated resource pool as the basis for the alliance portfolio value [
59]. In short, portfolio coordination enables entrepreneurial firms to maintain a high alliance portfolio level performance through synergy, which leads to firm sustainability. Consequently, we hypothesize the following:
Hypothesis 1c (H1c). The relationship between portfolio coordination and firm sustainability is fully mediated by alliance portfolio performance.
3.2. The Moderation of the Power Distribution of the Board in the Mediation Effect
It has been established that network relationships originate from other relationships such as the board of directors in organizations [
17]. From the perspective of “network pluralism” or “relational pluralism”, the relationship at the board level may influence inter-organizational relationship [
60]. For example, Beckman et al. [
17] argued that the social network of board members shapes the diversity of the alliance portfolio. Collins [
61] found that TMT’s external social connection is related to the alliance portfolio diversity. However, these research articles focused on the structure of the network, such as the scale of the board or the diversity of the portfolio, with little attention on the content dimension such as the power distribution or on the capability of network management. We believe that the power distribution of the board of directors has a moderating effect on the relationship between the alliance portfolio management capability and sustainability.
Prior research pointed out that corporate governance should be applied in alliance portfolio management [
19]. As a kind of strategic decision, alliance portfolio management should be discussed and approved by the board of directors given their service function based on steward theory [
62]. From stewardship theory, the role of the board is not only to bring external information and potential connections and being conduits to divergent resources, but also to involve themselves in strategic management [
63], such as fostering the capability of alliance managements. Rather than focus on the external social network of the board, we emphasize that how the power distribution of the board may influence the effect of the alliance portfolio management capability on the portfolio value and firm sustainability.
According to the power distribution of the board, we divided the board of directors into two types, that is, a centralized and decentralized board, according to the share that the board members have. The centralized board refers to the type of board in which the power is centralized with a certain board member, normally the chair of the board. The decentralized board refers to the type of board in which the power is shared among the board in a more equal manner. Based on the team theory, the power distribution in a team has a great impact on the operational efficiency of the team [
64]. In the decentralization condition, a team has an ambiguous authority, leading to conflicts which may damage the team efficiency [
65,
66]. Thus, it is difficult to make strategic decisions quickly in a decentralized board, which results in complicated procedures and even chaos in decision making. Nevertheless, in a centralized board, the member who has the central power is more likely to influence others and enable the whole board to achieve common objectives and synergetic actions.
The power distribution of the board of directors may influence the function of the alliance portfolio management capability. Firstly, as far as a centralized board is concerned, a fast alliance portfolio decision is easy to make, which enhances the time value of the alliance opportunity that partnering proactiveness contains. New alliance opportunity seeking is sped up by a centralized board due to its fast decision-making process, which leads to better alliance portfolio value and firm sustainability. Further, relational governance and coordination can be implemented better in a centralized board since the board can input more managerial attention and resources into the alliance portfolio. Synergistic effects and board efficiency are more likely to emerge in a board under the control of a central chair, supporting relational governance and coordination in alliance management.
Secondly, a decentralized board may weaken the impact of the alliance portfolio management capability on the portfolio value and the firm’s sustainability. In a decentralized board, every board member would like to be involved in strategic decisions. Although this will enable the firm to enjoy the information and knowledge benefits from different board members, it slows down the decision-making that is important for entrepreneurial firms, especially in proactive partnering. Moreover, a decentralized board may separate the managerial attention and critical resources on relation-specific investment as well as on portfolio coordination activities. Accordingly, when the board is decentralized, partnering proactiveness may not help the entrepreneurial firm to explore new alliance opportunities as soon as possible and the weakened governance and coordination would not be able to enable the firm to improve its alliance relationships and cross-alliance synergies, which would damage the value of the alliance portfolio. Consequently, we hypothesize the following:
Hypothesis 2a (H2a). The mediating relationship between partnering proactiveness, alliance portfolio value, and firm sustainability is moderated by the power distribution of the board. A centralized board may strengthen the mediating effect and a decentralized board may weaken the mediating effect.
Hypothesis 2b (H2b). The mediating relationship between relational governance, alliance portfolio value, and firm sustainability is moderated by the power distribution of the board. A centralized board may strengthen the mediating effect and a decentralized board may weaken the mediating effect.
Hypothesis 2c (H2c). The mediating relationship between portfolio coordination, alliance portfolio value, and firm sustainability is moderated by the power distribution of the board. A centralized board may strengthen the mediating effect and a decentralized board may weaken the mediating effect.
The theoretical framework is shown in
Figure 1.