Title

Alliance portfolios and shareholder value in post-IPO firms: The moderating roles of portfolio structure and firm-level uncertainty

Authors

Authors

N. Mouri; M. B. Sarkar;M. Frye

Comments

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Abbreviated Journal Title

J. Bus. Ventur.

Keywords

Strategic alliances; IPOs; Alliance portfolios; INITIAL PUBLIC OFFERINGS; STRATEGIC ALLIANCES; BIOTECHNOLOGY INDUSTRY; UNDERWRITER REPUTATION; COMPETITIVE ADVANTAGE; INTERFIRM COOPERATION; ENTREPRENEURIAL FIRMS; VENTURE CAPITALISTS; PRODUCT DEVELOPMENT; EQUITY; ALLIANCES; Business

Abstract

Using longitudinal data for initial public offering (IPO) firms, we examine the role played by structural differences between different types of alliance portfolios in the relationship between IPO firm alliance portfolios and shareholder returns. We show that because of the different signals they send to the capital market, different types of alliance portfolios affect IPO firm performance differently. Namely, financial markets seem to reward firms whose alliance portfolio is diversified across different types of alliances (a portfolio high in functional diversity), but not those who align their alliance partners into multiple functional points in the value chain (a portfolio high in vertical scope). We also examine the signaling role of alliance portfolios under different IPO firm uncertainty conditions. We note that uncertainty about the IPO firm is not limited to pre-IPO quality uncertainty. Investors also face transition uncertainty, post-IPO uncertainty about the ability of the firm to adapt to the new managerial challenges it faces and succeed post-IPO. We find that these two types of uncertainties moderate alliance portfolio effects in different ways. The beneficial effects of alliance portfolios in mitigating liabilities of newness is of greater importance for firms associated with higher quality uncertainty and for those associated with lower transition uncertainty. Published by Elsevier Inc.

Journal Title

Journal of Business Venturing

Volume

27

Issue/Number

3

Publication Date

1-1-2012

Document Type

Article

Language

English

First Page

355

Last Page

371

WOS Identifier

WOS:000301754400005

ISSN

0883-9026

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