The effect of alliance portfolio diversity on biotech firms' exit

High-tech industries have always been of interest for private capitals and governments because of their promising economic opportunities and scientific progress. However, these industries have also been associated with high rates of firms' exit. The most commonly cited reasons for that are the liabilities of newness and/or smallness, since the majority of firms in high-tech industries (e.g., biotech sector) tend to be small and relatively young. Previous academic research in entrepreneurship and strategy pointed towards the necessity for small firms to build an appropriate alliance portfolio in order to survive and grow (Powell et al., 1996; Baum, Calabrese, and Silverman, 2000; George et al., 2001). The present paper deals with a particular alliance portfolio characteristic – alliance portfolio diversity (APD). Two related research questions are targeted: What is the impact of APD on biotech-firms' exit? How does APD shape biotech firms' resource-based advantage? The present paper studies these questions through theoretical lenses of the extended resource-based view (RBV) for interconnected firms. It permits to consider alliances as specific resources and regard APD as valuable, rare and difficult to imitate resource characteristic.