Resource congestion in alliance networks: How a firm's partners' partners influence the benefits of collaboration

Research summary The network resources a firm can access through its strategic alliances are critical precursors to innovation: They provide the information and know-how needed to generate new knowledge. Yet prior literature has not directly considered the congestion of network resources stemming from constraints on their capacity to be applied without loss of value across multiple settings. I examine the degree to which this form of resource congestion influences the innovation benefits a focal firm realizes from its alliance portfolio. In a panel dataset of biopharmaceutical firms, I find that the knowledge-based resources of a focal firm's alliance partners can be congested due to multiple claims on these resources from the firm's partners' partners. This insight bridges the network and resource-based perspectives on alliances and innovation. Managerial summary Strategic alliances are an essential tool for managers in knowledge-intensive settings: They allow firms to access diverse information and know-how which can be of critical importance as inputs to the innovation process. What managers may overlook, however, is that the knowledge-based resources of their alliance partners can be congested due to competing claims on these resources from the other alliances in which their partners are engaged. In such cases, firms may end up competing for resources such as partner time and attention with their partners' other partners. Consequently, when engaging in alliances, managers should be attentive not only to the knowledge resources an alliance partner may hold but also to whether these partner knowledge resources may ultimately be congested due to their partners' other relationships.