Alliance Portfolios and the Impact of Incumbent Affiliations on New Ventures

This paper examines cooperative relationships between technology-based start-ups and industry incumbents, using a portfolio-level lens to understand the performance effects associated with this phenomenon. While start-ups often engage in alliance relationships with established firms in order to acquire a range of resources and capabilities necessary to navigate through the growth stage of development, the alliance portfolio configuration of the start-up's incumbent firm partners can significantly influence the value which accrues to start-ups from these affiliations. Examining the entire portfolio of an incumbent's alliances can reveal variation in incumbent firm strategic intent and highlight the degree to which multiple claims on the incumbent's assets impact the resources each affiliated start-up is able to access. Using a panel dataset of venture-backed start-ups founded between 1990 and 2000, I find that greater overlap between the activities of a focal start-up's alliances and those of its incumbent partners has negative performance implications for the start-up venture. Moreover, I find variation across industries and performance metrics, suggesting that the dynamics of particular cooperative settings cause start-ups to be differentially susceptible to incumbent resource congestion effects.