Title: Expand or retrench? Alliance portfolio adaptation to environmental jolts

Authors: Qingjiu Tom Tao; Ruihua Joy Jiang; Michael D. Santoro

Addresses: Department of Management, College of Business, James Madison University, Harrisonburg, Virginia, USA ' School of Business Administration, Oakland University, Rochester, Michigan, USA ' College of Business and Economics, Lehigh University, Bethlehem, Pennsylvania, USA

Abstract: We assume the real options perspective and threat-rigidity model to explain firms' responses to different environmental changes. Treating firms' alliance portfolios as bundles of real options, we argue firms would expand both the size and diversity of their alliance portfolios when environmental change is perceived to be creating opportunities; but both the size and diversity of their alliance portfolios shrink when an environmental change is perceived as posing threats. We tested our hypotheses by tracing the evolution of telecom industry firms' alliance portfolio strategy during and after the 1996 Telecommunications Act and the year 2000 dot.com and financial markets crash.

Keywords: alliance portfolios; environmental changes; real options; threat rigidity model; alliance portfolio diversity; telecommunications industry; cooperative strategy; portfolio adaptation.

DOI: 10.1504/IJBE.2015.066004

International Journal of Business Environment, 2015 Vol.7 No.1, pp.79 - 97

Received: 14 Nov 2013
Accepted: 17 Mar 2014

Published online: 30 Nov 2014 *

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