New Challenges in Alliance Portfolio Management - Innovation and Marketing in the Pharmaceutical Industry - page 150

In this chapter, I will fi rst derive key dimensions of alliance portfolio management
on the basis of previous research. Subsequently, I will single out the technological
diversity of the alliance portfolio as my focus of attention. Diversity exposes the
fi rm to nonredundant knowledge, which in turn contributes to fi rm innovativeness
and performance. Its importance in a science-based fi eld such as the pharmaceutical
industry is illustrated by GlaxoSmithKline's (GSK's) business development strategy:
“Our Worldwide Business Development group is a global team of scientifi c, trans-
action, and alliance management experts building diverse collaborations relating to
compounds (early stage discovery programs through to marketed products) and
technologies” (GlaxoSmithKline 2011 —italics added).
Interestingly, the literature has not been conclusive regarding the effects of port-
folio diversity. First, I argue that this can be partly explained by the use of problem-
atic proxy measures for technology diversity; hence, I will contrast technology
diversity with other facets of diversity. Second, the lack of generalizable insights
can be caused by (1) imperfect behavioral assumptions of established theories, (2) a
lack of attention to fi rm differences, and (3) the changing nature of collaboration in
the pharmaceutical industry. After contrasting technology diversity with other fac-
ets of diversity, I elaborate on these three challenges.
The fi rst challenge consists of contrasting competing perspectives on why fi rms
benefi t from portfolio diversity. I focus on two alternative perspectives: the learning
perspective and the real options perspective. The learning perspective holds that
fi rms seek to assimilate knowledge from their individual alliance partners. The real
options perspective holds that fi rms consider their alliances as real options on new
products under uncertainty and form diverse alliances to spread their bets and delay
choice until uncertainty is resolved. This comparison of theories is more than a
thought exercise as learning theory and real options theory lead to different implica-
tions as to the composition of an optimal alliance portfolio.
A second challenge is to acknowledge fi rm differences. While not all fi rms benefi t
equally from portfolio diversity, fi rm differences are not commonly accounted for in
interfi rm network studies. I argue that differences among fi rms in their commitment
of managerial resources to portfolio management and in their internal R&D strategies
help explain why some fi rms benefi t more than other fi rms from portfolio diversity.
A third challenge is more contextual: technological developments such as the rise
of nanotechnology and institutional developments such as healthcare reforms change
the very nature of collaboration and alliance portfolios in the pharmaceutical industry.
From a discussion of these three questions, I will derive next steps for academic
research as well as recommendations for managers in the pharmaceutical industry.

5.2 Key Dimensions of Portfolio Management

The literature has identifi ed four principal dimensions of portfolio management that
relate to scale, partners, governance, and technology. The literature has been remark-
ably silent on two other relevant dimensions, namely the costs and dynamics