New Challenges in Alliance Portfolio Management - Innovation and Marketing in the Pharmaceutical Industry - page 153

5.3.1 Technology Diversity

An examination of trade and academic literature, as well as prior conversations with
industry professionals, has indicated that the main motivation for pharmaceutical
fi rms to build alliance portfolios is to stay ahead of the technological developments.
Despite the large body of research on diversifi cation and the economic importance
of technology-intensive industries, there is relatively little systematic evidence with
regard to technology diversity. Technologically diversifi ed fi rms spread their tech-
nology development efforts across a diverse range of technology domains (e.g.,
Miller 2006 ). A few prior studies underscore its key role in corporate economics
(e.g., Granstrand 1998 ) and suggest that technology diversity enables the fi rm to
take options on technological opportunities (Pavitt et al. 1989 ) and contributes to
fi rm performance (Suzuki and Kodama 2004 ). Unfortunately, researchers have been
very liberal in their measurement of technological diversity, using proxy measures
as diverse as partner diversity and industry diversity, making it diffi cult to arrive at
empirical generalizations.

5.3.2 Partner Diversity

Partner diversity refers to forging agreements with different partners rather than with
the same partners over time. 1 Partner diversity is thus the counterpart of repeated part-
nering (Wuyts et al. 2004a ). In the network literature, partner diversity has often been
interpreted as a proxy for access to non-redundant knowledge bases (Reagans and
Zuckerman 2008 ). This quite impressive leap from construct to measure is often justi-
fi ed on the basis of the strength-of-weak-ties argument which holds that weak ties are
more likely to give access to non-redundant knowledge bases. This argument emerged
as a post hoc interpretation of unexpected research fi ndings in a study on simple bits
of information, namely job leads (Granovetter 1973 ).
When knowledge is more complex, however, weak ties have the disadvantage that
they are not effective as vehicles for knowledge transfer (Hansen 1999 ). It is an impor-
tant insight that what makes weak ties interesting in situations, such as those analyzed
by Granovetter, is not their inherent weakness itself but essentially the non-redun-
dancy that they are associated with. Consequently, non-redundancy turned into a core
concept in later network literature, such as in structural holes theory (Burt 1992 ) and
bridging theory (DiMaggio 1992 ; McEvily and Zaheer 1999 ).
Using partner diversity as a measure of non-redundancy of knowledge bases is
problematic. First, one partner may work in diverse technology domains simultane-
ously and keep up or even shape the scientifi c developments in those domains over
time, making it a useful source of non-redundant knowledge for the allying fi rm.

1 Note that some authors have defi ned partner diversity differently, such as the diversity of structur-
ally equivalent partner types (e.g., Baum et al. 2000 ); also these operationalizations fail to capture
actual redundancy and suffer from similar problems as discussed in this paragraph.