The Impact of Tie Strength between Complementors in Strategic Alliances on Firms' Innovation and Performance
Mohamed, Fatma Ahmed
Taylor, G. Stephen
Taylor, D. Ronald
This study attempted to explicate and empirically assess the impact of tie strength between complementors in strategic alliances on firms? innovation and performance using the embeddedness perspective. The Embeddedness perspective emphasizes the importance of the social relationships upon which the firm can draw in its strategic behavior and performance. By using a sample of 49 firms in the software industry and collecting data for a five-year period, the study tested the following four hypotheses: First, there is a positive relationship between a firm?s tie strength with its complementors and innovation; second, there is a positive relationship between a firm?s innovation and its performance; third, there is a positive relationship between the strength of a firm?s ties with complementors and their performance; and fourth, innovation partially mediates the relationship between tie strength and performance. The first and second hypotheses were highly supported. The third and fourth hypotheses were not supported. Basically, the study found that firms with strong ties with their complementors were likely to exhibit more innovations. These successful innovations improve firm performance. As a result, the study suggested that it is critical for firms in the software industry to increase both the number and the strength of their alliances with their complementors.