Open-Innovation Effectiveness: When does the Macro Design of Alliance Portfolios Matter?

We determine the impact of the macro-design of a firm's alliance portfolio on its open-innovation effectiveness. Three elements of macro-design—international, technological, and partner diversity—are theorized to affect the breadth of knowledge sourcing, which is an important facet of open-innovation effectiveness. We test our hypotheses on a sample of 982 firm-years in the biotech industry. We find a U-shaped relationship between knowledge-sourcing breadth and international diversity. We also find that that technological diversity has no impact on knowledge-sourcing breadth. Furthermore, when seeking valuable knowledge, partner diversity is detrimental to knowledge-sourcing breadth.