Patent strategy in exploration and exploitation alliances: The case of biotechnology start-ups

In technology-intensive industries, firms form alliances with each other to promote knowledge transfer and pool resources. The benefit that a firm is able to obtain through its alliance activities depends on a variety of factors. The patent portfolio of the focal firm is one of such factors that influences the role of alliance in enhancing firms' performance. As different facets of a firms' decision making process, alliance strategy and patent strategy need to be coordinated in a way that optimizes its innovative performance. Using a dataset comprised of 182 biotechnology start-ups, we show that a firm's alliance strategy and its patent strategy interact in subtle ways to impact innovative performance. The results indicate that firms engaging in more exploitation alliances should maintain a patent portfolio that is comprehensive in both depth and breadth. In contrast, for firms with more exploration alliances, a deep and broad patent portfolio would decrease the positive role of alliance in improving performance.