How strategic alliances determine market choices under exploration and exploitation
By Mihir Jakkaraju, Prothit Sen
Asian Management Research Consortium (AMRC)
Citation
Jakkaraju, Mihir., Sen, Prothit. How strategic alliances determine market choices under exploration and exploitation Asian Management Research Consortium (AMRC) .
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Asian Management Research Consortium (AMRC)
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Abstract
This paper explores the complex dynamics between alliance intensive exploratory and exploitative strategies, and their influence on market diversification. It challenges the largely held conventional wisdom that exploratory strategies restrict market diversification while efficiency gains from exploitative strategies enable it. By adopting a nuanced perspective, it scrutinizes how ambidextrous firms, those engaging in both strategies through strategic alliances, navigate these trade-offs, to complement their capabilities and facilitate or constrain market diversification. Analyses on a large dataset of global private equity (PE) deals transacted in the period 2000-2022 reveals that while exploitative value creation modes (like conventional LBOs) linked with high alliance activity enhance market diversification, exploratory value creation strategies (such as synergistic add-on deals) encourage sectoral diversification but lead to a more geographically concentrated portfolio of PE investments. The findings illuminate the role of alliances in shaping market diversification outcomes for ambidextrous firms who engage in simultaneous exploration and exploitation.

Prothit Sen is an Assistant Professor of Strategy at the Indian School of Business (ISB). His research interests primarily include business model innovations and the impact of such innovations on corporate strategy decisions such as strategic alliances and private equity portfolio strategies. In terms of research methodology, Professor Sen performs empirical analyses over secondary data by using a combination of predictive models that use machine learning algorithms and classical econometric techniques for making causal inferences regarding the phenomena of his interest.

Prior to completing his PhD, Professor Sen worked for several years as a consultant at Bain & Company in Gurgaon, India. His advisory experience in India spanned across manufacturing, automotive, IT services, and private equity sectors.

Prothit Sen
Prothit Sen