How strategic alliances determine market choices under exploration and exploitation
By Mihir Jakkaraju, Prothit Sen
Asian Management Research Consortium (AMRC)
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.
Professor Sen’s research includes exploring questions on corporate strategy such as those which pertain to the design of alliance portfolios and investment model innovations in the private equity industry. Professor Sen teaches Corporate Strategy and Organization Design.
Prior to obtaining his PhD, Professor Sen worked as a consultant for Bain & Company in Gurgaon, India. His advisory experience in India spanned across the manufacturing, automotive, IT services and private equity industries. Professor Sen has an MBA from the London Business School and a B.Sc. (Hons.) in Physics from St. Stephen's College, Delhi.
Prior to obtaining his PhD, Professor Sen worked as a consultant for Bain & Company in Gurgaon, India. His advisory experience in India spanned across the manufacturing, automotive, IT services and private equity industries. Professor Sen has an MBA from the London Business School and a B.Sc. (Hons.) in Physics from St. Stephen's College, Delhi.
Prothit Sen