Opportunity is in the eye of beholder: Behavioral drivers of alliance portfolio adaptation to performance and environmental jolts

As the literature on organizational alliances has begun to shift from analyzing individual dyads to strategic alliance portfolios, the essential drivers of firms’ alliance portfolio characteristics remain largely unexplored and poorly understood. In particular, existing studies do not provide a clear understanding of how contextual factors determine essential characteristics of a firm’s strategic alliance portfolio—particularly with respect to the diversity of the portfolio. Treating firms’ alliance portfolios as bundles of search activities, we apply the behavioral strategy lens to explain the observed changes in strategic alliance portfolios’ diversity driven by factors of the external (environmental jolts) and internal (relative performance) environments. We test our proposed theoretical framework by tracing the evolution of telecommunication industry firms’ alliance portfolios before and after the 1996 Telecommunications Act and the 2000 market crash.