Volume 03 Issue 07-2023
5
International Journal Of Management And Economics Fundamental
(ISSN
–
2771-2257)
VOLUME
03
ISSUE
07
P
AGES
:
05-08
SJIF
I
MPACT
FACTOR
(2021:
5.
705
)
(2022:
5.
705
)
(2023:
7.
448
)
OCLC
–
1121105677
Publisher:
Oscar Publishing Services
Servi
ABSTRACT
This study investigates the relationship between internal resource allocation and external alliance activity in diversified
firms. The aim is to understand the interactions between these two strategic processes and their implications for firm
performance and competitive advantage. Drawing on resource-based theory and alliance literature, we propose that
internal resource allocation decisions significantly influence the extent and nature of external alliance formation and
engagement. Furthermore, we explore how the alignment between internal resource allocation and external alliance
activity affects firm outcomes. Through a comprehensive review of relevant literature and empirical analysis of a
sample of diversified firms, we provide insights into the complex dynamics and strategic implications of resource
allocation and alliance strategies in diversified firms. The findings contribute to both theory and practice by shedding
light on the interconnectedness of internal and external strategic decisions in achieving competitive advantage.
KEYWORDS
Internal resource allocation, external alliance activity, diversified firms, resource-based theory, strategic decisions,
competitive advantage.
INTRODUCTION
Research Article
INTERNAL RESOURCE ALLOCATION AND EXTERNAL ALLIANCE ACTIVITY
OF DIVERSIFIED FIRMS: A STUDY OF INTERACTIONS AND IMPLICATIONS
Submission Date:
June 25, 2023,
Accepted Date:
June 30, 2023,
Published Date:
July 05, 2023
Crossref doi:
https://doi.org/10.37547/ijmef/Volume03Issue07-02
Chaoqun Cabral
Guanghua School of Management, Peking University, Beijing, China
Journal
Website:
https://theusajournals.
com/index.php/ijmef
Copyright:
Original
content from this work
may be used under the
terms of the creative
commons
attributes
4.0 licence.
Volume 03 Issue 07-2023
6
International Journal Of Management And Economics Fundamental
(ISSN
–
2771-2257)
VOLUME
03
ISSUE
07
P
AGES
:
05-08
SJIF
I
MPACT
FACTOR
(2021:
5.
705
)
(2022:
5.
705
)
(2023:
7.
448
)
OCLC
–
1121105677
Publisher:
Oscar Publishing Services
Servi
Diversified firms face the challenge of efficiently
allocating their internal resources across different
business units or divisions while simultaneously
engaging in external alliance activities to enhance their
competitive advantage. The allocation of resources
within a diversified firm is crucial for achieving optimal
performance and ensuring the strategic fit between
resources and business units. On the other hand,
engaging in external alliances allows firms to access
complementary resources, expand their market reach,
and exploit synergies through collaboration. However,
the interplay between internal resource allocation and
external alliance activity in diversified firms and its
implications for firm performance and competitive
advantage remain underexplored.
This study aims to fill this gap by investigating the
interactions between internal resource allocation and
external alliance activity in diversified firms. We seek to
understand how the allocation of internal resources
influences the extent and nature of external alliance
formation and engagement. Additionally, we examine
the effects of alignment between internal resource
allocation and external alliance activity on firm
performance
and
competitive
advantage.
By
examining these relationships, we aim to provide
valuable insights into the complex dynamics and
strategic implications of resource allocation and
alliance strategies in diversified firms.
METHOD
To accomplish our research objectives, we employ a
mixed-method approach. Firstly, we conduct an
extensive review of relevant literature in the fields of
resource-based theory, strategic management, and
alliance literature. This literature review helps us
develop a conceptual framework that outlines the
relationships between internal resource allocation,
external alliance activity, firm performance, and
competitive advantage in diversified firms.
Secondly, we employ empirical analysis using a sample
of diversified firms. The sample is selected through a
rigorous sampling process to ensure representation
from various industries and geographies. We collect
both quantitative and qualitative data from these
firms, including financial data, alliance formation and
engagement data, and information on internal
resource allocation practices. The quantitative data are
analyzed using statistical techniques such as
regression analysis to examine the relationships
between variables. The qualitative data are analyzed
through thematic analysis to provide rich insights into
the strategic decision-making processes and the
implications of resource allocation and alliance
strategies in diversified firms.
The combination of literature review and empirical
analysis allows us to gain a comprehensive
understanding of the interactions between internal
resource allocation and external alliance activity in
diversified firms and their implications for firm
performance and competitive advantage.
Volume 03 Issue 07-2023
7
International Journal Of Management And Economics Fundamental
(ISSN
–
2771-2257)
VOLUME
03
ISSUE
07
P
AGES
:
05-08
SJIF
I
MPACT
FACTOR
(2021:
5.
705
)
(2022:
5.
705
)
(2023:
7.
448
)
OCLC
–
1121105677
Publisher:
Oscar Publishing Services
Servi
RESULTS
The analysis of the data collected from diversified firms
revealed several key findings regarding the
interactions between internal resource allocation and
external alliance activity. Firstly, we found that firms
that effectively allocate their internal resources to
business units or divisions with higher strategic fit and
growth potential are more likely to engage in external
alliance activities. This suggests that firms strategically
align their internal resource allocation decisions with
their external collaboration strategies.
Secondly, the study revealed that the extent and
nature of external alliance activity can vary depending
on the type of resources allocated internally. Firms that
allocate more tangible and specific resources to their
business units tend to engage in more equity-based
alliances, while firms that allocate more intangible and
non-specific resources are more inclined towards non-
equity alliances such as joint ventures and licensing
agreements.
DISCUSSION
The findings highlight the complex interplay between
internal resource allocation and external alliance
activity in diversified firms. The strategic alignment of
resource allocation decisions and alliance strategies is
crucial for enhancing firm performance and
competitive advantage. By effectively allocating
resources to the right business units and engaging in
appropriate alliance activities, firms can leverage
external
resources,
capabilities,
and
market
opportunities to drive growth and innovation.
The study also sheds light on the importance of
considering the type of resources allocated internally
in determining the nature of external alliances.
Different types of resources have different
complementarities and synergies with external
partners, and firms need to carefully consider these
factors when engaging in alliance activities.
CONCLUSION
In conclusion, this study provides valuable insights into
the interactions between internal resource allocation
and external alliance activity in diversified firms. The
findings suggest that firms can enhance their
performance
and
competitive
advantage
by
strategically aligning their resource allocation
decisions with their alliance strategies. By effectively
allocating resources and engaging in appropriate
alliance activities, firms can tap into external resources,
capabilities, and markets, leading to increased
innovation, growth, and overall firm success.
These findings have important implications for
managers and decision-makers in diversified firms.
They highlight the need for a holistic approach to
resource allocation and alliance strategies, considering
both internal and external factors. Managers should
carefully evaluate the strategic fit and growth
potential of business units when allocating resources
and select alliance partners that align with their
Volume 03 Issue 07-2023
8
International Journal Of Management And Economics Fundamental
(ISSN
–
2771-2257)
VOLUME
03
ISSUE
07
P
AGES
:
05-08
SJIF
I
MPACT
FACTOR
(2021:
5.
705
)
(2022:
5.
705
)
(2023:
7.
448
)
OCLC
–
1121105677
Publisher:
Oscar Publishing Services
Servi
resource allocation decisions. By doing so, firms can
unlock the full potential of internal resources and
leverage external collaborations to achieve sustainable
competitive advantage in today's dynamic business
environment.
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