Navigating Through Extreme Asymmetry: Partnerships Between Entrepreneurial Ventures And Established Firms

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Nowadays, technology-intensive industries are permeated with partnerships between young/small ventures and large/established firms, where the ventures make technology commitments to the established firms. The partners involved in these partnerships are extremely asymmetric in a variety of dimensions. However, alliance literature seems to suggest that partnerships between highly dissimilar firms are less likely as well as less effective. Thus, the purpose of this dissertation is to address two research questions: (1) Why do some entrepreneurial ventures decide to make a technology commitment to an established firm while others do not? (2) Given the decision to commit, why do some ventures create more value from the partnership than others? I examine these questions within the context of the Partner Networks Program of Alpha Corporation , one of the major IT companies. This is a public program established to foster Alpha Corporation's collaboration with a large number of entrepreneurial independent software vendors (ISVs). I began the study with a series of field interviews. I then conducted a quantitative study for which data were collected from public archives, Alpha Corporation's internal archive, and a web-based survey of ISV partners.

Results reveal that entrepreneurial ventures in the same alliance portfolio of an established firm are competing for attention of the established firm in order to leverage value from the partnership. As such, a venture's decision to commit to the partnership is not only driven by its need for legitimacy and resources, but also determined by its expectation of its future ability to gain the established firm's attention. After the venture has committed to the partnership, its value creation from the partnership is largely a function of its attention-capturing ability. Such ability is predicted not only by the venture's attractiveness to its established partner as well as the venture's proactive behaviors, but also by the interactions between its attractiveness and proactiveness. In specific, the venture's proactive behaviors can substitute for the more visible aspects of its attractiveness, but magnify the less visible aspects of its attractiveness. This dissertation enhances our understanding of partnerships between entrepreneurial ventures and established firms, and contributes to a number of literatures.