Firm Performance and Alliance Capability: The mediating role of culture

Purpose – Extant literature has looked at the effect of alliance capability and organizational culture on alliance portfolio performance, but the relationship between the two has not been explored. The purpose of this paper is to explore the hypothesis that an alliance supportive culture is not only fostered by a firm’s alliance capabilities, but that it mediates the relationship between capabilities and performance. Design/methodology/approach – Survey responses from 190 alliance managers, collected using a two-stage process, were analyzed to investigate the interrelationship of firm-level alliance capability, alliance supportive culture and portfolio performance. Findings – Alliance supportive culture was found to mediate the relationship between alliance capability and alliance portfolio performance. This finding suggests that in order to effectively manage a firm’s portfolio of alliances, the benefits of alliance capability must be transferred broadly into the organization’s cultural orientation toward alliances. Research limitations/implications – Further research may extend this analysis to explore the effect of subcomponents of alliance capability and alliance culture to better understand fine-grained influences on alliance performance. The findings of this study also may be extended to inform how supportive culture orientation affects partner selection, negotiation and time to performance. Practical implications – Managers should utilize culture-building actions as a way of extending the value of their firms’ alliance capabilities in order to improve their effectiveness across the portfolio. Originality/value – Extant studies have considered the discrete effects of capability and cultural orientation on alliance portfolio success, but the mediation effect has not previously been investigated. The findings also identify a boundary condition for the benefit of alliance capabilities on portfolio performance.