Leveraging the Value of Proprietary Technologies

A knowledge-based perspective guides an empirical analysis of the relationship between technology portfolios and the rate at which new, technology-based firms form alliances. Following a review of the literature on alliance formation in new small firms and the degree to which knowledge may be considered a resource for alliance formation, it is hypothesized that firms with patent portfolios will form more alliances than those without portfolios and that the more important a new firm's portfolio, the higher the rate of alliance formation will be. These hypotheses are evaluated in light of nine years' worth of technology portfolios and alliance data on 67 new, U.S.-based firms from the computer and telecommunications industries.Analysis of the firms' patent and alliance activities supports the first hypothesis--i.e., firms that build patent portfolios in their first six years are more likely than those without portfolios to form alliances. The importance of a firm's portfolio, however, is only moderately associated with the rate at which it forms alliances. The findings reinforce the value of building technology portfolios and reveal implications for the study of knowledge-based applications of resource-based theory.(SAA)