Abstract
Though scholars are coming to a consensus that search and renewal of competencies prompts firms to expand their boundaries using alliances (Gulati, et al., 2009, p. 1213; Poppo & Zenger, 1995; Steensma & Corley, 2001), there is a gap in the literature regarding motives of alliance formation particularly for the young firms. Drawing on the real options view and multiple agency theory (Arthurs, et al., 2008), we propose that venture capitalists (VC) and institutional investors have different motivations which will influence the IPO firms' strategic decisions. Specifically, we examine the following research question: How does the power of venture capitalists (VC) and institutional investors impact a young IPO firm's strategic choice regarding the nature of alliance network it develops? Further, we examine how different governance influences impact a firm's decision to develop upstream (exploration) or downstream (exploitation) alliance networks (Rothaermel & Deeds, 2004; Lavie & Rosenkopf 2006).