Organizations build strategic alliances with other firms with the intent of tapping into partners’ resources and capturing long-term value from these relationships. Such partnerships are typically governed by contractual or equity arrangements with clear mutual obligations. More recently, however, organizations have begun to seek strategic partnerships with open innovation communities, which are novel digitally enabled forms of organizing, and where contractual commitments are not possible. Thus, selecting the right open innovation community as an alliance partner becomes a more complex decision. We follow how the organizational decision makers, in two technology firms that were pioneers of forming strategic alliances with open innovation communities, developed metrics around making such decisions. We build upon Shah and Swaminathan’s (2008) contingency model of alliance partner selection and consider how it applies to the case of partnering with open innovation communities. This framework was useful in to frame our findings, yet our work recognizes and builds upon two key differences: 1) the evaluation metrics used in selecting an open innovation community were more focused on value creation than value capture; and 2) open ecosystem considerations, and not just partner-specific metrics, featured prominently in this type of alliance partner evaluation. We develop the notions of community and ecosystem health to refer to these new metrics.

Introduction

Inter-organizational literature is rich in studies on how, and why, ties are built between organizations (Gulati and Gargiulo, 1999; Kenis and Knoke, 2002; Khanna and Rivkin, 2006), especially ties that enable digital innovation across an ecosystem (Helfat and Raubitschek, 2018; Nambisan et al., 2017). This body of work emphasizes how the desire to tap into resources more quickly than competition and innovate by combining diverse sources of expertise (Hoang and Rothaermel, 2005) compels organizations to look beyond their own boundaries (Lorenzoni and Lipparini, 1999; Parmigiani and Rivera-Santos, 2011). However, whereas firms are increasingly engaging with external partners for innovation and efficiency, how organizational decision makers actually pick an alliance partner is not well understood. We know that organizations are likely to choose partners that they had prior relationships with, but we know far less about how organizational decision makers actually conduct a potential partner evaluation (Furlotti and Soda, 2019). Although selecting an alliance partner is not a frequent decision in organizational life, organizations nonetheless develop routines around such evaluations, which constitute their alliance management capability (Li and Rowley, 2002). However, these capabilities may not be directly relevant when organizations are choosing a non-traditional partner with whom they cannot sign a formal contract or negotiate an equity arrangement (Poppo and Zenger, 2002 Reuer and Africa, 2007; Ryall and Sampson, 2009). This is particularly true when new, digitallyenabled forms of organizing are involved, and when organizations seek to partner with open innovation communities (Boudreau and Lakhani, 2013; Dahlander and Magnusson, 2005; Stam, 2009; West and Lakhani, 2008; Boudreau and Lakhani 2009).