How does the nature of firms' alliance portfolio in terms of exploration versus exploitation affect performance? Building on prior research grounded in the resource-based view and the relational perspective, we expand firms' boundary to include their inter-firm relationships and their immediate environment, and develop an extended resource-based framework centering on the concept of fit. Specifically, we propose that whether the exploration versus exploitation orientation of an alliance portfolio may benefit firm performance depends on how such an orientation fits the firm's internal organizational characteristics, strategic orientations, and the industry environment. Data from five U.S. industries over eight years largely support our thesis. Overall, our study calls for a holistic approach to consider the importance of organizational, strategic, and environmental fit in understanding the performance implications of alliance-formation choices.