Resource type and SME alliance formation: the contingent role of perceived environmental uncertainty

Abstract

PurposeThe aim of the study was to determine how the different types of resources possessed by a small- and medium-sized enterprise (SME), in conjunction with the environmental uncertainty perceived by the SME's managers, affect SME's alliance formation.Design/methodology/approachPersonal interview method was used to collect responses to a survey instrument from Indian SMEs. Logistic regression technique was used to analyze the responses obtained from 127 manufacturing enterprises.FindingsThe study finds that while both tangible and intangible resources possessed by an enterprise positively influence the enterprise's alliance formation, the influence of intangible resources is significantly stronger. The authors also observed the interactive effect between each resource type and environmental uncertainty to be a significant predictor of alliance formation.Research limitations/implicationsThe study does not account for temporal effects such as changes in resources and perceived environmental uncertainty, which may affect alliance formation. Similarly, because the data were obtained from a geographically restricted sample, replication of the study in other geographies may be necessary for generalizing the results.Originality/valueThe paper responds to the call for research to link firm resources and perceived environmental uncertainty toward explaining alliance formation by SMEs. The study went beyond making a distinction between the two types of resources by explicating how the interaction of resource type and environmental uncertainty will affect alliance formation.

Firm performance in uncertain times: the importance of networking capabilities

“…Previous studies show managers have the difficult task of identifying and analyzing environmental uncertainty to adapt their firms to the new context (L opez-Gamero et al, 2011). A recent study by Prabhudesai et al (2022) analyzed 127 manufacturing enterprises in India Importance of networking capabilities and showed that managers' perceptions of environmental turbulence are key predictors of collaboration and alliance formation. Furthermore, perceived environmental uncertainties are a key factor in managing relationships (Mitrega and Pfajfar, 2015).…”

Do industries' structural attributes/characteristics influence their decision to utilize strategic alliances?

“…On the other hand, Ferreira et al (2021) in their studies showed that strategic alliances provide a solution for small and medium scale enterprises to overcome intellectual capital resource limits, which has substantial implications for business practice. Prabhudesai et al (2022) in their studies found that while both tangible resources such as finances, component parts etc and intangible resources such as knowledge, expertise etc. have a favorable impact on an organization's ability to establish alliances, intangible resources have a far larger impact.…”

Prior partnering experience and preferred alliance partner diversity of small firms

“…In the context of alliance portfolio configuration, diversity is, thus, both a potential source of added value as well as a source of costly complexity (Kavusan and Frankort, 2019;Parkhe, 1991;Singh and Mitchell, 1996). In anticipation of such added costs, firms with more internal resources consequently have a clear advantage in configuring alliance portfolios (Prabhudesai et al, 2022). While small firms can gain competitive advantage through multiple, simultaneous alliances, the combinations and roles of different partners in the portfolio is an especially important determinant of whether the overall effect on performance is positive or negative (Baum et al, 2000;De Leeuw et al, 2014;Lee et al, 2017).…”

“…Alliance experience, however, is acknowledged to be a multifaceted concept which might have varying effects depending on its depth, breadth and a multitude of other factors (Duysters et al, 2012;Fern et al, 2012a;March et al, 1991;Rothaermel and Deeds, 2006). Few studies have focused upon small firms (for two notable exceptions see: Prabhudesai et al, 2022;Vicentin et al, 2021), where the "dark sides" of experience may be more pronounced due to biased behaviors, e.g. lack of adaptability to new information and overgeneralizing from limited experience (Fern et al, 2012b;March et al, 1991;Parker, 2006;Shepherd et al, 2015).…”

“…, 1991; Rothaermel and Deeds, 2006). Few studies have focused upon small firms (for two notable exceptions see: Prabhudesai et al. , 2022; Vicentin et al.…”