The Impact of Membership in Strategic Alliances on the Profitability of Firms in the Retail Sector

Abstract

Strategic alliances in the retail sector are based on cooperation in a variety of activities, ranging from supply and marketing to knowledge sharing and branding. For their members, they are a source of sustainable competitive advantage. Ever since the 1990s, a growing number of firms from the retail sector have attempted to improve their performance through participation in strategic alliances. The objective of this paper is to explore how participation in strategic alliances influences profitability of firms in the retail sector. A dynamic panel analysis is applied to the data on nearly 3,700 firms obtained from Amadeus, a large firm-level database, for eight countries (Croatia, Bosnia and Herzegovina, the Czech Republic, Slovakia, Slovenia, Poland, Hungary and Estonia) for the 2007-2012 period. The results of the investigation suggest that participation in strategic alliances positively influences a firm's performance.

Strategic Alliance and Its Influence on the Performance of Small- and Medium-scale Enterprises in Enugu State, Nigeria

“…This finding is significant and positive, and this indicates that strategic alliance affects the growth of profit in SMEs. This also corroborates the work of Butigan and Benic (2017) who found that there is a positive relationship between participation in strategic alliances and firm profitability. This can be attributed to reduction in production cost, risk sharing, and knowledge transfer, which are positive externalities of strategic alliances.…”

The Role of Strategic Alliances in Organizational Performance: A Review

“…The strategic alliance is a hybrid between the market and the firm, and can be a means to reduce the sum of transaction and production costs, thus formed to minimize costs and the motive for the theory is the evasion of small number bargaining and opportunism (Kogut, 1988). Therefore, the TCT suggests that the impact of strategic alliances on their members will be positive only if the potential benefits outweigh the costs of participation (Butigan & Benid, 2017), and transaction costs enhance competitive position and the acquisition of knowledge (Arrigo, 2012). Christoffersen (2013) and Shi, Sun, and Prescott (2011) anchored their studies on this theory.…”

“…There are studies on its effect on market share (Enyinnah, et al, 2020), operation sustainability (Akpotu & Jasmine, 2016), aviation industry (Thendu, 2020), small businesses and startups (Cacciolatti, Rosli, Ruiz-Alba, & Chang, 2020;Nwokocha & Madu, 2020;Obioma, 2017;Salisu & Abu Bakar, 2018;Talebi, et al, 2017), as well as on large corporations (Junaidu, et al, 2019). Strategic alliances studies have also been carried out in the service industry (Akewushola, et al, 2018;Akpotu & Jasmine, 2016;Enyinnah, et al, 2020;Salisu & Abu Bakar, 2018), retail (Butigan & Benid, 2017;Muange & Maru, 2015;Yacob, Sucherly, Sari, & Mulyana, 2016), and the manufacturing industry (Akewushola, et al, 2018;Aun, 2014;Ejekwu, Zeb-Obipi, & Uhuru, 2020;Junaidu, et al, 2019;Mathuki et al, 2019;Muteshi & Awino, 2018;Uko & Hamilton, 2020).…”

“…Firms involved in a strategic alliance could create value through several sources: Scale economies, reduced operational costs resulting from joint purchasing, economies of density, marketing and branding, effective risk management, knowledge sharing, cost-efficient market entries, and, especially, learning from partners (Arrigo, 2012;Butigan & Benid, 2017;Chao & Kao, 2015;Iatrou & Alamdari, 2015;Ireland, Hitt, & Vaidyanath, 2002;Kleymann & Seristö, 2017;Lee & Moon, 2016;Mellat-Parast, Golmohammadi, McFadden, & Miller, 2015;Min & Joo, 2016;Thendu, 2020;Vasigh, Fleming, & Tacker, 2018;Wang, 2014;Zou & Chen, 2017). Thus, alliances' success can be summarized as trust, the establishment of information & coordination system, provision of required resources, partner alliance experience, team spirit, agreement on fundamental values, appropriate scope; open communication; shared control, scrutinizing and selecting suitable strategic partner, cultural compatibility; measurable goals; and partner accountability and commitment of top management (Biggs, 2006;Dadfar, et al, 2014;Masoud, et al, 2020;Niesten & Jolink, 2015).…”

“…The review identified several successful alliance globally and the factors responsible (Klus, et al, 2019;McDaniel & Malone, 2012;Uddin & Akhter, 2011) and recognized the success factors responsible (Arrigo, 2012;Butigan & Benid, 2017;Chao & Kao, 2015;Iatrou & Alamdari, 2015;Ireland et al, 2002;Kleymann & Seristö, 2017;Lee & Moon, 2016;Mellat-Parast, et al, 2015;Min & Joo, 2016;Thendu, 2020;Vasigh, et al, 2018;Wang, 2014;Zou & Chen, 2017). Success stories are always encouraging for adoption, therefore, it is proposed that: P 3 : The factors that made strategic alliance successful today, will improve and be applicable in the future.…”