Partner selection processes in international strate gic alliances by small and medium sized businesses: UK fresh produce growers and their overseas partners (original) (raw)
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Experience of some countries shows how alliances have helped SME (small and medium enterprises) to be successful; however, this strategy is still not very popular in many other countries. Managing alliances is no more difficult than deciding to enter into such a cooperative relationship. Many researchers, particularly in the advanced countries have studied strategic alliances with special emphasis on large enterprises and focused as a way of internationalization but there is still a gap of references to understand how this decision is taken from the SME: what makes SME to be engaged in alliances? which factors are playing an important role into this decision?
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Purpose: This paper focuses on understanding three dimensions of international alliance formation by SMEs: the role of internal actors, planning/opportunity management, and organizational learning. Design/methodology/approach: These three dimensions form a proposed model of international alliance formation which is examined using semi-structured interviews with 16 biotechnology SMEs from Montreal (Canada) and 12 from Boston (USA). Findings: Findings deepen our understanding of the firm's internal development of international alliance strategy. Results generally support different roles of organizational actors in international alliance formation, often a combination of planning and opportunity management, and signal rather weak administrative routines to ensure organizational learning from the alliance experience. Interestingly, alliance formation strategies vary across the two cities (countries). Age of the firm, development phase, human and financial resources, and competencies may explain these differences. Research limitations/implications: Limitations include single respondent in each firm, sample size, and single sector (biotechnology). Future longitudinal research could combine information from and about the implication of all actors and their networks during alliance formation and examine the process by alliance functions (R&D, production, marketing) and governance modes (equity, non-equity). Practical implications: Results suggest weaknesses and potential avenues to be explored by managers. Originality/value: To our knowledge, this is a first attempt to model the internal dimensions of alliance strategy formation for SMEs, integrating the role of actors, planning and opportunity, as well as learning. Multiple quotations provide a rich environment for understanding practice.
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Journal of Business Research, 2002
This study addresses the issue of how small-and medium-sized companies seek information about potential international partners for cooperation. In particular, we focus on two sources of information: direct personal information (DIRPI) and indirect personal information (INPI). We argue that the use of these sources is related to how closely related the planned alliance is to the strategic core of the company, the degree of dissimilarity among potential partners, the degree of expected opportunism from potential partners and prior experience with cooperation. Our hypotheses were tested on a sample of small-and medium-sized companies. The results indicate that the planned alliance's closeness to the strategic core of the company and partner dissimilarity are important predictors for how managers seek information about potential partners.
International Journal of Business Innovation and Research, 2009
As international markets grow, many small-and medium-sized enterprises (SMEs) are finding lucrative opportunities to serve overseas consumers and source from overseas suppliers. The impact of information technology has made worldwide communication easier and more rapid. Some SMEs are literally 'born global', ready to do business on the internet. For many SMEs, this new commercial frontier offers both great promise and the challenge of determining: What are the key drivers of success in new and unknown international markets? This article focuses on this question from the perspective of strategic alliances in the global business environment. It develops a model to guide SMEs in managing overseas partners or allies that will 'fit' best with their company and their ambitions. The model provides SMEs with both strategic and tactical dimensions that are key international business arena. This article guides SMEs to 'get it right' when selecting allies in overseas markets.
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A statistical analysis on food engineering companies from the North Eastern of Romania was made in order to emphasize the fact that alliances are clear examples for companies to achieve more important and stronger market presence. Today, alliances are a fact of life for business, a substantial part of current operations as well as a future strategy. Among other existing solutions, creating strategic alliances (through various types of cooperation, collaboration and partnership) is a solution for business firms to get competitive advantages. Strategic alliances have become increasingly more and more important in the global economy and nowadays they are a kind of competitive weapon for survival in the business world. Even if there have been made many alliances between business organizations, a "magic formula" for creating them has not been found yet, because each alliance has its own particularities and its specificity. Since the foreign literature and Romanian literature on...
International Journal of Business and Management, 2009
Newly established, technology-based firms entering international markets often have limited resources in terms of capabilities, time, and capital. As a consequence, these firms often use entry modes characterised by low resource commitment, including partnership agreements (strategic alliances). This paper, investigates which partner selection criteria that are important for this group of firms when they are selecting partners. Based on case studies of three Norwegian firms targeting the UK market, five selection criteria have been identified as important (trust, relatedness of business, access to networks, access to market knowledge, reputation), one has been identified as partly important (sharing of financial risk), and ten have been identified as having limited importance. Further, the paper discusses the implications of these results for managers of small firms entering international markets and presents recommendations for further research.
Alliance Decision-Making of SMEs
Electronic Journal Information …, 2011
Hardly a sector of economic activity has remained untouched by the trend of inter-firm collaboration, particularly among large enterprises, but it seems to remain uncommon among many SMEs especially in some developing countries. The advantages of the SMEs of being faster and flexible are clouded by the lack of resources and skills to develop businesses in the network. Successful development in some economies, mainly in Asia, has been based on effective linkage participation of SMEs as a strategy to cover the scarcities they face. This strategy is now playing an important role on the agenda in many countries in Latin America, but there is still a lack of information to make this strategy more popular among SMEs in these countries. Traditional literature in developed countries has been focused on large companies to explain what makes an alliance successful, how the relationship alliance partners should be, which structure of the alliance or the type of contract may make or break an alliance but, few researches have explored alliance as a strategy to develop SMEs. The critical role of decision-making process regarding to the choice of being engaging into an alliance deserves particular research attention. This paper is focused on the alliance decision making process with specially emphasis on SMEs. The main contribution is to provide a framework of different factors that have influenced alliance decision making process. Based on Social Capital and Social Exchange, this research concentrates his analysis on a sample of SMEs from Mexico in which both, experienced and inexperienced alliances entrepreneurs, were considered. Our proposal included twelve variables which were analyzed to find their impact on the alliance decision making. The results show that the internal alliance initiative, frequently enterprise diagnose, trust based on partners' prestige and smaller or similar characteristics of potential partners have strong influence on positive alliance decision making. Opposite expected characteristics were found between alliance experienced entrepreneurs and alliance inexperienced entrepreneurs.
Newly established, technology-based firms entering international markets often have limited resources in terms of capabilities, time, and capital. As a consequence, these firms often use entry modes characterised by low resource commitment, including partnership agreements (strategic alliances). This paper, investigates which partner selection criteria that are important for this group of firms when they are selecting partners. Based on case studies of three Norwegian firms targeting the UK market, five selection criteria have been identified as important (trust, relatedness of business, access to networks, access to market knowledge, reputation), one has been identified as partly important (sharing of financial risk), and ten have been identified as having limited importance. Further, the paper discusses the implications of these results for managers of small firms entering international markets and presents recommendations for further research.
International SME Alliances: The Impact of Alliance Building and Configurational Fit on Success
Long Range Planning, 2011
Building and managing international alliances is a challenging activity for many SMEs. This study examines the impact of a set of factors at different stages of international SME alliance evolution on their success. In particular, it examines whether problems in alliance building (poor evaluation of foreign partners as well as problematic negotiations/ arrangements) and the configurational fit of ongoing partnerships are directly and indirectly linked to alliance success. The study uses a PLS approach to analyze data gathered by questioning SME managers, and the results show that international SME alliance success depends (in order) on structural fit, cultural fit and strategic fit. The findings demonstrate that problems in partner selection and negotiations/arrangements affect alliance success both directly and indirectly e through their negative impact on the alliance's ability to attain configurational fit in the ongoing management of the partnership -and that the relationships between alliance building, fit and success vary according previous partner knowledge, international experience and previous investments. So the success of an international SME alliance depends not just on its current congruencies, but is also influenced by decisions taken at the alliance building stage, a factor neglected in extant studies.
Functional and Contextual Dimensions of INVs' Alliance Partner Selection
Journal of International Entrepreneurship, 2016
Prior research on the selection of international alliance partners calls for investigation of the potential specificity of selection criteria for evaluating partners for alliances with different objectives or functions. The present study responds to this need and contributes to the development of the field of international entrepreneurship by examining the relation between the alliance function and the criteria chosen. We studied three alliance functions: R&D, production, and marketing. Second, for each alliance function, we analyzed the criteria selected within two contexts: developing countries and those that consider emerging markets in their partner choice set. Data were collected through semi-structured interviews with 25 executives from INVs in two major North American biotechnology clusters, representing 239 alliances. 65.7% of these were signed with international partners. Results indicate that, aside from compatibility/complementarity of resources (R&D and production alliances), all criteria used within a single function are unique to that function. Furthermore, these criteria differ somewhat when the potential partners considered by a firm include those from both emerging and developed markets, compared to firms that limit potential partners to those in developed markets contexts. Finally, the study reveals that respondent firms integrate country, industry, and market attractiveness factors with partner selection criteria for marketing alliances. This suggests that, for many firms, market choice and partner selection are not successive steps. The study's originality lies in its focus on the relationship between alliance function and partner selection criteria used by INVs as well as within different contexts.