Alliance Engagement. A Strategic View from the Back to Face the Future of SMEs by Karla Guadalupe Diaz Durand, Ute Rietdorf, and Utz Dornberger

Competing only with one’s own resources is meant to abandon opportunities and available resources from others. In this context many authors have emphasized the use of inter-firm cooperation as an effective solution to confront the global business environment. Successful development in some economies, mainly in Asia and Europe, was based on effective linkage participation between SMEs. However, recent studies show that there is a less significant trend among SMEs to be involved in alliance engagement compared with large companies. This paper focuses on the identification of factors that influence the alliance engagement of SMEs, particularly in developing countries such as Mexico. In the analysis of these factors, three stages of alliance engagement are considered: future alliance engagement (FAE), current alliance engagement (CAE), and intensity of alliance engagement (IAE). Based on factor analysis and different regression analysis results, this paper proposes a framework composed of four influential factors to encourage alliance engagement of SMEs. Key words: Alliance engagement, SMEs, Social Capital, Exchange Capital.

Introduction Global business constantly faces radical

confront

challenges where competing only with

example: Gulati 1995, Berry 1997, Arend

one’s own resources is meant to abandon

2006). Many studies have analysed inter-

opportunities and available resources from

firm relationships by focusing on large

others

The

firms in developed countries, but little is

which

known about the cooperation and alliances

organisations operate demands a new

involving SMEs in developing economies

approach and a strategy for competing in

(Vonortas, and Safioleas 1997).

this environment. Different authors have

Successful

emphasized

economies, mainly in Asia and Europe,

(Das

competitive

and

Teng

2001).

environment

the

use

in

of

inter-firm

cooperation as an effective solution to

was

such

based

environment

development

on

(see

in

effective

for

some

linkage

Karla Guadalupe Díaz Durand is a PhD candidate of the international SEPT program at the University of Leipzig, Germany. Dr. Ute Rietdorf is senior research assistant in the international SEPT program at the University of Leipzig, Germany. Dr. Utz Dornberger is director of the international SEPT program at the University of Leipzig, Germany.

1

Address correspondence to: Utz Dornberger, International SEPT Programme, University of Leipzig, Beethovenstrasse 15, 04107 Leipzig, Germany, Email: [email protected]

participation among SMEs as a strategy to

In this paper we analyse the characteristics

cover the scarcities they faced (Berry 1997,

that played an important role in inter-firm

Nishiguchi et al. 1997). However, recent

cooperation of many countries and we

studies show that there is a less significant

propose a framework with influential

trend among SMEs to get involved in inter-

factors

relationships compared with the large

engagement as a common strategy among

companies (Haagedorn, and Schakenraad

SMEs

1994). Previous inter-firm cooperation can

particularly in the case of Mexico, to

provide important insights and experiences

improve SMEs’ competitiveness in a

of other countries (for example from Asia,

globalised market environment. In the

and Europe), learning from the “back” to

analysis of the selected characteristics, we

face

considered

the

“future”

of

many

SMEs,

that

in

can

encourage

developing

three

alliance

countries,

stages

of

here

alliance

economies.

engagement: the first stage labelled “future

Alliance engagement is a strategy that is

alliance engagement” (FAE) refers to those

now playing an important role on the

SMEs which have never experienced an

agenda of many countries in Latin America

alliance engagement but are planning to be

(Berry 1997), but there is still a lack of

engaged in the near future. The second

information to make this strategy more

stage of engagement labelled “current

popular among SMEs in these countries.

alliance engagement” (CAE) refers to

Alliance engagement offers an important

those SMEs which have decided to be

opportunity for a balanced enterprise

involved in alliance engagements. The last

development

business

stage of engagement labelled in this paper

environment, especially for SMEs with a

as “intensity of alliance engagement”

comparably small amount of resources and

(IAE) refers to the number of alliances that

competences.

a SME has held during its operation. The

particularly in

in

developing

a

turbulent

2

analysis of these stages aims to provide

strategies

that

increase

more specific results in the understanding

engagement in countries where inter-firm

of an alliance engagement as a strategic

participation

decision, as well as, to address more

among SMEs.

effective and particular measures that

Gulati (1995) defines alliance as an

could promote the inter-firm cooperation

“independently initiated inter-firm link that

of SMEs.

involves

still

exchange,

remains

alliance

uncommon

sharing,

or

co-

development”, while Hitt et al. (2000) see Theoretical Background

alliances as “cooperative arrangements

Different researches in alliances have

between two or more firms to improve

appeared, emphasizing the importance of

their competitive position and performance

cooperation agreements among companies

by sharing resources”. Based on these

of

direct

authors, in our paper we show alliance

competitors in business, in comparison to

engagement as a voluntary inter-firm

the habitual cooperation among large

agreement to exchange, share or develop

enterprises in the past (see for example

resources, services or products to obtain

Berry and Escandon 1994, Alabaladejo

benefits that they would hardly obtain

1998,

new

operating as an individual unit. In our

modalities have created a new attitude in

definition, we include different forms of

governments and community authorities to

inter-firm cooperation: vertical linkages

undertake

to

such as, subcontracting activities, supply

encourage cooperation among enterprises

chains, agreements, etc., and horizontal

(Ferraro 2004). The challenge is to identify

linkages such as small-small alliances

the most common characteristics in success

developed

cases of alliance engagement, to develop

environments,

similar

dimension

Barreiro

2002).

numerous

and

These

initiatives

in

clusters etc.

and

There

network

have

been 3

attempts to explain inter-firm cooperation

availability of resources from alternate

from different theoretical points of view,

sources (Blau 1964, O’Brien 1991, Cooka

but none of these theories alone is perfectly

2002, Trompenaars 1985). Both Social

suitable for studying SME cooperation

Capital and Social Exchange, provide

(Mathieu 1997). We have chosen Social

insights allowing us to have a better

Capital and Social Exchange theories to

understanding of the alliance engagements

enhance the role of alliance engagement as

of

an inter-firm cooperation, because on the

cooperation.

SMEs

as

a

form

of

inter-firm

one hand, Social Capital studies the different forms of engagement that exist in

Alliance Engagement around the World

formal or informal social participation, and

Inter-firm

the levels of impact that these inter-

successful strategy in developed countries

relationships have in different contexts:

all over the world (for example: Italy,

micro, meso and macro (see for example:

Japan, Germany, etc.); some of them have

Putman 2003, Szreter, and Woolcock

even exported these policies to other

2004, Pridmore 2007); and on the other

countries where they have been successful

hand, Social Exchange theory underlines

in adapting them to the country’s specific

different assumptions about the behaviour

needs and conditions. The strong growth

of actors engaged in exchange and the

and performance of the East Asian

effects of different factors on the outcomes

countries (beginning with Japan, but also

of

power-dependence

including Korea, Taiwan and others)

principle, in addition, allows for the

suggests that the benefits of inter-firm

formulation of predictions concerning the

cooperation and linkages can be enormous

effects of increasing the value of the

(Berry 1997). It is argued that the success

resources involved in the exchange and the

of alliances in Europe is based on a system

exchange.

The

cooperation

has

been

a

4

where benefits and risks are shared among

Yasuda 1993). In this kind of alliance the

SMEs (Schmitz, and Musyck 1994).

primary

There are precedents to show political

resources, for example, a SME may own

actions focused to promote the inter-

excellent intellectual properties but lacks

collaboration

Latin

the capital for product development and

America. However, they were very scarce

manufacture. Such SME may collaborate

and isolated. Clear examples of countries

with another SMEs or large enterprises that

with strong institutional development in

have

inter-firm cooperation are: Brazil, Chile

capabilities (Yasuda and Hijima 2005).

and El Salvador. On the other hand,

Some concept underlined by many authors

examples of countries with common

as key issues in this type of inter-firm

programs

sufficient

relationship are: the enterprise’s strategy

coordination are: Costa Rica, Colombia

(see for example Hagedoom 1995, Lewis

and

with

1992), self-perception (see for example

isolated activities are Argentina, Ecuador,

Gómes-Cassares 1997), learning (Senge

Nicaragua, Peru, Trinidad, Uruguay, and

1990, Dixon 1995), partner selection

Venezuela (Ferraro 2004).

(Barney 1991, Dacin et al 1997), culture

among

but

Mexico.

SMEs

without

Finally,

in

countries

purpose

development

is

to

and

complement

manufacturing

and ethnicity (Humphrey and Schmitz Characteristics of alliance engagement

1995), economies of scale (Dyer and

We analysed horizontal and vertical forms

Nobeoka 2000), market access, transaction

of inter-firm organization from different

cost (Kale and Singh 2000), innovation

countries

key

(Humphrey and Schmitz 1995), risk (Ring

characteristics. In horizontal linkages, the

and Van de Ven 1992), control (Das and

purpose is to enable the firm’s access to

Teng 2001), governmental support (Berry

other management resources (Gulati 1995,

1997, OECD 2003), commitment (Black

in

order

to

find

5

and Edwards 2000), international market

milieu (Humphrey and Schmitz 1995),

orientation (Berry 1997), trust (Zucker

social cohesion (Berry 1997), trust (Zucker

1986), among others.

1986, Hill 1990), prestige (Piore 1992),

In vertical linkages, the inter-firm relation

partners selection (Dancin et al 1997),

refers to links between firms, or within a

structuring (Schmitz 1995), among others.

firm, up-and-down the production chain

From the information above, we grouped

for a particular product (OCDE 1993). The

the

most common type of vertical linkages is

characteristics. In our selection we decided

subcontracting; according to Odaka (1978),

to exclude some concepts: first, concepts

subcontracting is a type of business

related to specific circumstances were not

agreement

included because we considered that they

in

(subcontractors

which

different

commissioned by another party (parent

Mexican environment, (e.g., transformative

firms, assembler firms or higher-tier

synergies, and social cohesion particularly

supplier firms) to provide intermediate

from

products or processing services necessary

second, issues related to external support

for products manufactured by the latter,

such

based on specifications (quality, function,

macroeconomic circumstances were also

shape,

concepts

not included because we considered they

underlined by many authors as key issues

were beyond the scope of our study,

in this type of inter-firm relationship are:

deserving a separate analysis; and third,

leadership and governance (Eden 1992,

issues related to outward-orientation were

Porter

behaviour

also excluded because, according to the

(Pfeffer and Salancik 1978, Das and Tang

last census in Mexico (INEGI 2004), less

2001), stability (Barney 1991), social

than 1% of the micro small and medium-

etc.).

Some

opportunism

firms)

in

could be difficult to reproduce in a

1985),

supplier

party

concepts

is

design,

or

one

common

Japanese

as

and

Italian

governmental

clusters);

programs,

or

6

sized enterprises in Mexico are selling

company is the result of the correct

abroad. After these considerations, we

interaction of business management with

agreed in including characteristics which

its internal and external environment (Hill,

were related to: a) the enterprise diagnosis,

and

b)

enterprise

successfully, a company must concentrate

competences in alliance engagement, c)

on its future objectives and on its strengths,

enterprise flexibility, d) the possession of

while averting tendencies related to the

knowledge about alliances, e) trust in

company’s

alliance engagement, f) the identification

Westbrook 1997). Responding to internal

of potential partners, g) expectations of

strengths and weaknesses is therefore an

partners’

essential

the

perception

characteristics,

of

h)

cultural

Westbrook

1997).

weaknesses

component

of

To

operate

(Hill,

the

and

strategic

stereotypes in alliance engagement, i) the

management process (Houben et al. 1999).

identification of economic benefits, j)

Perception of Enterprise Competences in

internal and external initiatives, k) risk

Alliance Engagement

perception, and l) the perception of loss of

The perception of self-efficacy concerns

control.

the belief that one is capable of performing

Enterprise Diagnosis

certain goals. A positive perception of self-

Based on Hill and Westbrook (1997),

efficacy has an important influence on the

enterprise diagnosis refers to the evaluation

perception of partners providing a feeling

of the enterprise’s situation. It involves

of

specifying the objective of the business

relatively low performance risk (Miller et

venture or project, and identifying the

al.

internal and external factors that are

competences is a characteristic that has

favourable and unfavourable to achieving

influence on the entrepreneur’s decision

that objective. Good performance within a

making. A high level in self-perception

confidence

1999).

and

a

Perception

perception

of

of

enterprise

7

increases the effort exerted on a task and

possession

leads to improved task performance (Eden

different

1992). A high perception of enterprise

confident and increases the possibility of

competences influences the creation and

better decision-making in their business

subsequent survival of new ventures due to

strategies.

its affect on the decisions that individuals

Identification of Potential Partners

take when moving from intentions to

According to Barney (1991) and Mahoney

actual actions (Forbes 2005).

(1992), the identification of a potential

Enterprise Flexibility

partner is a key factor in an alliance

Responding

to,

or

anticipating

of

knowledge

issues

makes

regarding

people

more

the

engagement because of two reasons: first,

continuous changes of the global business,

most alliances represent an agreement

often requires companies to modify their

between partners, thus, focusing on pair-

organisation strategies (Price et al. 1997).

wise relationships can be particularly

One advantage of many SMEs is the ability

meaningful; second, the inclusion of a

to adapt themselves to the changes of the

clear identification of the partner firms

environment. Flexibility is necessary for

provides a complete picture of how the

partners to sustain a viable relationship in

partners “fit” each other.

the face of changing circumstances.

Expectations of Partners’ Characteristics

Possession of Knowledge about Alliances

The idea of a match between partners

Knowledge acquisition is the process of

should not be limited to resources. Indeed,

gaining possession of specific knowledge

in strategy research, following the tradition

to be able to apply it when it is required.

of

Grant (1996) suggests that in order to

competitors are analysed in terms of their

create a competitive advantage, firms need

market

to harvest and exploit knowledge. The

relative size, resources, and market power

industrial

organisation

positions

(Porter

economics,

1985).

The

8

of the partners affect the decision of

dysfunctional conflict and mistrust as the

becoming engaged in an alliance. Alliances

partners differ in organisational cultures

between equally strong, equally weak or

and management philosophies, and thirdly,

unequal partners can be dramatically

the learning process, often mentioned as

different in their alliance motives and

one of the major benefits and motivations

structuring process. Dacin (1997) suggests

for strategic alliances, may be affected if

that some characteristics in selecting a

partners do not trust each other (Das and

strategic partner are an analysis of motives,

Teng 2002; García 1995; Medcof 1997).

criteria, practices and/or outcomes of

Cultural

partner selection processes.

Engagement

Trust in Alliance Engagement

Hofstede (1980) views culture as the

The literature on the theme of trust

collective programming of the mind, which

contains

regarding

distinguishes the members of one category

cooperative relationships and the role of

of people from another. The human mind

trust (Zucker 1986; Smith and Ashford

is programmed by the system of cultural

1995). Trust is central to strategic alliances

beliefs and values that are unique to the

for three main reasons: firstly, no contract

ethnic group and are subconsciously

or agreement, no matter how complete or

absorbed by individuals from a very early

detailed, can account for every issue or

age (Samovar and Porter 1995). Rodriguez

every contingency that might arise. Formal

and Ramirez (2004) support the idea that

contracts, for instance, can never anticipate

there is a strong inter-connection between

and identify all the events and changes that

the

occur over the lifetime of the strategic

population in a nation and the impact it has

alliance; secondly, the alliance of two or

on the labour environment; each person is

more firms creates a strong potential for

a product of his/her biological background,

various

insights

history

Stereotypes

and

in

psychology

Alliance

of

the

9

environment, personal reactions and own

engagement and proposes to distinguish

decisions.

the

between internal and external initiatives.

by

When a proposal to develop an alliance

tradition, social rules, styles, fashion

comes from the owner/manager, it will be

ideologies, values, etc., has a strong

referred to as internal initiative, and when

influence on daily activities and they are

the proposal comes from external sources,

dynamic elements that create a culture.

it means, another enterprise, it will be

environment

Leadership

The

influence

which

is

of

integrated

and

referred to as external initiative. In both

External Initiative in Alliance Engagement

cases, initiative refers to the beginning or

For an SME, the process of achieving

introductory step to start and carry out the

competitiveness is strongly influenced by

alliance proposal.

the

Identification of Economic Benefits in

key

Initiative:

players,

Internal

highlighted

as

entrepreneurship factors in the framework

Alliance Engagement

of Horne (Horne et al. 1992). An OECD

This literature has identified a host of

study (1993) has put forward the idea that

motives

the

the

collaborations, including categorisations

owner/manager” is one of the major

such as scale alliances, in which partners

determinants of SMEs competitiveness

contribute similar capabilities in an attempt

because of the concentration of decision-

to maximise the utilisation of similar

making power within the owner/manager,

assets, and link alliances where partners

consequently affecting the firm’s overall

contribute different capabilities in an effort

strategy. This paper acknowledges the

to learn from each other (Hennart, and

existence of a leader in charge of

Larimo 1988). Fundamentally alliances are

promoting alliances’ initiatives as an

motivated by the desire to achieve some

influential

economic benefit from a strategy, or the

“basic

role

played

characteristic

on

by

alliance

for

forming

inter-firm

10

need to compensate for the absence of, or

otherwise by external factors such as luck

weakness in, a (perceived) required asset

(Rotter 1966). Literature suggests that

or

1989).

control is a key source of confidence in

Alliance engagement provides numerous

partner cooperation (Gulati 1995; Parkhe

advantages and benefits. The identification

1993). Therefore, organisations in alliances

of economical benefits is a characteristic

tend to be more confident about partner

strongly connected to the initiative of any

cooperation when they feel they have an

strategy.

adequate level of control over their

Risk perception in alliance engagement

partners (Das, and Teng 2001; Konsysnski

Risk perception is a term which refers to

1993).

competency

(Williamson

those ambiguities perceived by prospective alliance partners, about the future events

Methods

that

the

The collection of the empirical data was

performance of the alliance (Ring, and Van

done in Mexico between June and August

de Ven 1992). Risk perception provides a

2009. The economy of Mexico is the 13th

particularly

for

largest in the world in nominal terms; and

studying strategic alliances. Perceptions of

the 11th by purchasing power parity,

relational risk and performance risk in an

according to the World Bank (2007). In

alliance can be attributed to various factors

Mexico, 97.2% of the enterprises are

(Das, and Teng 2001).

micro, small and medium sized enterprises.

Perception of the loss of control in alliance

This group of enterprises faces serious

engagement

problems. Particularly, during the last 10

Loss of control refers to the degree in

years, inter-firm cooperation has been

which individuals believe that their fate is

placed at the top of many governmental

determined by their own abilities, or

Mexican programs, however most of them

may negatively

revealing

impact

on

perspective

11

have not been very successful and they

questions were also included using open

have had many problems with coordination

questions. We could access different

(Ferraro 2004).

databases of SMEs with and without

The sample consisted of 148 SMEs (69

alliance engagement through our research

SMEs with alliance experience and 79

partners. We started making contact with

SMEs without alliance experience); 76%

the SMEs and arranged an appointment

were small-sized enterprises (between 11

either in a face to face interview or phone

and 50 employees) and 24% were medium-

interview. To ensure that respondents

sized enterprises (between 51 and 250

shared a common notion of alliance

employees); 44% of the SMEs in the

engagement, a definition was given at the

sample belonged to the manufacturing

beginning of the interview; the opportunity

sector, 38% to the service sector and 18%

to

to trade activities. SMEs were located in

possible during the conversation. On

the states of Veracruz, Queretaro, Puebla

average, the interview took an hour and a

and San Luis Potosi, in Mexico. We

half to be completed. After collecting the

conducted a survey which was mainly

empirical

administered in face-to-face interviews.

analysed and interpreted. Our data analysis

For

of

was done in two steps: a) the first one

developed:

consisted of using correlation tests between

questionnaire “A” for SMEs without

the identified characteristics and the stages

alliance engagement included 38 questions.

of engagement (FAE, CAE and IAE); and

Questionnaire “B” for SMEs with previous

b) the second one was based on the results

alliance engagement included 50 questions.

obtained from the factor analysis, and then

Questions were formulated with three and

correlation and regression tests were

five-point Likert scale but some qualitative

applied between the factors and the stages

our

purpose,

questionnaires

two

were

types

share

additional

data,

the

information

information

was

was

12

of engagement. We will focus in this paper

IAE-data group, which consisted of SMEs

only on the second part of the analysis.

with alliance experience (69 SMEs).

To

analyse

the

three

stages

of

engagement, we created three data groups

Results

of analysis: a) FAE-data group, which

The factor analysis reduced the data into

consisted of SMEs without previous

five factors which were composed of

alliance engagement (79 SMEs), b) CAE-

different components (see table 1). Using

data group, which consisted of the total

these

sample, SMEs with and without previous

correlations between them and the stages

alliance engagement (148 SMEs), and c)

of alliance engagement (FAE, CAE and

five

factors,

we

tested

the

IAE). Table 1 Factors of the alliance engagement of SMEs Factor

Theme

Components included The level of perception of the enterprise competences;

F1

Competences in alliance issues

the level of knowledge about alliance issues related to: market

access,

resource

access,

cost

reduction,

advantages, disadvantages, legal issues, internal and external projects. The frequency of the enterprise diagnosis, the level of flexibility F2

Proactive management

in

management

issues,

the

level

of

identification of potential partners, the perception of cultural stereotypes, the number of internal initiatives and the level of identification of economic benefits.

F3

F4

Expectations of a partner’s

Type of characteristics expected from potential partners

characteristics

related to size, technology, facilities and market.

Flexibility

The level of flexibility with product and the level of flexibility in services. The level of expectation of partners’ experience in

F5

Risk perception

alliance issues and the level of risk perception of services. Source: Own elaboration

13

Table 2 Summary of correlations between factors and stages of AE FAE

CAE

F1

0.04*

0.58**

F2

0.06**

0.80**

F3

-0.39**

F4

0.31*

F5

-0.32*

IAE

0.572**

SMEs with alliance engagement had a better ability to identify potential partners, their cultural stereotypes about other Mexican were positive and they could easily identify economic benefits from

0.23*

** Correlation >.01, * Correlation >.05

alliance

engagement.

Kluckhohn

(1985)

Kroeber

and

underline

the

Source: Own elaboration

importance of cultural stereotypes and According to the results, FAE was positively correlated with two factors: F1 regarding competences in alliance issues and F2, related to proactive management. It is possible to say that the F1 created selfconfidence and decreased the perception of possible exploitation or abuses in an alliance engagement, and that F2 provided the enthusiasm to undertake this “new” strategy. CAE was positively correlated with a higher level of perception of enterprise competences and knowledge about alliance issues. A good level of regular evaluations of their enterprises, as well as good level of flexibility in management was also presented in those

values in any society. There is clear evidence to affirm that a strong level of self-perception

increases

positive

expectations in alliance engagement. The results also showed that, expectation of partners’ characteristics (F3) and risk perception (F5) were negatively correlated with

CAE.

SMEs

with

alliance

engagement were more likely to be engaged with similar or weaker partners, particularly in size, technology, facilities and market issues. Bleeke and Ernst (1993) pointed out that many stronger partners enter into an alliance with the hidden agenda of taking advantage of weaker partners, therefore smaller or similar

SMEs with current alliance engagement. 14

partners were preferred among enterprises

one alliance, because multiple alliance

with

engagements also added to the complexity

alliance

engagement

experience

resulting in a negative correlation.

of those alliances (from a market alliance

The IAE was correlated with F2 and F5.

to a cost alliance).

The characteristics of F2 refer to proactive

After the correlation tests, we undertook

management, it means, entrepreneurs of

different regression tests to find cause-

these SMEs were more active in taking

effect relations between the factors and the

initiative and making strategic decisions

stages of alliance engagement. Table 3

that resulted in an alliance engagement.

summarises these results.

Proactive management played an important

Table 3 Summary of regression tests between factors and stages of AE Predictor factors

role in leadership and in the development of alliance initiatives. The stage of IAE

FAE

CAE

IAE

was also correlated with F5 which refers to 1.272*

F1

risk perception, i.e., the level of experience

F2

of partners that may result in opportunist

F3

2.018*

3.745**

1.705**

-2.646**

F4

behaviour and the possibility of plagiarism .577*

F5

regarding service issues. The role of risk perception is well supported by current

R2

.235

.809

.432

** Correlation >.01, * Correlation >.05 Source: Own elaboration

literature. SMEs will involve themselves in activities they consider less risky. The

From the binary logistic regression with a

perception of risk is based on the source of

R2 value equal to 0.24, the results show

information

is

that enterprises with high levels of

communicated (Jaeger et al. 2002). In the

proactive management (F2) have a high

sample, there was a higher level of risk

probability of becoming involved in a

perception among SMEs with more than

FAE. The role of F2 in each stage of

of risk and how it

15

engagement

is

remarkably

important.

decision-making

process

to

become

Proactive management seems to be a key

engaged. The proactive management factor

factor in making alliance engagement a

(F2) provides the conditions for alliance

common strategy among SMEs.

proposals, planning and engagement. And

From the binary logistic regression with a

the expectation of partners’ characteristics

R2 value equal to 0.809, the results show

(F3) is a predictor factor in current alliance

that enterprises with high levels of

engagement because SMEs are more

competences in alliance issues (F1), high

confident about entering into strategies

levels of proactive management (F2) and

which are perceived as low risk.

similar or less expectations of the partners’

From the linear regression with a R2 value

characteristics (F3) had a high probability

equal to 0.43, the results show that the IAE

of becoming engaged in an alliance (CAE).

is influenced by F2 which refers to

The competences in alliance issues (F1)

proactive management, i.e., a high level of

were considered a basic requirement in the

enterprise diagnosis, a high level of

flexibility

clear

framework of four influential factors on

identification of potential partners, positive

three stages of engagement of small and

cultural stereotypes and a high level of

medium sized enterprises (see figure 1).

identification of economic benefits in

Our model shows the three stages of

alliance engagement; and F5 which refers

engagement studied: FAE, CAE, and IAE;

to risk perception, i.e., the level of

and the four factors identified as influential

perception

in the different stages of engagement:

in

of

management,

partners’

a

opportunistic

behaviour and the possibility of plagiarism

competences

regarding services issues.

proactive management (F2), expectations

Based on the regression test results after

about partners (F3) and risk perception

the

(F5).

factor

analysis,

we

propose

a

in

alliance issues

(F1),

16

Figure 1 Framework of influential factors on three stages of the alliance engagement of SMEs

Source: Own elaboration

The FAE is influenced by F2 which is a

also need to be more cautious about the

key

alliance

possible risk, because, according to the

engagement. The CAE is influenced by

results of this research, the type of

three factors: F1, F2 and F3. At this stage

engagement preferred by SMEs at this

of engagement, SMEs need not only a

stage seems to be more complex.

proactive management, but they also

Another important result of our work

require competences in alliance issues for

concerns the decision-making process of

being involved in such strategy and a clear

alliance engagement. 100 percent of the

expectation

partners’

total sample was in agreement that the

characteristics to turn a stage of future

process of alliance engagement consists of

engagement

real

four phases; and 57 percent of the SMEs

engagement. The IAE is influenced by two

with alliance experience had a clear

factors: F2, and F5. At this stage of

identification of a specific sequential order.

engagement, SMEs need to maintain a high

Then, based on these results, we suggest

level of proactive management, and they

that the decision-making process of an

factor

in

encouraging

about

into

their

a

stage

of

17

alliance engagement includes four phases:

show that SMEs with a low level of

1) enterprise analysis, 2) identification of

intensity of engagement are more likely to

potential partners, 3) risk-control analysis

be involved in the alliance of market

and 4) alliance proposal (see figure 2). The

issues, and the alliance of resources access

most striking result to emerge from this

because,

data is

alliance

knowledge of market issue alliances which

experience faced serious difficulties in

also involve less risk; and secondly, the

identifying this process; only 13 percent

lack of resources, mainly financial ones,

chose this sequence (see figure 2).

plays an important role and is a driver to

that SMEs without

Figure 2 Four-phase model of decision-making in alliance engagement of SMEs

firstly,

becoming engagement.

they

involved

in

However,

have

an

better

alliance

when

SMEs

increase the frequency of engagement they look for a more strategic type of alliance, Source: Own elaboration

such as cost reduction and mixed alliances,

We proposed a classification of alliance

that although they can probably be more

based on the benefits expected, divided

risky, they can also be more profitable.

into five categories: alliances related to

Alliances

market issues, alliances related to the

development do not show significant

accessibility of resources, alliances related

changes in the level of frequency (low)

to cost-reduction, alliances related to

probably because of the lack of innovation

research and development, and alliances

of many products among SMEs in Mexico.

related

to

research

and

related to various combinations of these categories (mixed alliances). According to

Conclusion

this classification, and based on the stage

Based on our proposed model of the

of intensity of engagement, the results

influential factors we conclude that F1, 18

labelled “competencies in alliance issues”,

issues and the experience of the alliance

was found to be a key factor, influencing

partner. This factor was concerned with

current alliance engagements. F1 could be

partners’ opportunistic behaviour. A high

considered as the basic factor that makes

level of perception of competitive services

alliance a suitable strategy for SMEs. F2,

within their own company increases risk

labelled “proactive management”, was

perception and tends to have a negative

found to be the most influential factor in

influence on the intensity of alliance

predicting the three different stages of

engagement.

alliance engagement. According to the

We suggest a decision-making model

results it is possible to assume that F2 is a

which consists of four four phases: 1)

key factor in promoting, implementing and

enterprise analysis, 2) identification of

increasing

potential partners, 3) risk-control analysis

alliance

engagements.

F3,

labelled “Expectations of partners”, was

and 4) alliance proposal.

found to be a key factor in current alliance

We conclude that SMEs with a low level

engagement.

the

of intensity of engagement are more likely

expectations of the characteristics that a

to be involved in the alliance of market

partner should have in relation to size,

issues, and alliance of resources access.

technology, facilities and market. This

However,

factor was negatively correlated with CAE

frequency of engagement they look for a

and it was also a predictor at this stage of

more strategic type of alliance, such as cost

engagement. F3 represented the change of

reduction and mixed alliances.

paradigm in the search for a partner in

We suggest eight basic recommendations

inter-firm cooperation. F5, labelled “Risk

which are focused

Perception” was as a key factor in IAE. It

components of each influential factor on

consisted of risk perception about service

alliance

It

consisted

of

when

SMEs

engagement:

increase

the

on the different

1)

management 19

systems of self-evaluation, 2) specialized

creation and economic growth, it is

consulting services, 3) diffusion of alliance

important to point out the necessity to offer

information, 4) workshops concerning

new strategies to create new business

legal issues, 5) workshops concerning

opportunities for SMEs. It is expected that

project

of

the growth of the inter-firm phenomenon

domestic

will continue. Therefore, the lack of

regional

information regarding the identification of

management,

6) diffusion

successful

regional

and

experiences,

7)

information

networks,

creation

of

and

8)

fiscal

success factors of alliance engagement

incentives and legal protection.

among SMEs deserves more prominent

The main contribution of this paper is to

place in academic and public debates. This

offer new insights to private and public

paper is particularly attractive because it

organizations

alliance

provides a framework of influential factors

engagement of SME’s. Considering the

with theoretical and practical implications

high potential of the SME’s in terms of job

for SMEs.

to

stimulate

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