Strategic Alliances between SMEs and Large Firms: An Exploration of the Dynamic Process**

Article excerpt

This paper explores the dynamics in strategic alliances between small and medium sized enterprises (SMEs) and large organisations (corporates). Despite the volumes written on this subject, few studies take into account this context of interorganisational relationships. The dynamics in strategic partnerships between small and large organisations are potentially multifaceted and fraught with complexities and contradictions. The partner organisations bring diverse interests and resources to the strategic partnerships and these affect the dynamics of their relationships. Using the literature on strategic alliances, this article examines four such strategic partnerships in New Zealand. Results show that in order to increase the likelihood of successful collaboration, the alliance partners must understand the importance of building trust and a shared alliance purpose, and both of these must be communicated effectively at executive and operational levels.

Key words: Strategic Alliances, SMEs, Trust, Commitment, New Zealand

1. Introduction

Strategic alliances are assuming increasing prominence in the strategy of leading firms, large and small. They have become a means through which firms expand into new markets, access dispersed capabilities, and leverage technologies and other resources. In fact, some popular business writers argue that strategic alliances have become a necessity rather than a choice in today's turbulent business environment (Doz/Hamel 1998; Dussauge/Garrette 1999).

Despite the volumes written on this subject, very few studies take into account strategic alliances between small or medium-sized enterprises (SMEs) and large firms (Alvarez 2001; Farkas-Conn 1999; Sulej/Stewart/Keogh 2001). Most literature predominantly pertains to strategic alliances that are formed between large organisations (Hamel 1991; Kanter 1994). While such studies indeed provide relevant insight into the alliance phenomenon, it is important to note that many small countries including New Zealand are increasingly dependant on SMEs.

The research reported here considers the interplay in strategic alliances between SMEs and large organisations (corporates). By doing so, it hopes to provide better insight into what makes collaborative partnerships effective between SMEs and corporates. If indeed the effective use of strategic alliances is viewed increasingly as an important issue facing SMEs (Bekmann/Robinson 2004), what, then, is the importance of developing trust and commitment within strategic alliances, and how can an increased understanding of these and other relevant dimensions associated with effective collaborative partnerships be useful to other SMEs wishing to embark on similar strategies for growth?

The paper is structured as follows. The first three sections highlight some of the potential issues and challenges that might be relevant in the context of strategic alliances between SMEs and corporates. The fourth section outlines the research method while the fifth section offers insights into empirical investigation of four case studies of strategic partnerships. The final sections draw on the accumulated evidence presented in the previous sections to discuss three prominent aspects of strategic partnerships between SMEs and large firms, and identify potential areas for future research.

2. The importance of strategic alliances

The last two decades have witnessed a significant increase in the frequency and magnitude of strategic alliances. Despite their increasing popularity, both management scholars and practitioners (Das/Rahman 2001; Seligman 2001) agree that most strategic alliances have failed to fully accomplish their goals. Inkpen and Ross (2001), for example, describe strategic alliances as unstable organisational forms. Hutt and colleagues (Hutt/Stafford/Walker/Reingen 2000) note that many strategic alliances fail to meet expectations because little attention is given to nurturing the close working relationships and interpersonal connections that unite the partnering organisations. …