Academic journal article Journal of Small Business Management

Institutional Readiness and Small to Medium-Sized Enterprise Alliance Formation

Academic journal article Journal of Small Business Management

Institutional Readiness and Small to Medium-Sized Enterprise Alliance Formation

Article excerpt

The focus of this study, in contrast to research that explores the strategic choice by small to medium-sized enterprises (SMEs) to form strategic alliances, is a characterization of the institutional attributes that enable alliance formation. This enabled state is defined as "institutional readiness," which is the capacity of the institutional environment to support the formation of SME-based strategic alliances. Utilizing institutional theory as a lens, this study sets forth a theoretical framework for institutional readiness and tests the framework using a survey of 2,054 SMEs from eight countries. Though it has been speculated for some time that institutional forces might have an important effect on firm behavior, to date, in contrast to the current research, there has been little research exploring these effects that is based upon multiple country settings and large samples of SMEs. Additionally, in contrast to the present study, few studies have been designed to rigorously test a broad set of institutional factors and in so doing provide a clear conceptualization of the interplay of institutional and firm attributes in the formation of interfirm alliances. The findings of this study suggest that in the case of SME-based alliance formation, institutions do matter and in some cases, in unexpected and surprising ways.

Introduction

Alliance formation by small and medium-sized firms is often an integral component of the networking process critical to the obtaining of support and resources for survival for these firms as well as in a much broader context the innovation enterprise for firms of all sizes. There has been important research pertaining to the strategic choice to form alliances. Much of this research is based in transaction cost economics, resource dependency theory, and strategic behavior theory and is supported by the premise that alliance formation is a response to the firm's competitive environment (Das and Teng 2000). As such, the assumption is made that firm leaders have either internal to the firm, or can obtain externally, the capacity to act upon their strategic intent (Gulati 1998). For small to medium-sized enterprises (SMEs), the assumption of sufficient internal resources can be tenuous at best, and often, it is only through the resource sufficiency and in a broader sense, the support of the institutional environment that SME alliances can materialize. In this study, our focus is not what motivates SME leaders to form alliances or necessarily the resources required but rather the environmental attributes that enable them to do so. More specifically, we focus on the environmental attributes that are necessary, though not necessarily sufficient, for what we term "institutional readiness." We define "institutional readiness" as the capacity of the institutional environment to support the formation of SME-based alliances.

Kale, Singh, and Perlmutter (2000) suggested that alliance research has had three general foci. These three foci are the motivation to form alliances (Park, Chen, and Gallagher 2002; Sakakibara 2002, 1997; Ghemawat, Porter, and Rawlinson 1986) along with the choice of specific alliance partners (Chung, Singh, and Lee 2000; Gulati 1995; Hitt et al. 2000; Osborn and Baughn 1990), the choice of alliance governance structures (Hagedoorn, van Kranenburg, and Osborn 2003; Das and Teng 2001a, 2001b; Hagedoorn and Narula 1996), and the success or failure of alliances (Madhok and Tallman 1998; Zaheer, McEvily, and Perrone 1998; Pisano 1990; Teece 1986).

One common theme that runs through the existing alliance research is the assumption that there is a capacity within the firm or that can be acquired within the firm's environment to support the alliance decision. When firm resources and/or environmental resources have been considered, they have been considered within the context of the influence of such resources on the choice of cooperative behavior, structural choice, and outcomes. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.