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

Abstract

Small- and medium-scale enterprises (SMEs) are the engine of economic growth and equitable development in emerging economies such as Nigeria. Their role in emerging market development can be seen in the areas of capital saving, utilization of local resources, and job creation among others. Enugu State is one of the emerging industrial hubs in Nigeria with SME base of 1,366. The activities of these enterprises have significantly increased the revenue base of the government, making the area an emerging market economy. This study assessed the influence of strategic alliance on the performance of SMEs in Enugu State. A quantitative approach comprising of field observations, reference to relevant literature, and questionnaire survey of 137 SMEs was adopted for the study. Data were analyzed using multiple linear regression. The results revealed that strategic alliance cumulatively led to 0.55 unit increase in sales growth, 0.58 unit increase in growth in market share, and 0.56 unit increase in product success. The result also revealed that that strategic alliance led to 0.76 unit increase in growth in profit, 0.62 unit increase in the number of employees, and 0.73 unit increase in labor productivity at 0.05 level of confidence. The article suggests that institutionalization of strategic alliance would encourage cooperation and interfirm linkages among SMEs and create a niche market for them.

Do industries' structural attributes/characteristics influence their decision to utilize strategic alliances?

“…It lies between the Equator's latitudes of 5 0 58 1N and 7 0 081N, and the Greenwich Meridian's longitudes of 7 0 081E and 7 0 481E as was shown in as seen in Figures 1. The area is made up of seventeen (17) Local Government Areas as was described elsewhere in Nwokocha (2020). The research area is home to a plethora of industrial activities.…”

“…In addition, the State's SME directory revealed that there are one thousand three hundred and sixty-six (1,366) such industries in the selected LGAs. Because data on Industries in other LGAs were unavailable, the choice to focus on the 12 (twelve) LGAs was made as was explained elsewhere in Nwokocha (2020). In the study area, seven (7) industrial groups yielded a total of 1,366 registered industries.…”

Small and Medium Scale Enterprises and the Utilization of Strategic Alliance: The Effect of Spatiality in Emerging Markets Economy

“…According to Yang and Meyer (2019), alliance proactiveness indeed interacts with both capabilities and market growth; probably most interesting is the finding that the combination of alliance proactiveness with technological capabilities and market growth has the highest impact on firm performance. The work of Nwokocha and Madu (2020) found that strategic alliance cumulatively led to an increase in the performance of SMEs in Nigeria. The study showed that strategic alliance lead to 0.55 unit increase in sales growth, 0.58 unit increase in growth in market share and 0.56 unit increase in product success.…”

“…This study was carried out in 12 Local Government Areas (LGAs) of Enugu State as was explained elsewhere in Nwokocha and Madu (2020). A total of one thousand three hundred and sixty six (1,366) SMES were identified from seven (7) industrial groups in the study area after a preliminary field work was carried out to update the existing industrial directory obtained from Enugu State SME directory.…”

“…These enterprises form alliances with other enterprises due to the lack of financial, physical and managerial resources and alliance allows SMEs to share major financial and non-financial resources among themselves (Dekker, 2004;Joshi and Dixit, 2014;Farsi & Toghraee, 2015). A number of studies, however, have examined the functions/benefits of forming alliances by firms (Brouthers, 2013;Brouthers & Hennart, 2007;Hung et al, 2015;Išoraitė, 2009;Segers, 2015), risks or constraints associated with alliance development (Dekker (2003;2004;Butigan & Benie, 2017), effect of alliance on the performance of SMEs (Junaidu et al, 2019;Ko et al, 2020;Nwokocha and Madu, 2020;Muange & Maru, 2015;Talebi et al, 2017) and location of firms (Ahn et al, 2009;Capaldo & Petruzze, 2014;Gulati, 1999;Narula & Santangelo, 2008;Ryu et al, 2016). As laudable as the findings of these studies are, they have not been able to show the spatial pattern of distribution (spatiality) of SMEs and its effect on the utilization of strategic alliance.…”