Motives behind Strategic Alliance Formation among Medium-Sized Manufacturing Firms in Tanzania

Abstract

Research on strategic alliance motives has attracted a great attention as firms strive to become market leaders. One critical area is to assess the contribution of these motives to strategic alliance formation. Most studies on alliance motives concentrate on international strategic alliances that involve large or multinational corporations from developed economies. Little research has been done on Small and Medium Enterprises (SMEs), particularly Medium-Sized Enterprises (MEs) from the manufacturing industry in least developed economies like Tanzania. This study reveals the contribution of alliance motives to strategic alliance formation. It seeks to find factors that would be taken into consideration by Tanzania’s medium-sized manufacturing firms before forming strategic alliances. The study finds firms’ views on the motives that would drive their decisions regarding strategic alliance formation. A cross-sectional survey design and multistage probability sampling technique enabled the participation of 398 CEOs from three zones of Tanzania whose views were collected through questionnaires. Through multiple regression analysis, motives related to resource accessibility, competitive advantage, firm’s improvements as well as cost and risk reduction are revealed and found influencing firms’ willingness to form strategic alliances. In order to become market leaders through strategic alliances, manufacturing MEs should consider motives that would influence rivals and other players to collaborate in order to make effective decisions regarding strategic alliances. Nevertheless, competitive business environments must be created by all manufacturing and alliance stakeholders in Tanzania in order to foster effective strategic alliances among manufacturing MEs.