Advantages and pitfalls of South Africa-Angola strategic alliances

Abstract

Purpose: Owing to a shortage of South African research focusing on international strategic alliances, this study aimed to determine whether the advantages and pitfalls of international strategic alliances referred to in international business publications are also applicable to South African international strategic alliances. Design/Methodology/Approach: This was a formal, empirical study that targeted the 163 South African enterprises which were members of the South African-Angolan Chamber of Commerce in 2005 and 2006. Findings: The results identified joint ventures as the most prominent mode of entry when expanding into developing countries and, with few exceptions, the findings support the advantages and pitfalls of international strategic alliances identified in other international publications. Value of the research: A great deal of international management research over the years has been focused on the importance of strategic alliances as a mode of entry, as well as on the pitfalls experienced by alliance partners, particularly in developed countries. However, the lack of such research in Africa in general and South Africa in particular means that South African enterprises must base their entry mode selection on non-South African research findings, and although this sample size was small, the lack of other Africa-specific research makes this research significant. Implications: With South Africa being the largest source of FDI into the rest of Africa, the findings of this paper show that South African enterprises can attain the advantages associated with international strategic alliances when using this mode of entry into Africa. In terms of pitfalls, the findings highlight the need for multinational enterprises to pay specific attention to the role of governments when forming strategic alliances.