Factors affecting a partner's perceived effectiveness of strategic business alliance: some Singaporean evidence

Abstract

Given functional specialisation and a scarcity of resources, organisations would seek to reduce environmental uncertainty by entering into strategic alliances with other organisations for exchanging resources for mutual benefit. This paper investigates the factors affecting a partner's perceptions about the effectiveness of their strategic business alliances. The factors investigated were inter-organisational trust, commitment to alliance, inter-organisational communication, dysfunctional conflict and power imbalances. Data was collected from a representative sample of Singapore-based companies that were involved in some form of strategic business alliances. The study found that the factors “commitment to alliance”, “inter-organisational communication” and “inter-organisational trust” were positively related to a partner's perceived effectiveness of their alliances. On the other hand, the factors “dysfunctional conflicts” and “power imbalances” were found to have a negative relationship with the partner's perceived effectiveness of their alliance. The five factors together explained 54% of the variance in the perceived effectiveness of alliance. The implications for managers are outlined.