The link between SMEs alliance portfolio diversity and top management’s entrepreneurial and alliance orientations

Abstract

To be able to survive and grow in twenty-first century global network economies, small-to-medium-sized enterprises (SMEs) strive to develop various types of interfirm alliances that provide them with bundles of resources and network security. Therefore, creating and configuring a beneficial and diverse alliance portfolio has become an important strategic issue for SMEs. The purpose of this article is to investigate how the entrepreneurial orientation and alliance orientation of the SMEs’ top managements lead to functional diversity of alliance portfolio configurations. Based on resource dependency and upper echelons theories, this study develops a model using survey data from 230 managers of Australian SMEs. The results suggest a significant link between the SME top management’s strategic orientations and the diversity of their alliance portfolios. When both entrepreneurial orientation and alliance orientation are high, the firms prefer to form portfolios that are functionally diverse. On the other hand, when either one or both strategic orientations are low, firms prefer to form portfolios that specialize on one of the functional areas like operations, logistics, marketing, or strategic management.