Abstract: Firms around the world cannot survive without creating alliances that bring together vital skills, resources and capabilities, that otherwise will be time and cost consuming to obtain. The current paper reviews literature on how industry structure influences the relationship between strategic alliances and performance aspect. The study is anchored on Dynamic Capabilities Theory, The Institutional Theory and the Resource Dependence Theory. Structure poses a challenge to implementation of strategic alliance because it involves restructuring of firm and work processes. Structure of alliances reflects the vision and intentions of the partners. Choosing the appropriate structure from joint ventures, equity bilateral, equity unilateral or contracts structure involves creating a fit between the structure and alliance strategy. The review of literature shows that strategic alliance challenges affects firm performance. Despite the popularity of strategic alliances in business, a considerable proportion of strategic alliances face many challenges and are unstable or performed unsatisfactorily. Further, the rates of instability and unsatisfactory performance are relatively higher in developing countries than in developed countries. The paper concludes that the underlying structure of an industry is reflected by the strength of his Five Forces model which describes the firm as facing buyers, suppliers, substitute products, potential entrants and rivalry from established players. The strength of each if the five competitive forces is a function of industry structure. The results of this study are important in influencing the government policy. This is especially because of the intervening effect of industry environment. The government should put measures to ensure that firms have favorable business environment. The Ministry of Industrialization and Enterprises Development in liaison with other ministries should ensure that there is appropriate legal framework that enhances the business environment. This is important because the government formulates and implement appropriate policies based on empirical data, the firms in strategic alliances will have more conducive environment to be competitive locally and globally.
Keywords: Strategic alliances, Industry structure, performance.
Title: STRATEGIC ALLIANCES AND FIRM PERFORMANCE: THE ROLE OF INDUSTRY STRUCTURE: A CRITICAL REVIEW OF LITERATURE
Author: Dr. Nyaberi, Justry P. Lumumba
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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