Impact of Strategic Alliances on Business Growth in Emerging Markets

Abstract

Strategic alliances have emerged as a critical platform for firms to grow and remain competitive, especially in emerging markets. Strategic alliances are a relationships between two or more companies, especially if they are across borders, established for the purpose of exploiting joint competencies, filling an experience gap, or to develop access to new markets and technologies. This study addresses the effect of strategic alliances on the economic growth of business in emerging economies. Emerging economies are identified by dynamic conditions, associated resource constraints, city-states with declining institutional contexts, and continuous business conditioning as a sustainable development challenge. The various facets of strategic alliances such as leveraging market access, leveraging innovation capabilities, financial performance, and knowledge transfer, will be studies comprehensively to determine the ways in which strategic alliances contribute to growth. Emerging markets typically have greater potential for forming strategic alliances because they are growing rapidly. Emerging markets have not fully developed regulation, therefore are progressing in fulfilling the needs of change resistant consumers. There are also some attributes in emerging markets that allow lesser forms of alliances considerable leverage in pursuing joint production. Political stability, weak legal infrastructure, and the cultural diversity in emerging markets have characteristics that allow for unique collaboration. Strategic alliances may also function as an essential mechanism to extend exposure and control uncertain and parochial economies, in which business may create synergies with either local or international partners. This study will also include how governance aspects, trust, compatibility, and resource sharing may contribute to meaningful, effective, and sustainable strategic alliances.The study design in this article was a mixed-method design. Quantitative data was provided by 150 firm-level studies in Asia, Africa, and Latin America through structured surveys, and qualitative data was derived from interviews with senior managers and experts in these industries. The data suggests statistically significant increases in market penetration, efficiency, and innovation performance associated with firms that formed strategic alliances. Joint ventures and licensing significantly impacted revenue and customer growth, while knowledge- and capability-based alliances were also significant for skill development and R&D performance. The results further highlight, for firms seeking strategic alliances in emerging markets, that government support, institutional support, and cultural fit are significant conditions for success. Firms with a stated strategy, strong/engaged leadership, and that use mutual joint objectives, are more likely to enjoy sustainable success in the long term. Firms that used mutual learning and timely adaptation in their strategic alliances outperformed firms that requested a single short-term objective from their strategic alliance partners. Further, this study furthers theoretical and practical management conversations regarding the mechanisms via which strategic alliances may shape firm survival and growth in non-traditional markets, and makes recommendations for managers to consider for their strategic alliances in either seeking to enter a new emerging market or grow in an existing market