Network Process, Strategic Alliance and Performance: Empirical Evidence from Nigeria

Abstract

This study explores the interplay between strategy alliance and network processes in explaining firm performance in highly unpredictable environments like what is obtained in Nigeria. Firms can outperform rivals by pursuing two types of strategic alliance: advantage-creating and advantage-enhancing. Each of these strategic alliances creates different needs, motivations, and opportunities for joint activity.

This research work shows that firms with better advantage-creating strategies become entrenched in extra network process and are more likely to form non-equity strategic alliances in the future period, whereas firms with strong advantage-enhancing tendencies become rooted in intense network process with many equity-based strategic alliances in the future period. However, if different strategies lead to formation of different types of network processes, are these tendencies advantageous for firm performance? If not, what is the optimal combination of strategic alliance and network processes that maximizes firm performance? This paper argue that network process provides advantageous access to external resources that can both balance the internal capabilities of the firm and substitute for the capabilities that a firm is lacking.

This paper finds out that network process plays both balancing and substitutive roles, however, my findings suggest dense network process is more favorable for firms that have superior either advantage-creating or advantage-enhancing capabilities, whereas firms with inferior internal capabilities can benefit more from a sparse network process. A correlation analysis was carried out on a sample of 125 respondents which indicates a positive relationship among both variables

Keywords: Network process, Strategic alliance, Competition, Firm Performance