SME-supplier alliance activity in manufacturing: contingent benefits and perceptions

• Published in: Strategic management journal Vol. 27; no. 8; pp. 741 - 763
• Main Author: Arend, Richard J.
• Format: Journal Article
• Language: English
• Published: Chichester, UK John Wiley & Sons, Ltd 01-08-2006; John Wiley and Sons
• Subjects: Alliances; Business management; Business structures; Business studies; Customer service; Economic networks; Likert scale; Management science; Manufacturing; Operations management; Outsourcing; perceptions; self-selection; Service industries; Small and medium sized enterprises; small business; Small businesses; Supply chain management; Survey data; U.S.A; vertical alliance benefits
• ISSN: 0143-2095; 1097-0266
• DOI: 10.1002/smj.538

We address the following two questions: how upstream vertical alliance (UVA) activity affects the performance of small and medium-sized enterprises (SMEs); and how SME perceptions of that relationship influence the choice to engage in UVA activity. Using responses from a recent survey of business unit managers representing 200 SMEs, we find that UVA activity benefits SME performance when self-selection effects are controlled. Instead of being a source of differentiation advantages, UVA activity leverages the SME's existing advantages. And, while SME perceptions appear to drive the self-selection of UVA activity, those perceptions are inaccurate; the result is that the SMEs likely to benefit less from such activity engage in it more.