Alliance management capabilities and internationalisation in SMEs setting:The mediating role of innovation activity.

Inter-organisational collaboration (IOC) has been regarded as a strategic option by companies from different sizes and sectors. In this regard, IOC is often related to innovation and internationalisation performance. However, research shows that these relationships are complex and risky where approximately 50% of them fail. Accordingly, scholars have sought to understand the dynamics of IOC and pointed towards the association between alliance management capabilities (AMC) and IOC success. However, despite the development in this topic, two important gaps remain. First, it is still unclear how AMC can actual lead to superior internationalisation performance. Second, the empirical research on AMC has thus far focused upon large firms, while overlooking SMEs. In this thesis, the two gaps are addressed by examining the process by which SMEs can realise the potential value of AMC for superior internationalisation performance by using the Resource-Based View (RBV). Specifically, in this process, radical and incremental co-innovation are conceived as the two strategic actions needed to leverage AMC for internationalisation performance.

This study adopts a quantitative survey approach to address the research question. To answer the research question of this study, a sample of 278 usable responses from SMEs in UK manufacturing industries was collected through a web-based survey. The quantitative data was analysed using the structural equation modelling (SEM) technique.

The analysis confirms that AMC is positively associated with radical co-innovation and incremental co-innovation. The positive effect of AMC on radical co-innovation is stronger at high levels of alliance partner diversity. The positive effect of AMC on incremental coinnovation is stronger at low levels of alliance partner diversity. In addition, both radical coinnovation and incremental co-innovation are found to have a positive relationship with internationalisation performance. No support is found for the interaction effect of foreign market knowledge on the relationship between radical co-innovation, incremental coinnovation and internationalisation performance.

Overall, this study makes three key contributions to the extant RBV literature in general, and AMC and IOC literature in particular. First, this study answers the question of how in RBV research and considers the strategic actions through which AMC contribute to internationalisation performance. Second, this study adds to current knowledge on IOC by showing some moderating effects. In particular, this study shows that the effect of AMC on strategic action varies depending upon the level of alliance partner diversity. Finally, this study contributes to AMC literature by empirically testing the AMC construct and its dimensions (that are inter-organisational coordination, inter-organisational learning, alliance transformation, alliance proactiveness and alliance bonding) in the context of SMEs. In such cases, the influence of AMC on SMEs’ pursuit of actions in IOC is identified. This study offers practical implications for the mangers of SMEs to better understand the need of AMC to effectively manage and execute the strategic actions and to achieve internationalisation performance.