A strategic classification of business alliances: a qualitative perspective built from a study of small and medium‐sized enterprises

Business alliances can assist organisations to acquire the means to compete within an ever complex and changing environment. For small and medium‐sized enterprises in non‐metropolitan areas these alliances can provide the means to extend business activity and compete against nationally based competitors. What is the nature of alliances formed by businesses in regional (non‐metropolitan) settings and how do those alliances contribute to business development? This research first examines theory supporting the classification of alliances in the literature, and then explores managers’ perceptions on motivation driving the formation of alliances and the role of alliances in a business’s strategic direction. When data identifying the purpose for entering the alliance and benefits received from the alliance were linked to data measuring alliance performance, three major dimensions emerged, which together describe strategic motivation or intent for the range of alliances observed in the data. The framework developed through this research provides a management perspective of building alliances, which supports Sheth and Parvatiyar’s (1992) prior classification of strategic (exclusive arrangements that create new opportunities), and operational (enhancing current business capabilities) alliances, with the addition of alliances created to defend past strategic activities against competitive and/or environmental threats.