Frontiers of Entrepreneurship Research
1997 Edition

SUMMARIES

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A MULTI-COUNTRY EXPLORATION OF THE ROLE OF ENVIRONMENTAL UNCERTAINTY AND ENTREPRENEURIAL ORIENTATIONS IN DETERMINING ALLIANCE STRUCTURES


SUMMARY

Names POSTER
K. Mark Weaver
Pat H. Dickson

Address
The University of Alabama
PO Box 870225
Tuscaloosa, AL 35487-0025

Telephone Fax
205-348-8947 205-348-6695

Principal Topics
Alliance research has primarily focused on the role of environmental uncertainty and the fear of opportunistic behavior in determining the choice of agreement-based or equity-based alliances. Research relying on transaction cost or resource dependency logic has provided limited insight into the role of the firm's key decision leader and the orientations of the leader in determining the choice of alliance structures. Taking a strategic behavior perspective our research proposes a model that acknowledges the importance of the link between environmental uncertainty and alliance structure yet explicitly considers the moderating role of the entrepreneurial orientation of the firm's key decision leader. Supported by past research we propose that environmental uncertainty is a multidimensional construct, in which the impact of the uncertainty upon structural choice may vary based on the source for the uncertainty. The model fit is tested and compared across three groups of small-to medium-sized enterprises (SMEs) drawn from manufacturing firms in Norway, Australia and Costa Rica.

Method
Samples of 252 Norwegian, 110 Australian, and 67 Costa Rican manufacturing firms that maintained alliance relationships were examined in this study. The SMEs maintaining alliance relationships were isolated from a larger random sample composed of 686 SMEs responding to mailed surveys in the three countries. The firms represented ten different industry groups. A key decision leader design was used in which responses were obtained from the owner or general manager of each SME. The outcome variable for this study was the use of agreement-based or equity-based alliances. The experimental variables included a multidimensional measure of perceived environmental uncertainty and a unidimensional measure of entrepreneurial orientations. Control variables included the SME's industry category, export intensity, number of alliances, size, financial strength and managerial resources. The proposed model for the determinants of alliance structure was tested for each country individually utilizing a logistic regression procedure and a post hoc moderator analysis. Significant differences across countries were then examined.

Major Findings
The study results support the general model for the choice to use equity-based or agreement-based alliances proposed by this research. Chi-square values for the model, as estimated for each of the three samples, were significant. Hit rates were 71.3 percent for the Norwegian sample, 94.3 percent for the Australian sample, and 85.7 percent for the Costa Rican sample. The regression results support the link between perceived environmental uncertainty and choice of alliance structures. The direction of the linkage (whether positively or negatively related to the use of equity-based alliances) was found to vary based on the source for the uncertainty. Additionally, the results indicate that the source for the environmental uncertainty determining the choice of alliance structures varied by country. Specifically, we found that perceptions of uncertainty relating to: a) the predictability of competitors and customers and b) the potential for future growth and profits were the primary determinants for structural choices by Norwegian SMEs. We found that the choices by the Australian SMEs were determined primarily by uncertainty relating the potential for future growth and profits. A perception of general uncertainty was the primary determinant of the Costa Rica SMEs decision to use agreement-based or equity-based alliances. Finally, study results suggest that the entrepreneurial orientation of they key decision leader plays both a direct and moderating role. The link between perceived environmental uncertainty and the choice of alliance structures varies based on the level of the key decision leader's entrepreneurial orientation.

Implications
These results provide three implications for SME-based alliance research. First, inconsistencies in past research linking perceived environmental uncertainty and firm level behavior may be a result of the failure to examine the multiple sources for environmental uncertainty. Second, the importance of the link between environmental uncertainty and the decision to use equity-based alliances may not be properly estimated if the entrepreneurial orientation of the key decision leader within the SME is not considered. Finally, the results of this analysis suggest that the link between the entrepreneurial orientation of the SMEs key decision leader and some firm level behaviors is through the influence of the orientation on the leader's environmental perceptions.

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1997 Babson College All Rights Reserved
Last Updated 04/25/98