Environmental shocks can occur when emerging country governments open their markets to outside influences. We extend research conducted primarily in mature economies on how managers react to environmental shocks by evaluating how environmental shock type, a firm's strategic orientation, and its slack resources affected strategic alliance formation intentions during and immediately following the Asian Financial Crisis. Results from two Indonesian small– and medium–sized enterprises (SME) samples show that these factors influenced alliance intentions, although not always in ways that were consistent with previous research findings in more mature markets. Overall, our results provide critical insights into emerging market firms’ strategic actions, particularly related to key managerial motivations for SME alliance formation.
Get full access to this article
View all access options for this article.
References
1.
AikenA. & WestS. (1991). Multiple regression: Testing and interpreting interactions. Newbury Park, CA: Sage.
2.
ArogyaswamyK., BarkerV.III, & Yasai–ArdekaniM. (1995). Firm turnarounds: An integrative two–stage model. Journal of Management Studies, 32, 493–525.
3.
AusterE. (1994). Macro and strategic perspectives on interorganizational linkages: A comparative analysis and review with suggestions and reorientation. In ShrivastavaP., HuffA., & DuttonJ. (Eds.), Advances in strategic management (Vol. 10, pp. 3–40). Greenwich, CT: JAI Press.
4.
BarkerV.III & PattersonP.Jr. (1996). Top management team tenure and top manager causal attributions in declining firms attempting turnaround. Group and Organization Management, 21, 304–336.
5.
BerghD. (1998). Product–market uncertainty, portfolio restructuring, and performance: An information–processing and resource–based view. Journal of Management, 24, 135–155.
6.
BourgeoisL.J. (1981). On the measurement of organizational slack. Academy of Management Review, 6, 29–39.
7.
BoydB., DessG., & RasheedA. (1993). Divergence between perceptual and archival measures of the environment: Causes and consequences. Academy of Management Review, 18, 204–226.
8.
BrislinR. (1980). Translation and content analysis of oral and written materials. In TriandisH.C., BerryJ.W. (Eds.), Handbook of cross–cultural psychology (Vol. 2, pp. 389–444). Boston: Allyn & Bacon.
9.
BrutonG., AhlstromD., & WanJ. (2003). Turnaround in East Asian firms: Evidence from overseas Ethnic Chinese communities. Strategic Management Journal, 24, 519–540.
10.
CameronK., KimM., & WhettonD. (1987). Organizational effects of decline and turbulence. Administrative Science Quarterly, 32, 222–240.
11.
CarterN. (1990). Small firm adaptation: Responses of physicians’ organizations to regulatory and competitive uncertainty. Academy of Management Journal, 13, 307–333.
12.
ChattopadhyayP., GlickW., & HuberG. (2001). Organizational actions in response to threats and opportunities. Academy of Management Journal, 44, 937–955.
13.
ChavezG. (1997). Outward bound. Global Finance, 11(2), 80–81.
14.
ChenM.–J. & HambrickD. (1995). Speed, stealth, and selective attack: How small firms differ from large firms in competitive behavior. Academy of Management Journal, 38, 53–482.
15.
ChengJ. & KesnerI. (1997). Organizational slack and response to environmental shifts: The impact of resource allocation patterns. Journal of Management, 23(1), 1–18.
16.
CohenM. (1998a). Easinglabor's pain. Far Eastern Economic Review, 161(5), 17.
17.
CohenM. (1998b). “Us” and “them. Far Eastern Economic Review, 161(7), 16–17.
18.
CovinJ. & SlevinD. (1988). The influence of organization structure on the utility of an entrepreneurial top management style. Journal of Management Studies, 25, 215–234.
19.
CovinJ. & SlevinD. (1989). Strategic management of small firms in hostile and benign environments. Strategic Management Journal, 10, 75–87.
20.
CovinJ. & SlevinD. (1991). A conceptual model of entrepreneurship as firm behavior. Entrepreneurship Theory and Practice, 16(1), 7–25.
21.
CyertR. & MarchJ. (1963). The behavioral theory of the firm. Englewood Cliffs, NJ: Prentice–Hall.
22.
DaftR., SormunenJ., & ParksD. (1988). Chief executive scanning, environmental characteristics, and company performance: An empirical study. Strategic Management Journal, 9, 123–139.
23.
DessG. & RobinsonR.Jr. (1984). Measuring organizational performance in the absence of objective measures: The case of privately–held firm and conglomerate business unit. Strategic Management Journal, 5, 265–274.
24.
DicksonP. & WeaverK. (1997). Environmental determinants and individual–level moderators of alliance use. Academy of Management Journal, 40(2), 404–425.
25.
DollingerM.J. & GoldenP.A. (1992). Interorganizational and collective strategies in small firms: Environmental effects and performance. Journal of Management, 18(4), 695–616.
26.
EisenhardtK. & SchoonhovenC. (1996). Resource–based view of strategic alliance formation: Strategic and social effects in entrepreneurial firms. Organization Science, 7, 136–150.
27.
Euroweek. (1998). Indonesia: A political credit, January, 25–26.
28.
FischerG., LeeJ., & JohnsL. (2004). An exploratory study of firm turnaround in Australia and Singapore following the Asia Crisis. Asia Pacific Journal of Management, 21, 149–170.
29.
FishbeinM. & AjzenI. (1975). Belief, attitude, intention, and behavior: An introduction to theory and research. Reading, MA: Addison–Wesley Publishing Company.
30.
HamelG. (1991). Competition for competence and inter–partner learning within international strategic alliances. Strategic Management Journal, 12(Summer), 83–103.
31.
HarriganK. & NewmanW. (1990). Bases for interorganization cooperation: Propensity, power, persistence. Journal of Management Studies, 27, 417–434.
32.
HittM., AhlstromD., DainM., LevitasE., & SvobodinaL. (2004). The institutional effects on strategic alliance partner selection in transition economies: China vs. Russia. Organization Science, 15, 173–185.
33.
HoskissonR., EdenL., LauC., & WrightM. (2000). Strategy in emerging economies. Academy of Management Journal, 43, 249–267.
34.
HumanS. & ProvanK. (2000). Legitimacy building in the evolution of small firm multilateral networks: A comparative study of success and demise. Administrative Science Quarterly, 45, 327–368.
35.
KetchenD.Jr. & PalmerT. (1999). Strategic responses to poor organizational performance: A test of competing perspectives. Journal of Management, 25, 683–706.
36.
KhandwallaP. (1977). The design of organizations. New York: Harcourt Brace.
37.
KhannaT. & PalepuK. (2000). The future of business groups in emerging markets: Long–run evidence from Chile. Academy of Management Journal, 43, 268–285.
38.
KnightG. (1997). Cross–cultural reliability and validity of a scale to measure firm entrepreneurial orientation. Journal of Business Venturing, 12, 213–225.
39.
KogutB. (1991). Joint ventures and the option to expand and acquire. Management Science, 37, 19–33.
40.
LiJ. (2005). The formation of managerial networks of foreign firms in China: The effects of strategic orientations. Asia Pacific Journal of Management, 22, 423–443.
41.
LiebholdD. (1998). Rough road ahead. Asian Business, 34(2), 22–27.
42.
LumpkinG. & DessG. (1996). Clarifying the entrepreneurial orientation construct and linking it to performance. Academy of Management Review, 21, 135–172.
43.
LuoY. (1997). Partner selection and venturing success: The case of joint ventures with firms in the People's Republic of China. Organization Science, 8, 648–662.
44.
LuoY. (2007). Are joint venture partners more opportunistic in more volatile environments?Strategic Management Journal, 28, 39–60.
45.
MarerP. (1991). The transition to a market economy in central and eastern Europe. OECD Observer, 169(3), 4–10.
46.
MarinoL., StrandholmK.SteensmaH., & WeaverK. (2002). The moderating effect of national culture on the relationship between entrepreneurial orientation and strategic alliance portfolio extensiveness. Entrepreneurial Theory and Practice, 26, 145–160.
47.
MayR., StewartW.Jr., & SweoR. (2000). Environmental scanning behavior in a transitional economy: Evidence from Russia. Academy of Management Journal, 43, 403–427.
MeyerA., BrooksG., & GoesJ. (1990). Environmental jolts and industry revolution: Organizational responses to discontinuous change [Special Issue]. Strategic Management Journal, 11, 93–110.
50.
MilesG., PreeceS., & BaetzM. (1999). Dangers of dependence: The impact of strategic alliance use by small technology–based firms. Journal of Small Business Management, 37(2), 20–29.
51.
MillerD. & FriesenP. (1983). Strategy making and the environment: The third link. Strategic Management Journal, 4, 221–235.
52.
MillikenF. (1987). Three types of perceived uncertainty about the environment: State, effect, and response uncertainty. Academy of Management Review, 12, 133–143.
53.
MishinaY., PollackT., & PoracJ. (2004). Are more resources always better for growth? Resource stickiness in market and product expansion. Strategic Management Journal, 25, 1179–1197.
54.
MoneM., McKinleyW., & BarkerV. (1998). Organizational decline and innovation: A contingency framework. Academy of Management Review, 23, 115–132.
55.
MursitamaT. (2006). Creating relational rents: The effects of business groups on affiliated firms’ performance in Indonesia. Asia Pacific Journal of Management, 23, 537–557.
56.
NohriaN. & GulatiR. (1996). Is slack good or bad for innovation?Academy of Management Journal, 39, 1245–1264.
57.
OzlerJ. & RodrikD. (1992). External shocks, politics and private investment: Some theory and empirical evidence. Journal of Developmental Economics, 39, 161–162.
58.
PalichL. & BagbyD. (1995). Using cognitive theory to explain entrepreneurial risk–taking: Challenging conventional wisdom. Journal of Business Venturing, 10, 425–438.
59.
ParkS.H., ChenR., & GallagherS. (2002). Firm resources as moderators of the relationship between market growth and strategic alliances in semiconductor start–ups. Academy of Management Journal, 45(3), 527–545.
60.
PearceJ.II & RobbinsD. (1993). Toward improved theory and research in business turnarounds. Journal of Management, 19, 613–636.
61.
PengM.W. & HeathP.S. (1996). The growth of the firm in planned economies in transition: Institutions, organizations, and strategic choice. The Academy of Management Review, 21(2), 492–529.
62.
PenroseE. (1959). The theory of the growth of the firm. New York: Wiley.
63.
PfefferJ. & SalancikG. (1978). The external control of organizations. New York: Harper & Row.
64.
PodsakoffP. & OrganD. (1986). Self–reports in organizational research: Problems and prospects. Journal of Management, 12, 531–544.
65.
PrahaladC. & BettisR. (1986). The dominant logic: A new linkage between diversity and performance. Strategic Management Journal, 7, 485–501.
66.
RomanelliE. & TushmanM. (1994). Organizational transformation as punctuated equilibrium: An empirical test. Academy of Management Journal, 37, 1141–1166.
SawyerrO. (1993). Environmental uncertainty and environmental scanning activities of Nigerian manufacturing executives: A comparative analysis. Strategic Management Journal, 14, 287–299.
69.
SenderH. (1997). Mayday for Eastern Asia. Economic Review, 160(35), 65.
70.
SenderH. & McBethJ. (1998). Face facts. Far Eastern Economic Review, 161(3), 53–54.
71.
ShariM. (1998). He no longer has heaven's blessing. Business Week, 3562, 32 1998, 01/22.
72.
SinghJ. (1986). Performance, slack, and risk taking in organizational decision making. Academy of Management Journal, 29, 562–585.
73.
SmithK. & GrimmC. (1987). Environmental variation, strategic change and firm performance: A study of railroad deregulation. Strategic Management Journal, 8, 363–376.
74.
StawB., SanderlandsL., & DuttonJ. (1981). Threat–rigidity effects in organizational behavior: A multilevel analysis. Administrative Science Quarterly, 26, 501–524.
75.
SteensmaH., MarinoL., WeaverM., & DicksonP. (2000). The influence of national culture on the formation of technology alliances by entrepreneurial firms. Academy of Management Journal, 43,951–974.
76.
StreetC. & CameronA.F. (2007). External relationships and the small business: A review of small business alliance and network research. Journal of Small Business Management, 45, 239–266.
77.
SutcliffeK. & ZaheerA. (1998). Uncertainty in the transaction environment: An empirical test. Strategic Management Journal, 19, 1–23.
78.
TallmanS. & ShenkarO. (1994). International cooperative venture strategies: Outward investments and small firms from NICs. Management International Review, 34, 75–91.
79.
TanH. & SeeH. (2004). Strategic reorientation and responses to the Asian Financial Crisis: The case of the manufacturing industry in Singapore. Asia Pacific Journal of Management, 21, 189–211.
80.
TanJ. & PengM. (2003). Organizational slack and firm performance during economic transitions: Two studies from an emerging economy. Strategic Management Journal, 24, 1249–1263.
81.
ThompsonJ. (1967). Organizations in action. New York: McGraw–Hill.
82.
TripathiS. (1997). Waiting game. Far Eastern Economic Review, 161(1), 122–123.
83.
TripsasM. (1997). Unraveling the process of creative destruction: Complementary assets and incumbent survival in the typesetting industry. Strategic Management Journal, 18(Summer), 119–142.
84.
TushmanM. & RomanelliE. (1985). Organizational evolution: A metamorphosis model of convergence and reorientation. In CummingsL.L., StawB.M. (Eds.), Research in Organizational Behavior (Vol. 7, pp. 171–222). Greenwich, CT: JAI Press.
85.
TylerB. & SteensmaH. (1998). The effects of executives’ experiences and perceptions on their assessment of potential technological alliances. Strategic Management Journal, 19, 939–965.
86.
VaradarajanP. & CunninghamM. (1995). Strategic alliances: A synthesis of conceptual foundations. Journal of the Academy of Marketing Science, 23(4), 282–296.
87.
WhiteS. (2004). Stakeholders, structure, and the failure of corporate governance reform initiatives in post–crisis Thailand. Asia Pacific Journal of Management, 21, 103–122.
88.
WrightM., FilatotchevI., HoskissonR., & PengM. (2005). Strategy research in emerging economies: Challenging the conventional wisdom. Journal of Management Studies, 42, 1–33.
89.
YeungH. (2006). Change and continuity in Southeast Asian ethnic Chinese business. Asia Pacific Journal of Management, 23, 229–254.
90.
ZammutoR. & CameronK. (1985). Environmental decline and organizational response. Research in Organizational Behavior, 7, 223–262.
91.
ZuckermanG. (2005). Cash–rich firms feel pressure to spend. Wall Street Journal, July 11, p. C1.
