Strategic Alliances
• Approximately 64 percent of small manufacturers and 63 percent of small businesses in general (all industries) currently hold or have held some type of alliance. The most utilized alliance type by small manufacturers is a long-term production agreement and the most utilized by small businesses is a licensing agreement.
• Businesses that keep alliances tend to maintain multiple alliances. Approximately 50 percent of small manufacturers and small businesses that have an alliance maintain three or more of them.
• Relatively few small manufacturers and small-business owners who initially form an alliance choose to discontinue that alliance or refrain from using alliances in general. Approximately 9 percent of manufacturers and 10 percent of small-business owners report having formed an alliance at some point, but do not currently maintain at least one.
• Alliance use by small manufacturers varies based on the size of the manufacturer, ranging from 53 percent use by those with less than 10 employees to 71 percent use by those with 20 or more employees. The widest variance in use, based on size, is the purchaser-supplier alliance.
• Small manufacturers appear to form alliances with larger businesses and similar/smaller businesses at about the same rate, although there are notable exceptions based on the type of alliance. Licensing agreements, product or service-based R&D alliances, and purchaser-supplier alliances tend to be formed with larger businesses. Only long-term outside contracting relationships tend to be more often formed with similar/smaller-sized partners.
• Alliances tend to be formed with partners who are drawn from either prior social or business relationships. Over 36 percent of the manufacturers and 40 percent of small-business owners report a prior social relationship with their most recent alliance partner and over 25 percent of the manufacturers held a previous alliance relationship. Almost 50 percent of the responding business owners had known their alliance partners for over 5 years.
• For the most part, small manufacturers and small-business owners are just as likely to make equity investments in the alliance as the alliance partner is to make an equity investment. Both groups tend to avoid alliances that involve high levels of non-recoverable investments.
• Eighty-four (84) percent of the small manufacturers and 76 percent of the small-business owners report positive alliance experiences. A majority of both small manufacturers and small-business owners indicate that their alliances are profitable, have exceeded expectations and have increased their ability to compete.
• Alliance experiences tend to be different given the size of the manufacturer. Smaller manufacturers (less than 10 employees) tend to have slightly higher numbers of alliances that fail to meet their expectations, but these same sized manufacturers also tend to be more optimistic about the futures of their alliances.
