Influence of Strategic Alliances on Performance of Telecommunication Organizations in Kenya

Abstract

Strategic alliances are a common scenario in businesses and organizations. This is attributable to the rising number of business collaborations anchored not only on ownership but also on affiliations which have eventually caused enormous changes to the business culture and running of organizations in the modern world. Strategic alliances are aimed at enhancing productivity and profitability of the collaborating entities and thereby improving the organizational performance of the individual firms. In Kenya’s telecommunication industry, three of the four main operators have not matched the performance of the industry leader, Safaricom, through the years. This has partly been associated with the level of involvement in strategic alliances. Safaricom has had several strategic alliances with various partners such as: M-Tiba, Afya Moja and Daktari Smart (health); Shupavu 291 and Zeraki learning (education); Digifarm (agriculture); United Nations Global Compact (corporate sustainability practices); Acumen (leadership development); and Shared Value Africa Initiative (competitive collaboration in Africa) among others. This research sought to establish how strategic alliances influence performance of telecommunication organizations in Kenya, particularly at Safaricom PLC. Specifically, the research sought to; determine the influence of marketing alliances on performance of telecommunication organizations in Kenya; establish the influence of production alliances on performance of telecommunication organizations in Kenya; and to examine the influence of technology alliances on performance of telecommunication organizations in Kenya. A descriptive research design, case study method, was employed. Safaricom PLC as well as other firms that the company had formed an alliance agreement with constituted the target population. It comprised those in top and departmental management positions. Stratified random sampling was used with the stratification criteria being on the basis of management level in the organization. Selection of the final sample of 105 respondents was done via simple random sampling. Primary and secondary data were used. Primary data was sourced through survey using questionnaires. Data analysis comprised both descriptive and inferential techniques. Descriptive analysis involved generating measures such as mean, mode, frequencies, range, standard deviation and percentages. Inferential analysis was conducted using multivariate regression analysis and correlation analysis. Results from the analysis of data were relayed through tables, graphs and charts. Results indicated that the main reason for engaging in strategic alliances was for the purpose of maintaining and increasing marketing. Regression analysis results conveyed statistically significant and direct influence on organizational performance occasioned by marketing and technology alliances. Production alliances showed an inverse and insignificant influence on organizational performance. However, correlation analysis showed strong, positive and significant influence organizational performance due to marketing, production and technology alliances. It was recommended that, rather than having a broad based approach, telecommunication firms should have a more narrow based approach that targets a specific component in strategic alliances and build a competitive advantage upon it so as to eventually attract the right partner(s) to form a business alliance.