Strategic Alliance Components and Firm Profitability: Evidence from the Fast-Moving Consumer Goods Industry in Lagos State
Keywords:
strategic alliances , profitability , cultural compatibility, resource accessibility, transaction costAbstract
Strategic alliances constitute an important strategic mechanism that can be used to support firm profitability in industries where resources may be scarce, and manufacturing expenses and market uncertainties are rising. However, firms in Nigeria’s Fast-Moving Consumer Goods (FMCG) sector continue to experience profitability pressures despite the increasing adoption of inter-firm collaborations. This research examines the relationship between strategic alliance components (transaction cost, cultural compatibility, and resource accessibility) and the profitability of FMCG companies in Lagos State, Nigeria. The data collection tools are structured questionnaires completed by 413 top- and middle-level managers, and the research design is quantitative and cross-sectional. The study uses Partial Least Squares-Structural Equation Modeling (PLS-SEM) to analyze the data. The results show that cultural compatibility, resource accessibility, and transaction cost are positively and significantly related to profitability. The model shows strong explanatory power, with an R² of 0.712, and strong predictive relevance, with a Q² of 0.397. The results indicate that alliance profitability is linked not only to inter-firm cooperation but also to relational compatibility, the sharing of complementary resources, and effective transaction cost management. The research contributes to the strategic alliance literature by providing multidimensional empirical evidence from the Nigerian FMCG sector. It also offers practical insights for managers seeking to strengthen the financial outcomes associated with strategic alliances.
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