An emerging market perspective of what makes professional service firms successful

Felix Nana Abaka Sackey (Ibistek Ghana, Accra, Ghana)
Livingstone Divine Caesar (Council for Scientific and Industrial Research, Science and Technology Policy Research Institute (STEPRI), Accra, Ghana)

Vilakshan - XIMB Journal of Management

ISSN: 0973-1954

Article publication date: 16 November 2020

Issue publication date: 16 December 2020

1011

Abstract

Purpose

Despite the criticality of strategic partnerships to the survival and success of professional service firms (PSF) in emerging markets, there is a dearth of research on the subject matter. Specifically, not much is known concerning the dynamics of partnerships among small and medium-sized enterprises (SMEs) in the professional services sector of the economy. This paper aims to explore the dynamics of the impact of constructs such as attributes of partnership, communication behaviour and collaborative conflict resolution on partnership success.

Design/methodology/approach

A quantitative survey sent to 300 small and medium-sized PSFs achieved a 79% response rate. The data is then analysed using bivariate and multi-variate techniques.

Findings

The results revealed a positive relationship between two of the three constituents of attributes of the partnership (i.e. commitment and coordination) and the success of partnerships. Commitment and coordination emerged as the significant attributes of partners that affect the success of the partnership. Contrary to previous studies, trust and information sharing did not have a positive impact on partnership success.

Practical implications

PSFs in emerging markets need concerted efforts to maintain competitive and sustainable partnerships. To make any significant impact, they must develop contemporary skills in collaborative conflict management.

Originality/value

This paper highlights the need for PSFs and SMEs in other service sectors of emerging markets to harness partnerships as a valuable tool to overcome the policy shortcomings of current regulatory frameworks within their respective markets.

Keywords

Citation

Sackey, F.N.A. and Caesar, L.D. (2020), "An emerging market perspective of what makes professional service firms successful", Vilakshan - XIMB Journal of Management, Vol. 17 No. 1/2, pp. 57-78. https://doi.org/10.1108/XJM-08-2020-0059

Publisher

:

Emerald Publishing Limited

Copyright © 2020, Felix Nana Abaka Sackey and Livingstone Divine Caesar.

License

Published in Vilakshan - XIMB Journal of Management. Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence maybe seen at http://creativecommons.org/licences/by/4.0/legalcode


1. Introduction

Increasing competition in the modern business environment, particularly among professional service firms (hereafter referred to as PSF) has led to the proliferation of a plethora of survival strategies. One of such strategies is an inter-organizational partnership (Thiel, 2019; Casey, 2008). Selecting the right partner for new ventures or the expansion of existing ones is crucial given the unique structural and ideological differences of firms. Whiles this is key, strategic partnerships of firms in the short-to-medium term, tend to duly affect organizations and operation of businesses. Irrespective of the reason why a partnership is formed, improper management could lead to its failure. Tuten and Urban (2001), claimed that partnerships are more likely to succeed when managed under appropriate circumstances and environmental conditions. Consequently, firms need to thoroughly assess the idiosyncrasies and prevailing conditions of the environment within which they operate to enable them to form sustainable partnerships. With high failure reported in the literature for most strategic partnerships (Thiel, 2019; Zineldin and Vasicheva, 2016; Tuten and Urban, 2001), it is imperative for PSFs (as in the case of other organizations) to acquire a thorough contextual grasp of the multiplicity of critical success factors. This will help them improve partnership outcomes, reduce the high failure rate of partnerships and apply appropriate measures to remain sustainable (Zineldin and Vasicheva, 2016).

Boddy et al. (2000, p. 1004) define partnership as a situation in which there is an attempt to build close, long-term links between organizations that remain distinct, but which choose to work closely together. Organizations form partnerships for diverse reasons. Principally, it promotes a cost-sharing culture, which is evident in cost savings, knowledge sharing (learning), complementarity and economies of expansion (Casey, 2008; Tuten and Urban, 2001). Partnerships promote inter-organizational collaboration, which serves as the platform for creating and sharing valuable strategic knowledge. With partnerships, firms can escape the limited affordances of operating as lone rangers. There is, however, a paucity of research concerning the best way to establish and maintain workable partnership relationships (Zineldin and Vasicheva, 2016). Further, the literature is practically silent and where there is, ambiguous on the execution of partnership roles. This restricts the practice of consultation, participation, shared decision-making and consensus building required to successfully implement the partnership (Casey, 2008).

1.1 Research problem

The professional service industry in emerging markets such as Ghana is dominated by privately owned small and medium-sized enterprises (SMEs); hence, their sole proprietorship status (Abor and Quartey, 2010). They are, thus, subjected to the many limitations of sole proprietor SMEs: limited access to capital, low level of managerial ability and limited risk-bearing capacity. One major drawback is the inability to exploit the numerous affordances accessible to partnerships as an alternative business ownership structure. Foon (2006) identified low productivity, global sourcing inadequacies, lack of financing, lack of managerial capabilities, technology and heavy regulatory burden as some of the barriers that confront SMEs in emerging markets. These challenges affect their ability to grow and compete.

Through partnerships, SME firms may be able to overcome the aforementioned challenges and grow to globally compete (Lee et al., 2012). Additionally, it is postulated that firms may achieve growth through diversification into new services and new geographic areas as a result of partnerships (Zineldin and Vasicheva, 2016; Tuten and Urban, 2001). Through service diversification as a result of partnerships, firms may achieve economies of scope (Markides and Williamson, 1996).

It is, thus, the considered view of this paper that a contextual investigation of the partnership success antecedents explored by previous studies is imperative. While prior studies exist on the critical success factors of partnerships (Tuten and Urban, 2001; Casey, 2008), the focus was not on SMEs and the findings (which were mostly contradictory) may be alien to emerging markets when one considers their peculiar characteristics, which may not be common to the developed markets of previous studies. The generic knowledge available in the developed country literature does not appear to apply to emerging market PSFs; given the volatility, uncertainty, complexity and ambiguity characteristics of their environment. Consequently, many firms cannot appreciate and effectively manage the factors underpinning successful partnerships. Also, the obvious time-lapse limitation of past studies warrants a contemporary investigation of the previously hypothesized relationships; but in a different market environment for fresh insights.

The results of this study will improve our understanding of factors critical to the success of partnerships among PSFs from an emerging market perspective. The outcome will undergird knowledge on the modern partnership formation literature; at least for SMEs. Also, the contradictory results from previous studies could be resolved. This paper does not only focus on the critical success factors but catalogues the obstacles to partnership success as well. From a theoretical perspective, the study contributes to our understanding of the social exchange theory by highlighting how critical success factors of partnership and partnership motive cold help facilitate exchanges in a way that minimizes firm cost and maximize benefits. Practically, the study will provide PSFs with a blueprint on how to practice sustainable partnerships in volatile and regulation-constrained emerging markets such as Ghana.

The rest of this paper is organized as follows. In Section 2, a review of the extant literature on PSFs and partnership success is done. Also, this section focuses on a discussion of the theoretical framework of the study. Section 3 provides details on the methodology used for the paper. Section 4 presents the results of the study. In Section 5, the discussions and industry implications of the paper are presented.

2. Literature review

2.1 Partnership success in professional service firms

Presumably, PSFs are distinctively different from businesses in other sectors. They are described as extreme examples of knowledge intensity firms, with business models geared towards a knowledge-based economy (Gardner et al., 2008). Perhaps, the key characteristic that may be associated with professionals is their mastery of a particular knowledge base or expertize. This characteristic of professionals does not pre-suppose that PSFs are firms that master a particular knowledge base or expertize. Von Nordenflycht (2010) provides an expansive definition of the term (that incorporates the “service” aspect) noting qualifying attributes such as “knowledge intensity, low capital intensity and a professionalized workforce”.

To achieve efficiency, PSFs rely on partnerships. Partnerships are usually enduring relationships that exist among one or more autonomous organizations striving to achieve greater benefits by operating jointly rather than in isolation (Brown et al., 1996). Despite the growing prominence of partnerships in the professional service management literature, prescriptions on how to effectively manage them particularly in PSFs are still very much little. Partnerships if not managed well may result in a collapse of any such relationships. Parkhe (1993), stressed that prescriptions to guide managers in the effective management of partnerships were necessary given their high (70%) mortality rates.

The success of a partnership is determined by several factors. Mohr and Spekman (1994) investigated the effect of partnership attributes on the success of partnerships and found coordination, commitment and trust as key antecedents as they all positively impacted on partner satisfaction and dyadic sales (the dependent variables). Monczka et al. (1998) also share similar views in their study. Lee and Kim (1999) found that partnership quality served as a key predictor of outsourcing success. All these findings were corroborated in other studies done within the construction sector (Cheng et al., 2000).

2.2 Theoretical framework

The study uses the social exchange theory and the transaction cost theory to explain how the critical success factors impact on partnership success.

2.2.1 Social exchange theory.

The application of the social exchange theory has been one of the major theoretical perspectives in social psychology research (Cook et al., 2013). Social exchange is a dyadic exchange between at least two partners geared towards the achievement of some benefits. Partners in such dyadic relationships are often exposed to exploitation and opportunistic behaviours from one another, underscoring the need for them to use calculative trust strategies to cushion themselves against the risks their relationship exposes them to Reusen and Stouthuysen (2020), Susarla et al. (2020). The cost, which is viewed as the alternative opportunities or activities foregone by individual actors is a common feature in social exchanges. Social exchanges involve the principle that one person does another a favour, and while there is a general expectation of some future return, its exact nature is not stipulated in advance (Blau and Scott, 1962). Hinging on the element of trust and reciprocity, the partners of a social exchange return the favour or disfavour of one another (Susarla et al., 2020; Cropanzano et al., 2017). Inferring from the social exchange theory perspective, it can be noted that partnerships are characterized by behavioural characteristics that differentiate their exchange relationships from other traditional (conventional) organizational relationships. Thus, partnerships firms who exhibit these behavioural characteristics more were better positioned to be successful than those that exhibited less. When partners initiate and continuously exhibit positive actions towards one another, the partnership relationship is likely to grow towards profitability and vice versa (Cropanzano et al., 2017).

2.2.2 Transaction cost theory.

The partnership between firms is a form of strategic alliance. Strategic alliances for that matter partnerships have been explained with various theoretical lenses, but in the context of this study the transaction cost theory (Williamson, 1991; Shan, 1990) is used as a supporting theory to the social exchange theory. The transaction cost theory is usually used to explain the motive underpinning an individual or a firm’s decision to go into some sort of partnership with another. The theory assumes that “firms transact by the mode, which minimizes the sum of production and transaction costs” (Kogut, 1988, p. 322). Thus, from a transaction cost perspective, an individual or firm may venture into a partnership because of the economic and personal benefits they seek to derive from the partnership relationships. Quite often, the anticipated economic and personal motive significantly shapes the partnership relationship behaviour of stakeholders (Reusen and Stouthuysen, 2020; Susarla et al., 2020; Cook et al., 2013). For instance, knowledge transfer and other information exchange behaviours between partners in these strategic alliances will improve if the partners trust each other and where its occurrence is likely to reduce costs and enhance the fortunes of partners (Lascaux, 2020; Susarla et al., 2020; Milagres and Burcharth, 2019).

Figure 1 shows the proposed model for the study. It depicts how independent factors such as attributes of partnership, communication behaviour and collaborative conflict resolution could lead to partnership success.

2.3 Development and presentation of hypotheses

2.3.1 Conceptualizing partnership success.

The conceptualization of the concept of partnership success has received varied views over the years. Some scholars conceptualized partnership success relating to partner relational issues (Casey, 2008; Mohr and Spekman, 1994; Anderson and Narus, 1990), with others concentrating on the outcome of the partnership (Mohr and Spekman, 1994).

In the view of Anderson and Narus (1990), satisfaction regarding the working relationship between partners is a good measurement of the success of the partnership. Dissatisfaction/satisfaction regarding a partnership relationship is a cognitive state and this relates to the perceived adequacy of the rewards or benefits received through the partnership relationship (Frazier, 1983). Thus, a partner to a partnership may be deemed to be satisfied based on the partner’s cognitive state concerning the perceived adequacy of benefits received in the partnership relationship. Therefore, success is partnerships may be achieved when both partners to the partnership are deemed to be satisfied with the contribution of each other and they both receive rewards/benefits from the partnership relationship. Thus, partnership success in the context of this study relates to how satisfied partners are with each other concerning the various aspects of the partnership relationship, ranging from how committed the partner is to the partnership, his/her level of coordination, the perceived trust of the partner, communication, participation and information sharing behaviour of the partner and the partner’s collaborative conflict resolution behaviour (Mohr and Spekman, 1994) and the benefits they receive from the partnership relationship.

2.3.2 Attributes of partnership.

In strategic partnership relationships, there exists a set of process-related constructs that help guide the flow of information between partners, manage the depth and breadth of interaction and capture the complex and dynamic interchange between partners. These are called the attributes of partnership. Extant literature has focused on commitment, coordination, interdependence and trust as important attributes of partnerships (Anderson and Narus, 1990; Frazier et al., 1988). The existence of these attributes implies that both partners acknowledge their mutual dependence and their willingness to work for the survival of the relationship. Should one party act opportunistically, the relationship will suffer and both will feel the negative consequences.

2.3.2.1 Commitment.

Commitment refers to the willingness of trading partners to exert effort on behalf of the relationship (Mohr and Spekman, 1994). It suggests a future orientation in which partners attempt to build a relationship that can weather unanticipated problems. A high level of commitment provides the context in which both parties can achieve individual and joint goals without raising the spectre of opportunistic behaviour. Because more committed partners will exert effort and balance short-term problems with long-term goal achievement, higher levels of commitment are expected to be associated with partnership success (Kwon, 2008). It is, thus, hypothesized that:

H1.

Commitment of partners has a positive relationship with partnership success.

2.3.2.2 Coordination.

Coordination reflects the set of tasks each party expects the other to perform. Successful working partnerships are marked by coordinated actions directed at mutual objectives that are consistent across organizations (Lee and Lim, 2003; Kwon, 2008). Stability in an uncertain environment can be achieved via greater coordination. Without high levels of coordination, just-in-time processes fail, production stops and any planned mutual advantage cannot be achieved (Lee and Lim, 2003). It is, thus, hypothesized that:

H2.

Coordination has a positive relationship with partnership success.

2.3.2.3 Trust.

Atuahene-Gima and Li (2002) explain trust as a person’s belief and expectation about the likelihood of having a desirable action performed by another as an assessment of another’s goodwill and reliability. It is, thus, a very important aspect of building sustainable strategic partnerships. Cooperation, which is a central feature of partnerships is almost impossible without trust (Bruneel et al., 2010). Zaheer and Harris (2006) posit that trust reduces uncertainties and collaboration barriers in most inter-organizational relationships. This encourages transparency and the sharing of information to make partnership success.: other things being equal, exchange relationships featuring trust will be able to manage greater stress and will display greater adaptability. Hence, lack of trust will be deleterious to information exchange, to the reciprocity of influence and will diminish the effectiveness of joint problem-solving. Based on these cluster of similar findings, it is hypothesized that:

H3.

Trust among partners has a positive relationship with partnership success.

2.3.3 Communication behaviour.

Because communication processes underlie most aspects of organizational functioning, communication behaviour is critical to organizational success (Atouba and Shumate, 2019; Casey, 2008; Mohr and Nevin, 1990). To achieve the benefits of strategic partnerships, effective communication between partners is essential (Casey, 2008; Kauser and Shaw, 2004). Communication captures the utility of the information exchanged and is deemed to be a key indicant of the partnership’s vitality. Three aspects of communication behaviour are discussed here, namely, communication quality, the extent of information sharing between partners and participation in planning and goal setting.

2.3.3.1 Communication quality.

Communication quality is a key aspect of information transmission (Kauser and Shaw, 2004; Casey, 2008). Quality includes such aspects as the accuracy, timeliness, adequacy and credibility of information exchanged (Lee and Kim, 1999; Mohr and Spekman, 1994). Across the range of potential partnerships, communication quality is a key factor of success. Timely, accurate and relevant information is essential if the goals of the partnership are to be achieved. Other researchers (Atouba and Shumate, 2019; Mohr et al., 1996) acknowledge the importance of honest and open lines of communication to the continued growth of close ties between trading partners. It is, thus, hypothesized that:

H4.

Communication quality has a positive relationship with partnership success.

2.3.3.2 Participation.

Participation refers to the extent to which partners engage jointly in planning and goal setting. When one partner’s actions influence the ability of the other to effectively compete, the need for participation in specifying roles, responsibilities and expectations increases (Busom and Fernández-Ribas, 2008; Mohr and Spekman, 1994). Input to decisions and goal formulation are important aspects of participation that help partnerships succeed. Participation in decision-making is associated with satisfaction in partnerships whereas joint planning allows mutual expectations to be established and cooperative efforts to be specified (Altinay et al., 2014; Kwon, 2008). In sum, more successful partnerships are expected to exhibit higher levels of communication quality, more information sharing between partners and more participation in planning and goal setting than less successful partnerships. It is, thus, hypothesized that:

H5.

Participation has a positive relationship with partnership success.

2.3.3.3 Information sharing.

Information sharing refers to the extent to which critical, often proprietary, information is communicated to one’s partner (Du et al., 2012; Cheng, 2011; Mohr and Spekman, 1994). Closer ties result in more frequent and more relevant information exchanges between high performing partners (Lee, 2001; Lee and Kim, 1999). By sharing information and by being knowledgeable about each other’s business, partners can act independently in maintaining the relationship over time. The systematic availability of information allows people to complete tasks more effectively (Lee, 2001), is associated with increased levels of satisfaction, and is an important predictor of partnership success (Kwon, 2008; Mohr and Spekman, 1994). To this point, it is hypothesized that:

H6.

Effective information sharing has a positive relationship with partnership success.

2.3.4 Conflict resolution techniques.

Conflict often exists in inter-organizational relationships because of the inherent interdependencies between parties (Tsasis, 2009). Given that a certain amount of conflict is expected (Wu et al., 2012), an understanding of how such conflict is resolved is important. The impact of conflict resolution on the relationship can be productive or destructive (Butt, 2019). Thus, how partners resolve conflicts has implications for partnership success. Firms in a strategic partnership are motivated to engage in joint problem-solving, as they are, by definition, linked to managing an environment that is more uncertain and/or turbulent than each alone can control and integrative outcomes satisfy more fully the needs and concerns of both parties (Butt, 2019; Tsasis, 2009). When parties engage in joint problem-solving, a mutually satisfactory solution may be reached, thereby enhancing partnership success.

Partners often attempt to persuade each other to adopt particular solutions to the conflict situation. These persuasive attempts will generally be more constructive than the use of coercion or domination (Butt, 2019). The use of destructive conflict resolution techniques (e.g. domination and confrontation) is seen as counter-productive and are very likely to strain the fabric of the partnership. In some partnerships, the method of conflict resolution is institutionalized, and third-party arbitration is sought. While such mediation can help produce beneficial outcomes (Anderson and Narus, 1990), “internal resolution” (i.e. not relying on outside parties) shows a greater promise of long-term success. Using conflict resolution, options that address the root cause of the conflict without undermining the partnership’s goal of mutual gain will yield success. Thus, it is hypothesized that:

H7.

The application of effective conflict resolution techniques has a positive relationship with partnership success.

3. Procedures and methods

The quality of any given research hinges on choosing an appropriate paradigmatic and methodological position and making sampling decisions guided by scientifically grounded tenants of inquiry (Bryman, 2016; Caesar, 2016). Consequently, this paper holds an objective ontological stance, thus, the researchers are of the view that the critical success factors that impact on partnership success exist and are external to the researchers. Given that the objective of the paper is to identify the factors critical to the success of partnerships, the positivistic paradigm was adopted. This enabled the use of a quantitative research approach. The positivistic paradigm assumes an objective, quantitative approach, where it uses a hypothetic-deductive technique beginning with problem definition, development of hypotheses, data collection and analysis including interpretation of data (Bryman, 2016). For the current study, using the hypothetic-deductive technique helped to explain the predicted causal relationships between the critical success factors of partnership and partnership success.

Power analysis of a chi-square test was conducted in G-POWER to determine a sufficient sample size using an alpha of 0.05, the power of 0.95, a medium effect size (w = 0.15) (Faul et al., 2007). Based on the aforementioned assumptions, the desired sample size was 154. However, the sample size for the study was increased and a total of 350 survey respondents were targeted for this study to ensure proper representativeness of the study population. The questionnaire designed for this study was sent and distributed to participants through field interviewers and collected after completion. To ensure the quality of the information collected, a back check of the responses was made. Respondents were called to verify 50% of the information provided as part of the quality assurance process.

The study questionnaire was developed with multi-item measures based on construct definitions and research precedents. A pre-test of the study was conducted with 50 accountants as they share attributes similar to that of the PSFs. Some minor changes were made to the wording in the questionnaire based on the feedback from the pretest. The design of the data collection instrument was greatly influenced by the study questions, hypotheses and conceptual model. The questionnaire was divided into two parts – Part 1: consisting of five sections of Likert scale questions (A–E) and; Part 2 the bio-data and comprising demographic questions. Most measures in the questionnaire were chosen from those that had been used in previous research. If the variables had satisfying quality in previous literature variables, they were adopted. Further, some measures were adopted.

The construct commitment was measured using six items, which were adapted from Finkel et al. (2009). The measures for coordination was adapted from the one used by Gaumer Erickson et al. (2016). It used six items. Using Jones and Barry (2011), trust was measured using six scale items. The five scale items used in measuring communication quality was culled from de Waal et al. (2015). The initial five items and six items that were, respectively, used to measure participation and information sharing adapted from the one used by Mohr and Spekman (1994). Finally, the initial nine items that were used to measure collaborative conflict resolution was adapted from the one used by Gaumer, Soukup, Noonan, and McGurn (2016).

Ethical considerations in data collection were highly considered and maintained by this study. According to Saunders et al. (2012), ethical issues are “important throughout the research process to establish the ethical integrity of the research and the researcher”. Issues connected to confidentiality, securing the informed consent of study participants and anonymity were addressed. To maintain the confidentiality of the sample population, for instance, each organization and its employees sampled were assigned a unique code to prevent them from being traced to their respective responses (Bryman, 2016). Thus, the use of codes was useful in making the contributions of respondents confidential and non-attributable. Respondents’ biographical data was strictly kept anonymous.

4. Results and findings

4.1 Background information of respondents

The data collection process resulted in 276 responses; representing a 79% response rate. The distribution of the background characteristics of the respondent and the organization are reported in Tables 1 and 2, respectively.

Table1 shows that more men (94.1%) than women (5.9%) were involved in the study. This could suggest that majority of professional partnership firms have more men than women workers. Over 80.9% of the respondents were 41 and above years old with over 10.6% between 36-40 years followed by 31-35 years (7.3%), etc. About half (49.1%) of the respondents held positions as a manager, followed by those with positions as chief executive officer (CEO) (31.1%) and administrative officer (15%). In practice, businesses that come together to operate as partners usually appoint one as a manager to oversee the operations of the company. In total, 45.8% of respondents had 10 years and above experience with their organization. Majority of the respondents representing (46.9%) have their bachelors, (24.5%) have their masters and more than 27.1% have a professional qualification such as Association of Chartered Certified Accountants (ACCA). The high level of education among respondents is not surprising given the knowledge-intensive nature of the environment in which PSFs operate.

Table 2 shows that majority of the organizations surveyed (90.5%) had employee size less than 20; confirming the assertion that firms with less than 20 employees are SMEs (Kayanula and Quartey, 2000). Also, over 5 out of every 10 respondents (50.5%) indicated that their organization has been in existence between 11–15 years, followed by organizations with 16–20 years (23.8%) experience. Further, 89.4% indicated that they are involved in the general practice partnership type while over 10.3% indicated that they are involved in the acquisition partnership type.

On partnership types, 64.8% are a partnership of 2 and 31.5% are a partnership of 1 with 81.7% indicating that their partnership has been in existence for two years. The average annual revenue for each organization (92.3%) is $1m.

4.2 Measures and validation

To ascertain the internal validity and consistency of the scale items used in measuring the independent and dependent variables of the study (as shown in Figure 1), an exploratory factor analysis using the principal components analysis factoring method and varimax rotation was performed. Also, the reliability of the scales was examined by computing the Cronbach’s alpha (α) (Cronbach, 1951). Table 3 presents the factor loadings and Cronbach values of the constructs (variables). Cronbach (1951) minimum alpha value of 0.60 was adopted as the benchmark and Table 3 demonstrates that the minimum value was exceeded. Hence, Cronbach’s alpha estimates for the constructs were sufficient. Table 3 further provides important information on the sources of the scale items that were used to measure the variables.

Additionally, the average variance extracted (AVE) (Fornell and Larcker, 1981) loadings for the measures of each construct to determine their reliability and reliability (using the convergent validity and discriminant validity procedure) were all relatively large and positive above 0.50. The criterion for establishing reliability is that the AVE measures should exceed 0.50 to ensure that, on the average, the measures share at least half of their variation with the latent variable (Fornell and Larcker, 1981; Hjorth, 1994).

4.3 Correlation and description

Table 4 shows the correlation between constructs and descriptive statistics. The Pearson correlation test results are indicative of a not too high correlation among constructs, and thus, the element of multi-collinearity is eliminated. The result showed that, collaborative conflict resolution (r (276) = 0.703, p < 0.01) positively correlated successful partnership, just as the case for information sharing (r (276) = 0.024, p > 0.01); participation (r (276) = 0.487, p < 0.01); communication quality (r (276) = 0.511, p < 0.01); coordination (r (276) = 0.288, p < 0.01); and commitment (r (276) = 0.115, p < 0.01). However, trust (r (276) = −0.052, p > 0.01) negatively correlated successful partnership.

The data was normally distributed, as the skewness and kurtosis were approximately between −1 and +1. Respondents generally showed agreement to commitment (Mean = 4.70, SD = 0.33), information sharing (Mean = 4.21, SD = 0.46), participation (Mean = 4.16, SD = 0.39), coordination (Mean = 4.14, SD = 0.65), successful partnership (Mean = 4.0, SD = 0.63), collaborative conflict resolution (Mean = 3.95, SD = 0.54) and communication quality (Mean = 3.86, SD = 0.55), as associated with establishing a successful partnership. The respondents, however, expressed disagreement with respect trust (Mean = 2.99, SD = 1.28) issues when dealing with partners.

4.4 Analysis and results

The tolerance values of greater than 0.10 and variance inflation factor values of less than 10 all indicated that the multi-collinearity assumption was not violated (Hair et al., 1998). An initial regression with the control variables was run, followed by the independent variables in the second model (Aiken and West, 1991).

4.4.1 Impact of attributes of partnership on partnership success.

In determining the impact of the attributes of partnership on the success of partnerships. The independent variables regressed on the dependent variable as shown in Table 5. Model A shows that the control variable explained 7.1% of the variance in a successful partnership. After the introduction of commitment, coordination and trust together with control variables in Model B, the explanation increased to 72.5% (ΔR2 = 0.653, ΔF = 207.192, p < 0.000).

Model B in Table 5 showed that commitment (β = 0.260, p < 0.001) and coordination (β = 0.716, p < 0.001) positively impacted on partnership success in support of H1 and H2. This may suggest that partners who do everything to make their business grow and agreeable in most situations, as well as maintaining a good business relationship may result in high business growth. On the contrary, trust negatively impacted successful partnership (β = −0.260, p < 0.001) not lending support to H3. This outcome is intriguing as it may suggest that partners who engage in activities to progress their agenda rather than the partnership agenda and withhold information of relevance to the partnership can hurt the success of the partnership. Consistent with Madhok (1995), trust may be essential for the creation of the partnership relationship but not sufficient for its continuation, as one partner may become more vulnerable in the relationship because of unequal dependence. Further, the negative impact of trust on partnership success for this study could be attributed to the fact that the members to the partnership were previously competitors but came together. According to Sende (2016), trust could act as a source of risk, and thus, reduces performance when firms who were formally competitors find themselves in a partnership. Under such a circumstance, the partners, due to the ambiguity of trust tend to exhibit coopetitive rather than collaborative behaviours. This increases opportunistic and calculative behaviours (Susarla et al., 2020), stifles innovation, and thus, impact negatively on the success of the partnership.

4.4.2 Impact of communication behaviour of partners on partnership success.

To determine the impact of the communication behaviour of partners on the success of partnerships. The independent variables, communication quality, participation and information sharing were regressed on the dependent variable, successful partnership in Table 6. Model A shows that the control variable explained 7.1% of the variance in a successful partnership.

After the introduction of communication quality, participation and information sharing with control variables in Model B, the explanation increased to 58.8% (ΔR2 = 0.517, ΔF = 109.451, p < 0.001). Model B in Table 6 showed that communication quality (β = 0.712, p < 0.001) and participation (β = 0.053, p < 0.001) positively impacted on successful partnership in support for H4 and H5. The reason may be that the quality a partner communicates with his partner in terms of regularly seeking for advice, conferring on the planning of activities, grounded on partners making suggestions encourage each other, may, in turn, increases the effectiveness of the organization. This is consistent with Lewis (1999), who indicated that organizational change and the communication process are inextricably-related processes. Studies about communication show that communication has a positive correlation with many organizational outputs such as organizational commitment, performance, organizational citizenship behaviours and job satisfaction. In contrast, communication failure may cause functionless results such as stress, job dissatisfaction, low trust, a decrease in organizational commitment, severance intention and absence (Bastien, 1987; Malmelin, 2007) and this can affect an organization’s efficiency negatively (Zhang and Agarwal, 2009).

On the contrary, information sharing negatively impacted successful partnership (β = −0.521, p < 0.001) not lending support to H6. This outcome is intriguing as it may suggest that sharing of too much information can be used by one side of the partner to his benefit. This is consistent with Hendriks and Vriens (1999) study, which argued that information sharing should be considered as a continuous managerial activity to sustain higher organizational capability.

4.4.3 Impact of conflict resolution techniques on partnership success.

To determine the impact of the conflict resolution techniques of partners on the success of partnerships, the independent variables, collaborative conflict resolution was regressed on the dependent variable, successful partnership in Table 7. Model A shows that the control variable explained 7.1% of the variance in a successful partnership. After the introduction of collaborative conflict resolution with control variables in Model B, the explanation increased to 54.1% (ΔR2 = 0.470, ΔF = 270.110, p < 0.001).

Model B in Table 7 showed that collaborative conflict resolution (β = 0.715, p < 0.001) positively impacted on a successful partnership in support of H7. The reason may be that, partners with several ways of dealing with disagreement help improve business relationship thus, the success of the business.

4.5 Summary hypotheses

The conceptual model shown in Figure 1 presented the hypotheses to be tested for the study. Table 8 presents a summary of the hypotheses and the empirical conclusions based on the hypotheses formulated.

5. Discussion and implications

5.1 Discussion of findings

5.1.1 Attributes of partners will positively impact on the success of partnerships.

The study hypothesized a positive relationship between the three constituents of attributes of partners (i.e. commitment, coordination and trust) and the success of partnerships. The regression results lent support to H1 and H2. However, H3 on trust was not supported. The inferential reason for the negative impact of trust on partnership success lies in the calculative trust and coopetitive tendencies of partners.

Akintoye et al. (2000) contend that commitment among partners is critical to the success of the partnership as it helps propel the achievement of the collective goals. The study results, thus, corroborate this assertion and the conclusions of Tellefsen (2002). Commitment usually evokes a strong sense of intention and focus; obligating partners to act and behave in ways that to protect their interests and that of the partnership. It is a key prerequisite for the effective execution of projects, operational processes and the successful implementation of organizational change programmes. A high level of commitment will provide both parties with an opportunity to avoid raising the spectre of opportunistic behaviour, which might result in partnership failure.

The coordination dimension positively impacted partnership success and corroborates Mohr and Spekman (1994). Lack of coordination among partners decreases productivity, complicates processes and delays the completion of tasks. Hence, better coordination coupled with long-term commitment can strengthen partnerships among PSFs and increase the chances of its success. PSFs require some coordination provisions in their partnership arrangements to exchange information and engage in joint planning. This breeds compatible timing, sequencing of actions, productive combination of resources and capabilities and quick responses to market changes and trends.

Trust was found not to be significant. This contradicts an early work of Monczka et al. (1998), which found trust to be a significant attribute of partnership. This is not to suggest that trust is unimportant but simply underscores the fact that coordination and commitment play more important roles as attributes of partnership, which ensure partnership success among PSFs in the context of this study. Also, the findings on trust might be contradicting previous studies due to the idiosyncrasies of the emerging markets in which data for the current study was collected.

5.1.2 Communication behaviour among partners will impact positively on the success of partnerships.

As a dimension of communication behaviour, communication quality was found to positively impact the success of the partnership among PSFs. This finding confirms aspects of a study by Lee (2001) and Das and Teng (1996), which found that communication is a key determinant of partnership success among firms. To promote the success of partnerships, roles and responsibilities about who has to communicate what, when and how, has to be made clear. It must be noted that communication underlies the effectiveness of coordinating exchange activities, developing a strong relationship, which culminates in improved performance of firms. Consequently, firms in a partnership must develop communication competence to knowledgeably engage in appropriate and meaningful communication with other partners.

Also, the current study established participation as a significant determinant of the success of the partnership. Participation of partners in organizational operation does not only motivate them but also enables them to contribute more effectively and efficiently. Hence, to strengthen the success of the partnership, participation of partners within every dispensation should be encouraged. Meanwhile, information sharing surprisingly was not a significant predictor of partnership success based on the results of the study. This contradiction of previous findings could be due to the many barriers identified in the literature (Khurana et al., 2011) as undermining information sharing among firms in developing markets. This means that participation and communication are more relevant as dimensions of communication behaviour in ensuring partnership success in emerging markets compared to information sharing.

5.1.3 Collaborative conflict resolution among partners will impact positively on the success of partnerships.

The hypothesis on the positive impact of collaborative conflict resolution on the success of partnership was supported; confirming findings from the study of Anderson and Narus (1990), who also found that conflict resolution can help produce beneficial outcomes to ensure the sustainability of firms. When conflict arises among partners as it inevitably does it affects the success of the partnership. However, it is important to resolve any discrepancies among partners if they should arise. When parties engage in joint problem-solving, a mutually satisfactory solution may be reached, thereby enhancing partnership success.

5.2 Conclusion and implications

It is evident from the perspective of this study and previous ones that partnership is a valuable tool for PSFs to overcome policy shortcomings of the current regulatory frameworks in emerging markets. Despite the enormous benefits derived from a partnership, several obstacles undermining their success exists (Hampl, 2020). Results from the hierarchal regression model revealed commitment and coordination as the significant attributes of partners that affect the success of the partnership. Concerning the communication behaviour of partners, it emerged that communication quality and participation are significant determinants. Finally, the findings revealed effective conflict resolution as a significant determinant of partnership success among PSFs in emerging markets. The findings from the current paper thus, corroborate Hampl (2020) as it appears to underscore the assertion that the characteristics of firms (i.e. cost of switching and societal values) and that of their founders (i.e. background, social network, etc.) effectively combine to either foster or hinder the growth and success of partnerships. Policymakers need to target interventions capable of sustaining partnerships among small and medium-sized PSFs given that SMEs are considered the engine of growth for many emerging market economies. Such interventions could be tax incentives for PSFs after remaining together for the initial five years.

From a practice perspective, PSFs need to view partnerships as a strategic option to break the constraints imposed on them by their peculiar regulatory environment and aid the internationalization of their operations. With many SMEs failing within the first three years of their existence and the increased competition PSFs face from Foreign Service provides, effective partnerships coupled with commitment and workable communication guidelines are of utmost importance for their survival. Communication must be used to improve trust among members of the partnership to strengthen the relationship bond and promote its sustainability. Also, it is recommended that efforts be made to create an integrated coordinated system that fosters accountability among partners. A culture of candour is also needed among members of a partnership for rich divergent views to thrive. This is important when one considers the fact that divergent views may lead to better solutions to give the partnership a competitive edge.

The implication for future research is that this paper recommends replication of the current study in knowledge-intensive sectors of the economy of other emerging markets using larger sample sizes to further enhance the generalizability of the present results. Also, future studies can focus on other determinants such as micro and macroeconomic factors that are most likely to influence the success of partnerships. Using moderator variables such as operational performance could equally be useful in future studies to investigate the relationships proposed in the conceptual model of the current study. Given that the current study lacks a qualitative component, it is recommended that future study uses a mixed-methods approach where textual data could be collected to provide an in-depth explanation of the quantitative results. Future research could use the trait and behaviour of the CEO as a moderator variable to ascertain how this could influence the hypothesized relationships in this paper. Further, interviews or focus groups could be done for an in-depth probe of the moderator variables.

Figures

Conceptual model

Figure 1.

Conceptual model

Demographic characteristics of respondents

Variable Characteristics Frequency (%)
Gender Male 257 94.1
Female 16 5.9
Age Below 20 years 1 0.4
26–30 years 3 1.1
31–35 years 20 7.3
36–40 years 29 10.6
41 and above years 220 80.6
Position Chief Executive Officers 85 31.1
Manager 134 49.1
Administrative officer 41 15.0
Experience in organization Below 1 year 1 0.4
1–3 years 30 11.0
4–7 years 100 36.6
8–10 years 17 6.2
Above 10 years 125 45.8
Education PhD 2 0.7
Masters 67 24.5
Bachelors 128 46.9
Diploma 2 0.7
Professional qualification (ACCA, CA, Ghana, etc.) 74 27.1

Background information of the organization

Variable Characteristics Frequency (%)
Employee size Less than 20 247 90.5
21–50 25 9.2
50–99 1 0.4
Company existence 0–5 years 16 5.9
6–10 years 44 16.1
11–15 years 138 50.5
16–20 years 65 23.8
21 years and above 10 3.7
Partnership type Acquisition 28 10.3
Strategic alliance 1 0.4
General practice 244 89.4
Number of partners One partner 86 31.5
Two partners 177 64.8
Three partners 10 3.7
Partnership age Below one year 4 1.5
Two years 223 81.7
Three years 30 11.0
Four years 5 1.8
Five years and above 11 4.0
Average revenue Less than Gh¢5m 251 92.3
Gh¢6m–Gh¢10m 19 7.0
Gh¢21–Gh¢25m 2 0.7
Note:

The population (N) differ across variables due to missing values

Measurement summary

Source Construct Items Loadings α AVE
0.700 0.50
Adapted from Finkel et al. (2009) Commitment 1. I feel really awful when our strategic plans towards the growth of the partnership go bad 0.806
2. I am completely committed to maintaining our business relationship and building more relationships with other partners 0.699
3. I will do everything I can to make our partnership grow 0.666
4. I spend a lot of time thinking about the future of our business partnership 0.615
0.847 0.65
Adapted from Thomson et al. (2007) Coordination 1. I participate on a board or steering committee specifically created for making decisions about the collaboration of partnership 0.875
2. All partners have to agree before a decision is made about the goals and activities of the collaboration 0.870
3. Partners formally evaluate the success of the collaboration 0.838
4. My organization relies on a formal agreement that spells out relationships between partners 0.747
5. I know what resources (such as money, time and expertize) the partner brings to the partnership 0.676
0.922 0.87
Adapted from Jones and Barry (2011) Trust 1. The contributions of all partners are valued equally, irrespective of whether a majority agree or disagree with their point of view 0.950
2. Business partners have hidden agendas and bring these into the partnership 0.948
3. Partners withhold information of relevance to the partnership 0.895
0.539 0.50
Adapted from de Waal et al. (2015) Communication quality 1. My partner communicates his changing demands regarding the partnership in time to me 0.816
2. My partner keeps me well (completely, honestly, openly and timely) informed on developments 752
3. My partner and I always confer on the planning of activities 0.533
4. My partner regularly asks me for advice 0.519
0.572 0.50
Adapted from Mohr and Spekman (1994) Participation 1. My advice and counsel are sought by my business partner 0.764
2. I participate with goal setting and forecasting with my business partner 0.748
3. I help our business partner with their planning activities 0.620
4. Suggestions by me are encouraged by my business partner 0.552
0.700 0.53
Adapted from Mohr and Spekman (1994) Information sharing 1. In our business relationship, it is expected that any information, which might help the other party is provided 0.852
2. the parties are expected to keep each other informed about events or changes that may affect the other 0.820
3. my partner and I share information through face-to-face interaction 0.652
3. I inform my business partner in advance of changing needs and preferences 0.532
0.755 0.55
Adapted from Gaumer Erickson et al. (2016) Collaborative conflict resolution 1. The way our organization resolves conflict usually strengthen our relationship with our partners 0.833
2. We are happy about how our organization handle most of the disagreement with our partners 822
3. In an argument, we try to understand the point of view of our business partners 0.776
4. Our business can think of several ways of dealing with disagreement 0.682
5. We try to understand if a disagreement is caused by misunderstanding 0.552
0.857 0.64
No source Success in partnership 1. I have an effective partnership relationship with my partner 0.876
2. The partnership increases the effectiveness of our organization 0.865
3. The partnership increases the profitability of our profit organization 0.829
4. The partnership increases the quality of our organization 0.761
5. The partnership has enhanced my brand perception 0.649
Notes:

These items were used for further analysis of the study.

All items were measured on five-point scales anchored by “strongly disagree” and “strongly agree”.

AVE = Average variance explained

Correlation among construct

Constructs 1 2 3 4 5 6 7 8 9 10 11 12 13 14
1. Years of existence −0.086 −0.122* 0.151* 0.053 −0.015 0.155* 0.139* 0.095 0.234** 0.125* 0.038 0.125* 0.194**
2. Employee size 0.071 0.102 0.070 0.580** 0.123* 0.065 −0.039 0.096 −0.011 0.060 0.179** 0.074
3. Partnership type 0.148* 0.089 0.055 −0.004 −0.214** −0.271** −0.285** −0.186** 0.044 0.029 −0.091
4. Number of partnership 0.002 0.000 0.126* 0.059 0.141* 0.152* 0.117 0.069 0.164** −0.041
5. Partnership age 0.243** −0.116 −0.113 −0.184** −0.094 −0.129* 0.091 −0.074 0.046
6. Average revenue 0.016 −0.019 −0.142* 0.033 −0.098 0.124* 0.080 0.084
7. Success partnership 0.800 0.703** 0.024 0.487** 0.511** −0.052 0.288** 0.115**
8. Collaborative conflict resolution 0.740 0.294** 0.202** 0.313** −0.387** 0.493** 0.284**
9. Information sharing 0.726 0.141* 0.189** −0.400** −0.103 −0.151*
10. Participation 0.648 0.138** 0.066 0.487** 0.418**
11. Communication quality 0.668 −0.334** 0.360** 0.097
12. Trust 0.931 0.199** 0.054
13. Coordination 0.805 0.371**
14. Commitment 0.700
Mean 3.86 1.10 3.79 1.72 2.25 1.09 4.0 3.95 4.21 4.16 3.86 2.99 4.14 4.70
SD 1.13 0.31 0.61 0.53 0.71 0.36 0.63 0.54 0.46 0.39 0.55 1.28 0.65 0.33
Kurtosis 1.451 8.827 4.831 −0.497 7.457 32.853 −1.260 −0.986 −0.872 0.321 −1.199 −1.193 −1.119 0.255
Skewness −0.24 3.065 −2.602 −0.195 2.693 5.129 −0.241 0.386 −0.207 0.376 0.290 0.115 −0.679 −0.937
Notes:

*p < 0.05, **p < 0.01 (two-tailed test). All constructs were measured on a five-point Likert scale, 1 indicating strongly disagree and 5 indicating strongly agree except for controls. SD = Standard Deviation

Regression analysis of attributes of partnership on the success of partnerships

Variables Model A Model B
β (t-values) β (t-values)
Control variables
Years in existence 0.167 (2.754)** 0.023 (0.677)
Employee size 0.163 (2.198)* 0.005 (0.125)
Partnership type 0.031 (0.512) 0.021 (0.631)
Number of partners 0.088 (1.434) 0.032 (0.939)
Partnership age −0.127 (−2.069)* −0.053 (−1.552)
Average revenue −0.047 (−0.626) −0.029 (−0.696)
Independent variable
Commitment 0.260 (7.142)***
Coordination 0.716 (19.147)***
Trust −0.206 (−6.162)***
R2 0.071 0.725
F value 3.383*** 76.585***
ΔR2 0.653
Change F value 207.192***
Degrees of freedom 6/265 9/262
Durbin–Watson 1.623
Notes:

p < 0.10, *p >< 0.05, **p < 0.01, ***p < 0.001

Standardized regression coefficients were reported with t-values for each effect in parentheses

Regression analysis of communication behaviour on the success of partnerships

Variables Model A Model B
β (t-values) β (t-values)
Control variables
Years in existence 0.167 (2.754)** 0.337 (1.280)
Employee size 0.163 (2.198)* 0.097 (1.945)+
Partnership type 0.031 (0.512) 0.102 (2.344)*
Number of partners 0.088 (1.434) 0.061 (1.484)
Partnership age −0.127 (−2.069)* −0.098 (−2.335)*
Average revenue −0.047 (−0.626) −0.037 (−0.725)
Independent variable
Communication quality 0.712 (11.263)***
Participation 0.053 (6.815)***
Information sharing −0.521 (−8.709)***
R2 0.071 0.588
F value 3.383*** 41.509***
ΔR2 0.517
Change F value 109.451***
Degrees of freedom 6/265 9/262
Durbin–Watson 1.904
Notes:

+p < 0.10, *p < 0.05, **p < 0.01, ***p < 0.001.

Standardized regression coefficients were reported with t-values for each effect in parentheses

Regression analysis of conflict resolution on the success of partnerships

Variables Model A Model B
β (t-values) β (t-values)
Control variables
Years in existence 0.167 (2.754)** 0.075 (1.746)+
Employee size 0.163 (2.198)* 0.071 (1.345)
Partnership type 0.031 (0.512) 0.170 (3.916)***
Number of partners 0.088 (1.434) 0.088 (2.037)***
Partnership age −0.127 (−2.069)* −0.057 (−1.306)
Average revenue −0.047 (−0.626) −0.006 (−0.121)
Independent variable
Collaborative conflict resolution 0.715 (16.435)***
R2 0.071 0.541
F value 3.383** 44.432***
ΔR2 0.470
Change F value 270.110***
Degrees of freedom 6/265 7/264
Durbin–Watson 1.629
Notes:

+p < 0.10, *p < 0.05, **p < 0.01, ***p < 0.001.

Standardized regression coefficients were reported with t-values for each effect in parentheses. EPM = Economic partnership motives, RRM = Risk-reduction partnership motive

Hypotheses summary

Hypothesis Description Empirical conclusions
H1 The commitment of partners has a positive relationship with partnership success Supported
H2 Coordination has a positive relationship with partnership success Supported
H3 Trust among partners has a positive relationship with partnership success Not supported
H4 Communication quality has a positive relationship with partnership success Supported
H5 Participation has a positive relationship with partnership success Supported
H6 Effective information sharing has a positive relationship with partnership success Not supported
H7 The application of effective conflict resolution techniques has a positive relationship with partnership success Supported

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Livingstone Divine Caesar can be contacted at: livingstonecaesar@yahoo.co.uk

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