Environmental Shocks and SME Alliance Formation Intentions in an Emerging Economy: Evidence from the Asian Financial Crisis in Indonesia

Abstract

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.