Original Research

Influence of foreign alliances on the performance of small-scale agricultural businesses in South Africa: A new institutional economics perspective

Patient Rambe, Livingstone A.K. Agbotame
South African Journal of Economic and Management Sciences | Vol 21, No 1 | a2011 | DOI: https://doi.org/10.4102/sajems.v21i1.2011 | © 2018 Patient Rambe, Livingstone A.K. Agbotame | This work is licensed under CC Attribution 4.0
Submitted: 05 July 2017 | Published: 04 October 2018

About the author(s)

Patient Rambe, Department of Business Support Studies, Central University of Technology, South Africa
Livingstone A.K. Agbotame, Department of Business Support Studies, Central University of Technology, South Africa


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Abstract

Background: Globalisation has accentuated the need for small-scale agricultural businesses (SSABs) to network horizontally and vertically into world markets. However, the capacity of SSABs to cement foreign alliances to capitalise on business opportunities that the expansion of global markets presents, while simultaneously mitigating against the negative forces of globalisation remains a grey area.

Aim: The study sought to contribute to internationalisation literature by examining: (1) the extent to which SSABs’ owner and/or managers in selected South African provinces establish foreign alliances, (2) whether there are any statistically significant differences in SSABs’ performance based on their extent of establishment of foreign alliances.

Setting: The setting for this study was Vryburg-Pokwani in the North West and Northern Cape provinces of South Africa, respectively.

Method: A survey was conducted on 151 SSAB owner and/or managers in the aforementioned study area.

Results: The results revealed that although a majority (51.7%) had some (i.e. few) foreign alliances, 48.3% of SSABs had no foreign alliances at all. The results also demonstrated that the establishment of foreign alliances was positively and statistically significantly related to the performance of SSABs in the Vryburg-Pokwani area. Post-hoc comparisons (Bonferroni) results showed that while SSABs with 1–2 foreign alliances perform better than those with no foreign alliances at all, those SSABs with 6–10 foreign alliances perform better than those with none, 1–2 and 3–5 foreign linkages respectively.

Conclusion: Since SSABs with foreign alliances tended to outperform those that were dependent on domestic links, the extent to which the economic benefits derived from internationalisation are reinvested into the businesses for the continued sustenance of businesses needs more rigorous investigation.


Keywords

foreign alliances; firm performance; small scale agroprocessing firms; globalisation; new institutional economics

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