Requirements, principles, and performance of corporate federalism: A case of MNC-SME alliance

Abstract

This study aims to define and propose a corporate federalism model. In addition, it empirically examines the relationships between the requirements, principles, and performance of corporate federalism, as applied to a strategic alliance among a multinational corporation (MNC) and small- and medium-sized enterprises (SMEs). The study uses survey questionnaires to gather information. The data were collected from associates of 171 SMEs in a strategic alliance with a designated MNC. Structural equation modeling was used to analyze data in order to explore proposed relationships. The findings of the study suggest that corporate federalism creates commitment toward the alliance among participants. Among the requirements of corporate federalism, interpersonal relationships represent the most significant factor for the successful practice of corporate federalism in the given sample. Based on the findings, theoretical and practical implications for implementing corporate federalism in strategic alliances are discussed.