Small Business Alliances: Internet-enabled Strategic Advantage

The essential difference between small businesses and large corporations is found in their corporate structure. Similarly, the inter-organizational systems (IOSs) formed between small businesses to support strategic alliances and community-like networks have different requirements and functions from those formed between large corporations. This paper discusses the differences between the IOSs created by small and large organisations and then considers the transformations enabled by the Internet. When small businesses form IOSs on the Internet, the links created are both multi-purpose and multi-faceted these IOSs can be transaction-based or can be used to exchange knowledge and to conduct joint production and projects. A large group of standard Internet services is available for use to enable the interaction of members within an IOS and we next provide a framework showing the way in which different interorganizational relationships can be supported by using the Internet to enable competitive advantage. Finally, we consider the business drivers relevant to successful Internet alliance formation and analyse the strategy of building IOSs on the Internet.