Richard Muthoka^1,, James Kilika¹, Stephen Muathe¹

Active collaboration in strategic alliances is quantified using the model of inter-organizational network structures, which is applied to measure the effect of the level of collaboration in strategic alliances formed by Small and Medium Enterprises in the manufacturing sector. The study's target population comprised 74 manufacturing SMEs in Kenya, and the respondent included the firm's CEO and senior managers. The study used stepwise methods for the regression analysis of the mediating effect proposed by Baron and Kenny (1986). The study findings indicated that manufacturing SMEs in Kenya practice strategic alliances to a moderate extent (Mean=3.78; S.D=0.66), level of collaboration is practiced to high extent at (M=4.24; S.D=0.41), while the level of firm performance is at the level of moderate extent (M=3.68; S.D=0.77). The finding of the study hypotheses shows a positive and significant effect of strategic alliances on firm performance, while the level of collaboration has a significant partial mediating effect on the relationship between strategic alliance and firm performance. The study concluded that collaboration is relevant in strategic alliances formed by manufacturing SMEs in Kenya since the strength of the relationship between strategic alliance and firm performance depends on the level of collaboration. Though impactful at the managerial level of manufacturing SMEs, the study findings have also proposed suggestions on the complementarities among multiple theories suitable to explain the phenomenon of strategic alliance and firm performance.

strategic alliance, firm performance, level of collaboration, small and medium enterprises, manufacturing sector