Effect of Strategic Alliances on the Growth of Market Share of Commercial Banks Malaysia

Abstract

The Malaysia banking sector has been facing stiff competition as a result of globalization where other players have joined the sector with differentiated innovative products and services. Alliances are becoming an alternative business strategy and hence the formulation of strategic alliances in the banking industry because of the development of worldwide patterns, for example, heightened rivalry, taking off cost of capital, including the cost of innovative work and the regularly developing interest for new advances. The study sought to determine effect of strategic alliances on the growth of market share for commercial banks in Malaysia. The specific objectives were determining the effects of sharing financial risk, knowledge sharing, markets access and gaining capabilities on the growth of market share for commercial banks in Malaysia. The study was anchored on four theories namely Resource Based View, Open System Theory, Game Theory and Dynamic Capabilities Theory.  The study used a case study research design of Hong Leong Bank. The target population of the study comprised of the 182 directors and senior managers who are involved in the daily management of the alliances top management employees from the Hong Leong Bank. Data was collected through the use of closed ended questionnaires. The questionnaires were administered to the senior and middle level management for data collection. A pre-test on the research instrument was done to ensure it fits the requirements of the research. Data collected was analysed by use of inferential statistics. The findings suggest that strategic alliances had a positive significant relationship with market share. The findings of this study showed that strategic alliance formation has a significant effect on the growth of market share at Hong Leong Bank. The entire null hypotheses was rejected. It is recommended that firms seek appropriate kinds of partnerships and alliances that will help enhance their own market share and growth. It is further recommended that firms should reconsider reasons for engaging in strategic alliances and understand whether they will gain capabilities, knowledge, and find it easier to access new markets.

Keywords: Strategic Alliances, Growth, Market Share, Commercial Banks.