Assessing the effects of strategic partnership on firms profitability in the telecommunications industry: a case of Vodafone distributorship in Western Region of Ghana

Abstract

Competing in the market is difficult for most companies because they have limited flexibility in adjusting to the quickly changing competitive environments, which require resource and capability flexibility. As a result, more companies in emerging economies have increased their competitiveness by partnering with other companies, especially in telecommunications. However, there is confusion about the effect of strategic partnership on firms' profitability and what firms in the telecommunication industry do to achieve and then sustain their full leadership potential as strategic partners. This study employs Partial Least Squares (PLS) Structural Equation Modelling to empirically investigate how strategic partnerships lead to firms' profitability in the telecommunication industry from the Ghanaian perspective. The result showed that the effect size of the relationship between strategic partnership on firm’s performance was 0.127 indicating a medium effect. Also, the result supported the hypothesis that there is a positive relationship between strategic partnership and distribution quality. Furthermore, the result showed a significant positive relationship between distribution quality and profitability, which supports the hypothesis that there is a positive relationship between distribution quality and profitability. Thus, again, there is a partial mediation of distribution quality on the relationship between strategic partnerships and profitability. These findings imply that firms in the telecommunication industry should invest in distribution quality as this will directly and positively mediate the positive impact of strategic partnership on firms’ profitability.