Impact of Strategic Alliances on the Productivity of Housewives Groups in Northern Thailand

Abstract

The food industry in Thailand comprises various types of food manufacturers including local processors who produce cottage foods, defined as foods produced in a home with little capital requirement and without the use of a commercial kitchen. The cottage food processing industry mainly comprises community enterprises such as the so-called 'housewives groups'. These groups consist of a number of rural Thai housewives who combine their food processing activities in a particular district or village. The main objective is to assess the impact of vertical and horizontal strategic alliances on the productivity of housewives groups in the cottage foods industry in northern Thailand. In particular, we focus on both types of alliances as conduits to raise the productivity of these groups in producing processed fruit and vegetable products. Vertical alliances are implemented by entering into relationships with groups in the supply chain that supply them with inputs or buy their outputs. Horizontal alliances are implemented to exchange information on product marketing and inputs for production, improve distributional services, exert greater marketing power, and share technology and equipment among groups at the same level in the supply chain. We also assess whether higher levels of vertical strategic alliance are more productive than lower levels. Five levels of strategic alliance can be identified for housewives groups in Thailand, in ascending order of aggregation: village; district; 'aumpher' (sub-provincial); provincial; and regional. Greater productivity gains are expected at higher levels of strategic alliance because they should open up a broader range of opportunities to improve processing performance. In the next section, the main competitive weaknesses of housewives groups are outlined, followed by a review of how they may use strategic alliances to overcome these weaknesses. The analytical method to measure the efficiency and productivity of the groups is then outlined and a brief description is provided of the source of data. Results are reported and discussed, and the paper ends with a section containing the main conclusions drawn from the analysis.