Effect of Strategic Alliances on The Performance of Microfinance Institutions in Rwanda.

The study assessed the effect of strategic alliance on the performance of Microfinance Institutions in Rwanda. The objectives of the study were; to examine the effect of technology alliances on MFIs’ performance, to assess the effect of marketing alliances on MFI’s performance, and to determine the effect of products and services alliances on the performance of MFIs. The population was 491 MFIs, and a sample size of 220 was decided using Slovene’s formula. Primary data was collected using structured questionnaires. Structural Equation Modelling (SEM) was used to establish the relationship between the dependent variable, the independent and mediating variable. The data collected were analyzed through STATA software. The results for skewness (-3 to +3) and kurtosis (-10 to +10) were within the acceptable range for all variables. The SEM results revealed that strategic technological alliance with an R2 of 0.5834 was not significant while strategic marketing alliance with an R2 of 0.77 and product and service alliance with an R2 of 0.99 were both significantly related to the microfinance institution's performance. The p-value for the first null hypothesis showed that the results were not significant (p =0.54) meaning that there was no significant relationship between technological alliance and the performance of MFIs. Further, the mediating effect of strategic alliance management on the three protector variables was found to contribute highly to a total effect of the technological alliance, marketing alliance, product and services alliance. It was recommended that engagement in business alone may not be enough to improve organizations ‘performance thus the formulation of strategic alliance is indispensable in the business world context. Keywords: Strategic Alliances, Marketing Alliances, Microfinance Institutions, Microfinance Institution