This study investigates the relationship between Effective Strategic Alliances (ESA) and Competitive Advantage among small and medium-sized enterprises (SMEs) in resource-constrained environments. Situated in the West Bank, Palestine, where family ownership is highly prevalent among SMEs and political and economic conditions are uncertain, the study examines whether strategic alliances facilitate external resource acquisition and whether these resources contribute to competitive advantage. ESA is conceptualized as a formative higher-order construct comprising Relational Quality, Resource Complementarity, and Agility. Using a quantitative, deductive approach, we analyzed data from 262 Palestinian SMEs using Partial Least Squares Structural Equation Modeling (PLS-SEM). The results demonstrate that ESA is significantly associated with Resource Acquisition and Competitive Advantage. Resource Acquisition mediates the relationship between ESA and Competitive Advantage, while Environmental Uncertainty moderates the link between ESA and Resource Acquisition, highlighting the importance of alliances under high uncertainty. These findings provide an integrated framework for SME managers, particularly in family-business contexts, and policymakers to leverage collaborative strategies for economic resilience and performance in challenging environments.