Current research on the economic consequences of corporate strategic alliances primarily focuses on how such alliances help expand the “cake”, with less attention paid to how the “cake” is divided in the process of primary income distribution. This paper examines the impact of strategic alliances on common prosperity within private firms. The study finds that participation in strategic alliances can increase the labor income share of private firms. The primary mechanisms are the financing flow effect and the human capital upgrading effect. Specifically, strategic alliances help alleviate financing constraints and attract government subsidies, while also generating demand for highly educated and skilled labor. Extended analysis shows that the positive impact of strategic alliances on labor income share is stronger when the firm is located in a highly competitive labor market, belongs to a high-tech industry, includes state-owned partners, or focuses on joint R&D objectives. Further breakdown of labor income share sources indicates that strategic alliances increase the labor income share of ordinary employees, with no evidence that executive compensation is affected. However, the absolute pay gap between ordinary employees and executives is reduced overall. Finally, the positive impact of strategic alliances on labor income share persists over a longer-time horizon. This paper provides a new micro explanation for changes in the labor income share of private firms in the context of strategic alliances and offers important policy implications for further exploring the economic value of strategic alliances and optimizing income distribution.