In strategic alliance relationships, high levels of trust often
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This article argues that the success of international strategic alliances requires attention not only to the hard side of alliance management (e.g., financial issues and other operational issues) but, also, to the soft side. The soft side refers to the development and management of relationship capital in the alliance. Relationship capital consists of the socio-psychological aspects of the alliance that are positive and beneficial to the alliance. Two important areas of relationship capital are mutual trust and commitment. Based on our findings from two major studies of Japanese strategic alliances, we develop a dynamic model of trust and commitment based on mutual adjustments of alliance partners. We also show how the dynamics of trust and commitment affect the performance of international strategic alliances with the Japanese. The article concludes with a discussion of the managerial implications of our findings and the dynamic model. Show
Section snippetsDefinitionsTrust and commitment are distinct concepts even though they are often closely related in practice and are mutually reinforcing in alliances. As such, in this section, we provide formal definitions of each concept based on current research and theory. Trust, the first major component of relationship capital, is based in beliefs about how an alliance partner will behave in the relationship. Can our alliance partner be trusted? Are they reliable? Would they do something to harm us? Will they take Why are trust and commitment important?We believe that mutual trust and commitment are central for international strategic alliances for several reasons. First, no contract or other agreement, no matter how complete or detailed, can account for every issue or every contingency that might arise. Formal contracts can never anticipate and identify all the events and changes that occur over the lifetime of the strategic alliance. Likewise, it is not feasible that partner companies rewrite an agreement every time a new issue or situation Research questions and proceduresThis article reports on the results of two field research studies. One study involved Japanese equity joint ventures with partners from 11 other countries where the language of business is English. The other study involved nonequity Japanese strategic alliances with U.S. companies. Data were gathered by questionnaires sent, in Japanese, to the top Japanese manager in each alliance and, in English, to the top foreign manager in each alliance. Japanese participation in the study was secured by How do alliances build trust and commitment?The development of trust and commitment in strategic alliances involves a complex interplay between the dimensions of trust and the dimensions of commitment within the individual alliance partner firm and across the alliance dyad. In attempting to understand the development of trust and commitment, it is useful to consider the perspective of the individual partner firm separately from the interactions between firms in the alliance relationship. From the perspective of the individual partner Alliance performance, commitment, and trustFig. 3 illustrates the implications of our findings regarding how performance relates to commitment and trust. Again, note the strong correlations of meeting objectives with the dimensions of trust and commitment found in our ICA study (Table 1). Performance in strategic alliances includes a range of possible outcomes (Anderson, 1990). Learning a new market, gaining a new technology, and learning new business practices are examples other than traditional financial dimensions of performance. Our How do the Japanese differ from their partners?Although the Japanese and their partners generally follow similar paths to the development of trust and commitment, we did find some results unique to the Japanese. Although cultural sensitivity toward others in the alliance relationship is important for developing credibility and benevolent trust for both the Japanese and their partners, we found that it is more important for the Japanese (Cullen, Johnson, & Sakano, 1995). This suggests that the Japanese are more likely to believe that a Conclusions: building and sustaining trust and commitmentThere are several essential factors that multinational managers need to consider to build and sustain commitment and trust in international strategic alliances. These include: · Pick your partner with trust in mind. As a major step in alliance implementation, issues considered in picking a partner must involve more than potential strategic complementary and resource contributions. Alliance partners must believe that they can trust each other and they must believe that mutual commitment is References (29)
TrustThe connecting link between organizational theory and philosophical ethicsAcademy of Management Review(1995) Setting the stage for trust and strategic integration in Japanese-U.S. cooperative alliancesJournal of International Business Studies(1996) Patterns of change in marital partnersHuman Relations(1989) 2022, Long Range Planning Show abstractNavigate Down We study the role of alliance governance in the behavior of partners in alliances with different degrees of competition. Using data from a lab experiment on 1,009 alliances and 31,662 partners' choices, we explore whether and how alliances succeed in different competitive scenarios, contingent on the use of formal governance mechanisms (termination clauses) and the number of partners in the alliance. We find that trust, an informal governance mechanism, emerges as a complement to formal governance in order to establish success in our experimental alliances, especially when competition is high. In particular, we document the significance of “trust-building” in initial stages and “trust repair” in later stages of our experimental alliances. Baking and slicing the pie: An application to the airline alliance's profit-sharing based on cooperative game theory2022, Journal of Air Transport Management Show abstractNavigate Down Cooperating with competitors can be a mutually beneficial strategy for companies. To achieve continuous gains from the partnership, profit-sharing rules for the collective benefits are critical. This paper proposes a new allocation scheme that focuses on sustainable relationships based on cooperative game theory. Our min-variance solution deploys joint profits by minimizing the intent to form sub-groups, thus ensuring the alliance's stability. The min-variance is reasonable in a network collaboration where the preservation of the network itself is essential. By application to a numerical example of an airline joint venture, we examine the validity of the proposed distribution rule in the cooperation-allocation problem. The collective surplus of logistics collaboration is suggested by a mixed-integer programming model to solve the optimal value of combinations of the multi-commodity flow problem under the network shared. In addition, the results are interpreted by comparison with other solutions in cooperation game theory, such as the Shapley value, the τ–value, and the nucleolus. We offer further insights into changes in profit-sharing using a sensitivity analysis considering efficiency abatement. Parameters for selecting the partners in locally owned renewable energy small-scale project for achieving energy security in Atlantic Canada2022, Energy for Sustainable Development Show abstractNavigate Down Several countries throughout the world are pursuing energy security as a means of ensuring that their economies operate smoothly and that their citizens have access to appropriate, reliable, and economical supply of clean energy. Because most of the rural communities across the globe rely heavily on non-renewable sources for their domestic needs, hence there is a risk of energy insecurity and vulnerability. This research aims to define a set of parameters for a successful strategic alliance in ensuring energy security in the rural and remote communities of Atlantic Canada. This research was split into two halves. The first study focused on a literature review on strategic alliance measures for achieving energy security, item development, and factor structure exploration. For successful strategic alliance constructs on a sample of 98 small-scale energy project owners, followed by reliability and validity checks. Study 2 seeks to identify the correlation among the partner's characteristics, set of parameters, and alliance performance with the help of regression analysis. Based on data from locally owned renewable energy small-scale (LORESS) projects in Atlantic Canada, the study discovered a set of parameters for selecting the right partner for energy security. The study discovered that overall alliance performance is significantly correlated with a set of parameters including indigenous process know-how, marketing interest and prominence, efficiency for generating energy, technological know-how, and affordability. The research gives a multi-dimensional tool that can assist in building a successful strategic alliance for achieving energy security. Moreover, it can serve as an aid to the different stakeholders in gauging the success of any strategic alliance in the energy sector. Extending alliance management capability in individual alliances in the post-formation stage2022, Industrial Marketing Management Show abstractNavigate Down Strategic alliances are increasingly important to firms, yet many alliances do not achieve their goals. This lack of success can be attributed to poor mitigation of risks related to performance and to managing relationships. Current conceptualizations of the capability to manage the post-formation stage of alliances overly focus on mitigation of relationship management risks, and as a result do not fully address both types of risks. We draw on Social Exchange theory, the Resource Based View and Transactions Costs Economics to extend the conceptualization of alliance management capability (AMC) by adding specific justice-related activities and resource management skills to the extant conceptualizations. We focus our attention on the post formation stage. We test our hypotheses using a sample of 154 Indian firms engaged in strategic alliances in the IT industry and we find support for our extended conceptualization of AMC and a strong positive association with alliance performance. We also demonstrate that our extended conceptualization provides additional explanatory power in relation to alliance performance than the original AMC. Implications for managers and opportunities for future research are explored. Why trust is important in strategic alliance?The existence of trust in a relationship reduces the perception of risk associated with opportunistic behavior (Moore 1998). Partners that trust each other generate greater profits, serve customers better, and are more adaptable (Kumar, 1996).
What are the main characteristics of a strategic alliance?Examining each of the five strategic criteria in depth provides insight into how the strategic value of alliances can be leveraged.. Critical to a business objective. ... . Competitive advantage and core competency. ... . Blocking a competitive threat. ... . Future strategic options. ... . Risk mitigation.. What advantage comes from trust between alliance partners?What advantage comes from trust between alliance partners? a) Trust enables partners to enter into detailed formal contracts.
What is the most important factor in a strategic alliance?The most outstanding factors affecting alliance success are shown to be a good relationship with the partner, mutual trust, a minimum commitment between the parties, and clear objectives and strategy.
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