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The antecedents and impact of interfirm trust in United States-based strategic alliances

Larry William Cox, University of Nebraska - Lincoln

Abstract

Strategic alliances are increasing in number and strategic importance. Indeed, successful firms in today's global marketplace look more like "Italian city-states" than the "citadels" of previous eras. They cooperate with rivals and spin complex webs of formal and informal alliances. They practice diplomacy with erstwhile competitors while simultaneously building their own competitive advantage. However, such collaborative arrangements are not without their own peculiar problems. Developing the trust required to effectively cooperate is often problematic. Yet, most management scholars would agree that trust is essential to the successful implementation of a strategic alliance. This research examined the impact of trust on alliance performance. It utilized the transaction cost paradigm to posit that trust has a direct effect on the intensity of contractual safeguarding, and through this, an indirect effect on the outcomes of the alliance. Further, it hypothesized that: (a) the injection of non-recoverable investments by the partner firm, (b) a history of cooperation, and (c) a positive partner reputation, increase the level of trust. Key executives from 55 firms responded to a mailed questionnaire asking about a recent alliance in which they had engaged. Their answers indicated that interfirm trust may not be as critical to alliance performance as previously thought--at least within certain types of alliance. Nor is the transaction cost paradigm as useful in explaining performance as advocates contend. By restricting this study to U.S.-based alliances, the importance of trust, which had been seen in prior cross-cultural research, was negated. In addition, the level of trust was found to vary across industrial sectors. However, statistically significant relationships were uncovered between history of cooperation, partner reputation, and performance. These findings have theoretical importance because they suggest fresh directions in alliance research. Reputation and the presence of alliance experience stand out as promising new avenues for inquiry. These findings are also practically important because they recommend procedures which are easily implemented for enhancing alliance performance.

Subject Area

Management

Recommended Citation

Cox, Larry William, "The antecedents and impact of interfirm trust in United States-based strategic alliances" (1995). ETD collection for University of Nebraska-Lincoln. AAI9611046.
https://digitalcommons.unl.edu/dissertations/AAI9611046

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