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An Empirical Examination of the Role of Social Exchanges in Alliance Performance
Abstract
While some researchers have examined the relationship between interfirm trust and alliance performance (Inkpen and Curall, 1998; Luo,2002; Sako, 2000; Zaheer et aL, 1998), others have argued that several factors such as risk and uncertainty, cultural diversity of partners, and resource dependence (Elangovan and Shapiro, 1998; Luo, 2002) affect the relationship between trust and alliance performance. Thus, there is a need for research into the role of other social exchanges such as reciprocal resource commitments and relational influence between partners that will ensure collaboration and alliance success. Because reciprocity and mutual influence between partners are tangible norms and manifest as mutual control and power sharing or joint decision making, they can very well supplement trust in collaboration. In addition, there is a need lo understand why a partner will have a greater or lesser amount of trust for another party. That is, what are the specific attributes of the partners that enhance trust in the alliance? In this study, we conceptualize trust in terms of trustworthiness based on skills, integrity, and benevolent attitudes of the partner as perceived by the focal firm, and examine the managerial perceptions related to all significant ongoing social exchanges between alliance partners. Since most conflicts occur in the routine aspects of the interaction, successful alliance management is essentially a social process. From the focal firms' perspective, we examine the relationships between social exchanges (reciprocity, trust, and mutual influence) and alliance success in terms of perceived alliance performance and partner's propensity to continue the alliance.
... Another incentive for this study is the lack of agreement in previous research regarding the relationship between trust and performance in ISAs, which is more complex than it is usually assumed (Mohr & Puck, 2013). Some researchers have shown that trust positively affects ISA performance (Bener & Glaister, 2010;Kwon, 2008;Lavie, Haunschild, & Khanna, 2012;Nielsen & Nielsen, 2009;Silva, Bradley, & Sousa, 2012), while others have concluded that there is no significant relationship between the two (Inkpen & Currall, 1997;Muthusamy, White, & Carr, 2007;Sarkar, Echambadi, Cavusgil, & Aulakh, 2001). The final incentive for our research is the fact that empirical research has explained only partially the role of moderators on the impact of trust on ISA performance and researchers have noted the need to further investigate their role (Krishnan, Martin, & Noorderhaven, 2006;Robson, Katsikeas, & Bello, 2008;Robson, Skarmeas, & Spyropoulou, 2006;Silva et al., 2012). ...
... The items used to operationalise each construct were developed on the basis of existing literature. Trust was measured with a seven-item scale drawing from Khalid and Ali (2017), which is based on the review of prior research on inter-organisational trust (Krishnan et al., 2006;Morgan & Hunt, 1994;Muthusamy et al., 2007;Nielsen, 2007). The single item construct of local partner reputation was operationalised from the work of Nielsen (2007). ...
... In our ISA, our partner considers our firm's welfare alongside its own while making important decisions g. In our ISA, the relationship with our partner firm is characterised by high levels of trust Adopted by Khalid and Ali (2017), Krishnan et al. (2006), Morgan and Hunt (1994), Muthusamy et al. (2007), Nielsen (2007) Positive local partner reputation Please evaluate your partner firm's reputation at the time of the ISA formation: (very negative 1-5 very positive) ...
In this study we explore the critical antecedents of trust in International Strategic Alliances (ISAs). Additionally, we examine the impact of the foreign partner’s trust towards the local partner on ISA performance. Our theoretical development is based on elements drawn from Social Exchange Theory and Transaction Cost Theory. Both theoretical and analytical triangulation strategies are incorporated into the research design in order to better understand the complexity of trust and ISA performance. We empirically examine 171 Greek firms with ISA participation. The results show the positive impact of (a) the favourable local partner reputation, (b) effective communication with the local partner, and (c) the negative impact of foreign partner’s perceived risk of local partner’s opportunistic behaviour, on the degree of trust in ISAs. We also confirm prior work and show the positive impact of the foreign partner’s trust on ISA performance. Furthermore, we investigate the moderating role of environmental hostility in the local market on the impact of the degree of foreign partner’s trust on ISA performance. Additionally, we discuss the strategic implications of the results for managers of transnational corporations and practitioners and provide suggestions for further research.
... (Mayer et al., 1995, p. 712) Embedded in this definition of trust is the idea that the trustor holds specific expectations of the other party to perform in a certain way. Another view is that trust is beholden to a party's perception of the other party's trustworthiness (Muthusamy et al., 2007). ...
... Trust is based on the respective view of either partner about the other's ability, integrity, and benevolence towards the trustor, and adherence to moral principles the trustor finds acceptable (Christoffersen, 2013;Muthusamy et al. 2007;Mayer et al., 1995). In this study, understanding the definition of trust helps to explain administrators' unmet expectations of OPMs. ...
... Long-standing and dominating literature addresses trust between individuals and between organizations (Christoffersen et al., 2013;Mayer et al., 1995;Muthusamy et al., 2007;. For this study, trust is defined as follows: ...
This paper details the findings of a case study conducted at a 4-year private university in the United States. The study site was outsourcing online learning through university-industry partnerships with online program management providers (OPMs). The case study was conducted to reveal university administrators’ views on (a) working with OPMs to design, deliver, and implement online learning and (b) how online learning became an institutional practice. The study findings indicated that the university’s culture of innovation resulting from institutional support in the form of governances, grants, and services led to university administrators’ decision to outsource. The study findings also indicated that university administrators did not trust OPMs because the OPMs did not meet university administrators’ expectations. University administrators expected OPM staff to (a) have advanced degrees and experience working in higher education, (b) understand the academic discipline for the program they were supporting, and (c) understand higher education practices and policies. Lastly, the study findings revealed that decision-making is an essential process to promote trust and reduce conflicting expectations. Administrators of other institutions can reference these study findings when considering partnerships with OPMs.
... Accordingly, in order to develop this form of trust, detailed information about the partner is required and acknowledged [37]. Furthermore, [41] also considered that acknowledgment of a partner's useful knowledge, experience, and capabilities is critical to alliance formation. ...
Contemporary supply chain (SC) seems to be more susceptible to different risks and disruptions than ever. Almost all industries have seen increased competitive pressure in the business environment. This, high risk vulnerable, environment has compelled firms to make their intra firm business and inter firm SCs more risk preventive. In this tough business environment, the ultimate aspiration of managers is obviously to develop efficient risk mitigation strategy. However, risk mitigation is costly which necessitates firms to identify the most probable and critical risks that might be happen to their particular SC, before engaged in expensive actions, and then they can be able to prepare contingency plan to tackle them effectively. Therefore identifying specific risks and ways of managing the same in specific industry/firm and strategy is crucial. In this paper, we relate SC risks to strategy types: defender, prospector and innovator. We relate the SC risks reported in literature to these three strategy types. Later we relate 'trust' types to risk sharing and term of relationship among SC partners. We then plan to conduct an empirical investigation to verify the framework presented in this paper.
... The compromised trust reported in the multiple regression analysis aligns with the qualitative theme regarding lacking accountability. Based on the mixed methods findings, when organizations do not create emotionally and psychosocial safe working spaces and fail to hold bullies and discriminatory people accountable, faculty do not trust the organization and instead adopt avoidance and disengagement behaviors (Meier et al., 2016;Muthusamy et al., 2007). ...
With gendered organization theory and n = 201 Historically Black Colleges and Universities women faculty, the following is addressed: RQ1 Which Historically Black Colleges and University women faculty, those at schools with or without an anti-bullying policy, are more likely to report workplace bullying? RQ2 What is the relationship between workplace bullying intensity and time spent strategizing against bullying, health problems, and organizational distrust for Historically Black Colleges and University women faculty? RQ3 How does workplace bullying affect the experiences of Historically Black Colleges and University women faculty? The mixed methods findings confirm the need for preventative structural changes policies to empower women.
... Although the origins of the SET are at the individual level, the theory has been extended to inter-firm level (e.g. Muthusamy et al., 2007;Ali and Larimo, 2016) and MNE-host government level (e.g. Luo, 2001Luo, , 2004. ...
Purpose - This study investigates an under-researched yet fundamental question of how a developed country MNE (DMNE) perceives and manages political risks when entering emerging markets (EMs) to undertake infrastructure projects.
Design/Methodology/Approach - We use an abduction based qualitative research approach to analyze six international project operations of a multinational enterprise originating from Finland in five EMs.
Findings - Findings suggest that the overall nature of political risks in EMs related to market entry and operations is not the same, except few political risk factors which are visible in most EMs. Consequently, the applied risk management mechanisms in this specific international market entry mode (project operations), vary between EMs except with few common mechanisms. We develop an integrative analytical framework of political risk management in international projects market entry mode.
Originality/Value - Our paper is one of the first studies to identify political risk factors for western MNEs while undertaking international project operations and link them to reduction mechanisms used by them. We go beyond the notion of risk being conceptualized at a general level and evaluate twenty specific political risk factors referred to in extant literature. We further link these political risk factors with both social exchange and transaction cost theories conceptually as well as empirically. Finally, we develop a relatively comprehensive analytical framework of political risk management based on the case projects' findings that combine several strands of literature, including social exchange theory, transaction cost theory, international market entry, project management, and finance literature streams.
... The purpose of this study is to answer the following three research questions: Another incentive for this study is the lack of agreement in previous research regarding the relationship of trust and performance in ISAs. Some researchers have shown that trust positively affects ISA performance (Kwon, 2008;Nielsen & Nielsen, 2009;Bener & Glaister, 2010;Lavie et al., 2012;Silva et al., 2012), while others have concluded that there is no significant relationship between the two (Inkpen & Currall, 1997;Sarkar et al., 2001;Muthusamy et al., 2007). The final incentive is the fact that empirical research has explained only partially the role of moderators on the impact of trust on ISA performance and researchers have noted the need for further research (Luo, 2002b;Krishnan et al., 2006;Robson et al., 2006;Robson et al., 2008;Silva et al., 2012). ...
Based on elements from Social Exchange Theory and Transaction Cost Theory, this research empirically tests a set of hypotheses concerning critical antecedents of trust development and the impact of foreign partner’s trust towards the local partner on alliance performance in Greek International Strategic Alliances (ISAs) operating in South East Europe, an under-researched region that includes several emerging markets. It contributes to ISA literature, first, by providing additional support to previous research findings regarding the a) positive impact of favorable local partner reputation, b) positive impact of effective communication with the local partner, and c) negative impact of foreign partner’s perceived risk of local partner’s opportunistic behavior, on the degree of trust the foreign partner has towards the local ISA partner. It also offers support to prior findings regarding the positive impact of the level of trust the foreign partner has towards the local partner on ISA performance. Second, it contributes by investigating environmental hostility in the local market as a moderator of the impact of the degree of foreign partner’s trust towards the local partner on the ISA’s performance. Finally, it provides further empirical evidence regarding the above impacts in emerging markets.
... The items used to operationalize each construct were developed based on previous literature. Trust was measured with a seven-item scale drawing from Khalid and Ali (2017), which is based on the review of prior research on inter-organizational trust (Krishnan et al., 2006;Mohr and Puck 2005;Morgan and Hunt 1994;Muthusamy et al., 2007;Nielsen, 2007). In order to measure internal consistency and scale reliability, the Cronbach's Alpha was computed. ...
Nowadays, cooperation through the formation of International Strategic Alliances (ISAs) has become a key strategy for many firms that expand internationally. Trust among foreign partners and knowledge transfer are identified in the literature as crucial factors for satisfactory ISA performance. This paper extends previous research (Rotsios et al., 2018, 2019) on these two important parameters. Based on aspects from the Social Exchange Theory and the Resource Based View, we explore a) the perceived level of Greek managers' trust towards their foreign partners, and b) the perceived level of the knowledge that Greek companies have acquired from their participation in ISAs. A quantitative approach is adopted, and through a questionnaire survey, a sample of 171 Greek ISAs operating in the region of South East Europe is examined. This study contributes to International Business (IB) literature and sheds light on trust and knowledge transfer in ISAs in an under-researched region. Furthermore, this research enhances the understanding on issues related to trust among ISA partners and knowledge transfer in ISAs. In addition, it contributes to the limited number of regional IB studies. Finally, the empirical findings are discussed and managerial implications are presented, while areas for further research are also proposed.
... It is manifested in personal interactions, open communication and direct discussion of problems (Schmoltzi & Wallenburg, 2012, p. 59). Mutual influence has a positive effect on learning and transfer of knowledge between partners (Muthusamy & White 2005), cooperation commitment (Schmoltzi & Wallenburg, 2012), performance and propensity of a partner to continue the cooperation (Muthusamy et al., 2007). ...
Cooperation between companies is widely believed to have positive impact on their performance. However, there is insufficient empirical research on relationships between these constructs in small and medium-sized enterprises (SMEs) in the construction industry. Moreover, cooperation is a complex and multidimensional phenomenon, and it is interesting how different dimensions of cooperation may influence the company's performance. To bridge the research gap, the following study is performed, which: (1) identifies dimensions of intercompany cooperation, and (2) examines the relationships between dimensions of cooperation and the performance of SMEs. Eight dimensions of cooperation were identified, based on 125 observations obtained from Polish construction SMEs. It appears that a company's openness to cooperation is dependent on the company's maturity and the competition between partners. Surprisingly, no significant connection was observed between the cooperation, financial performance and the change in the number of employees. It is considered that the cooperation in the construction industry, although not related to financial performance in a significant or direct way, is common and may be essential for the survival of SMEs.
The right partner and high innovation speed are crucial for a successful research and development (R&D) alliance in the high-tech industry. Does homogeneity or heterogeneity between partners benefit innovation speed? This study examined the links between partner asymmetries (technological heterogeneity and network resource asymmetry) and innovative speed from both economic and social dual perspectives by focusing on biopharmaceutical industries. The results revealed an inverse U-shaped relationship between technology heterogeneity and innovation speed. In addition, a positive linear relationship exists between network resource asymmetry and innovation speed for 1991–2000 alliances and for biotech–biotech partner-type alliances; significantly negative moderating effects of time to market occurred on these linear relations. Finally, this study makes important theoretical and practical contributions to partner selection literature on R&D alliances in the biopharmaceutical industry.
This study integrates three methods for evaluating the interaction and importance of key factors, while mapping the differences between development and maintenance stages during the formation of marketing strategic alliances in the telecommunications industry. A systematic, quantitative, integrated measurement is proposed to evaluate the importance of factors. Moreover, it provides a holistic picture of similarities and differences across stages for establishing marketing strategic alliance relationships. The factors' evaluation results show that the maintenance stage is critical for the relationship as it relates to sustaining the collaboration and can determine whether a marketing strategic alliance will continue or terminate.
