Trust and Learning in International Strategic Alliances

Although trust has been given much attention in alliance literature as an explanatory factor, little research has been devoted to defining and operationalizing trust. Trust is more or less seen as a magic ingredient, poorly understood much like the concept of luck, and usually attributed ex post; successful alliances seem to involve trust; unsuccessful alliances do not. The extant literature has treated trust as a residual term for the complex social-psychological processes necessary for social action to occur. Since trust is a social phenomenon, both national culture and institutional arrangements have an impact on trust and the perception of trust. Hence, this paper develops a conceptual model, based on a structural equation approach, for empirically exploring the role played by trust in the process of learning in international strategic alliances. The model distinguishes between pre-alliance formation factors and post-alliance formation factors in an attempt to respond to calls for research examining the evolution of trust and its impact on international collaborative relationships. The determinants of trust in international strategic alliances are examined and a series of testable propositions are derived to guide future empirical investigation. Note: The author wish to thank Kate Stovel for her suggestions and comments. This research is funded in part by the Tuborg Research Grant. This version is a draft. Please do not quote or make reference to this paper without a written consent from the author. 3 During the last three decades, the globalization of markets, the convergence of and rapid shifts in technologies, and regulatory and institutional changes within the United States, Asia and Europe, has led to new opportunities for interfirm collaboration, across institutional and national borders. It is somewhat of a paradox that in order to be an effective competitor in the " New Economy " a firm needs to be a trusted cooperator in some network. Research on strategic collaboration between firms has received increasing attention in the literature during the last two decades, reflecting the increasing frequency and importance of strategic alliances in business practice. Two main streams, in terms of focus, in this literature can be identified; one stream is mainly concerned with examining the underlying conditions favoring alliance formation (motivation for alliance formation and contractual, or structural, structures used in these alliances) the other stream is occupied with investigating alliance outcomes and the impact of alliances on aims at combining elements from these two streams of research in …