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Trust in interorganisational networks: towards a conceptual model
Abstract
In this paper, we build a conceptual framework that models the influence of trust on strategic resource acquisition. The main focus is on the role of trust in interorganisational networks and how trust in interorganisational networks can accelerate the acquisition of strategic resources. Based on the network literature, social capital literature and the literature on trust, we seek to develop propositions that detail the relationships among trust, interorganisational network characteristics, strategic resource acquisition/network effectiveness and performance.
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The exchange of information among organizational employees is a vital component of the knowledge-management process. Modern information and telecommunication technology is available to support such exchanges across time and distance barriers. However, organizations investing in this type of technology often face difficulties in encouraging their employees to use the system to share their ideas. This paper elaborates on previous research, suggesting that sharing personal insights with one's co-workers may carry a cost for some individuals which may yield, at the aggregate level, a co-operation dilemma, similar to a public-good dilemma. A review of the research on different types of public-good dilemmas provides some indications of the specific interventions that may help organizations encourage the kind of social dynamics that will increase overall knowledge sharing. These interventions can be classified into three categories: interventions aimed at restructuring the pay-offs for contributing, those that try to increase efficacy perceptions, and those that make employees' sense of group:identity and personal responsibility more salient.
We propose a supplemental perspective, based on organizational social capital, for examining the voluntary turnover-organizational performance relationship. We view existing organizational-level theories as those focusing on cost or human capital issues or, rarely, on a balance among these factors. But rapid changes in the nature of work, organizational structures, and interorganizational competitiveness increase the importance of studying the role of social capital in the voluntary turnover-organizational performance relationship. We highlight areas of correspondence and divergence among the various perspectives, discuss implications for various performance measures, and outline several research directions.
Drawing on the social embeddedness perspective, this article examines the impact of entrepreneurs' social capital on their firm performance in post-Soviet Russia. Based on face-to-face interviews with 75 Russian entrepreneurs in 1995 and follow-up interviews in 1999, the study examines effects of structural embeddedness, relational embeddedness and resource embeddedness on firm performance. The main finding is that relational embeddedness and resource embeddedness have direct positive impacts on firm performance, whereas structural embeddedness has no direct impacts on performance.
We build on an emerging strategy literature that views the firm as a bundle of resources and capabilities, and examine conditions that contribute to the realization of sustainable economic rents. Because of (1) resource-market imperfections and (2) discretionary managerial decisions about resource development and deployment, we expect firms to differ (in and out of equilibrium) in the resources and capabilities they control. This asymmetry in turn can be a source of sustainable economic rent. The paper focuses on the linkages between the industry analysis framework, the resource-based view of the firm, behavioral decision biases and organizational implementation issues. It connects the concept of Strategic Industry Factors at the market level with the notion of Strategic Assets at the firm level. Organizational rent is shown to stem from imperfect and discretionary decisions to develop and deploy selected resources and capabilities, made by boundedly rational managers facing high uncertainty, complexity, and intrafirm conflict.
Interfirm collaboration and trust are topics currently exciting research interest. The literature treats trust as a unitary concept, providing little understanding of those processes that create trust, or are employed by parties relying on trust. I suggest that two distinct forms of trust can be observed in economic exchanges: fragile trust and resilient trust. I define these kinds of trust, speculate on processes by which economic actors learn about them, and explore contexts in which they are likely to be relied upon by economic actors. I conclude with a discussion of implications for practice and scholarship.
We argue in this paper that when the knowledge base of an industry is both complex and expanding and the sources of expertise are widely dispersed, the locus of innovation will be found in networks of learning, rather than in individual firms. The large-scale reliance on interorganizational collaborations in the biotechnology industry reflects a fundamental and pervasive concern with access to knowledge. We develop a network approach to organizational learning and derive firm-level, longitudinal hypotheses that link research and development alliances, experience with managing interfirm relationships, network position, rates of growth, and portfolios of collaborative activities. We test these hypotheses on a sample of dedicated biotechnology firms in the years 1990-1994. Results from pooled, within-firm, time series analyses support a learning view and have broad implications for future theoretical and empirical research on organizational networks and strategic alliances.•.
Developing and maintaining trust in work relationships The past decade has seen dramatic changes in the modern organization. New organizational linkages, strategic alliances, partnerships, and joint ventures are being formed to achieve and maintain competitive advantage in the marketplace. New linkages require organizations to move away from the more traditional hierarchical forms and toward networks and alliances. These new forms are designed to be more responsive to rapid change, enable entrepreneurial activity to flourish within the organization and across its boundaries, and increase the effectiveness of communication and problem solving across departments, locations, functional responsibilities, and organizational boundaries. In their recent work, Managing the New Organization , Limerick and Cunnington (1993) emphasize nine crucial competencies for managing networks, within and across organizational boundaries. Interpersonal dynamics between key actors within a network or alliance are critical elements in this list of competencies, and trust is central to this list: The key ...
We introduce the construct of organizational social capital and develop a model of its components and consequences. Organizational social capital is defined as a resource reflecting the character of social relations within the organization. It is realized through members' levels of collective goal orientation and shared trust, which create value by facilitating successful collective action. We discuss employment practices as primary mechanisms by which social capital is fostered or discouraged within organizations.
Though key to fostering innovation, interpersonal exchanges of resources between R&D scientists across organizational boundaries can represent intellectual capital leaks. A grounded theoretical framework is developed for individual exchange decisions. Social capital emerges as the key success factor in this resources acquisition process. Strategic resources can only be exchanged under conditions of acquaintance and mutual trust. The economic interests of a scientist's employing firm and personal considerations are intertwined.
We combine theory and research on alliance networks and on new firms to investigate the impact of variation in startups' alliance network composition on their early performance. We hypothesize that startups can enhance their early performance by 1) establishing alliances, 2) configuring them into an efficient network that provides access to diverse information and capabilities with minimum costs of redundancy, conflict, and complexity, and 3) judiciously allying with potential rivals that provide more opportunity for learning and less risk of intra- alliance rivalry. An analysis of Canadian biotech startups' performance provides broad support for our hypotheses, especially as they relate to innovative performance. Overall, our findings show how variation in the alliance networks startups configure at the time of their founding produces significant differences in their early performance, contributing directly to an expla- nation of how and why firm age and size affect firm performance. We discuss some clear, but challenging, implications for managers of startups.Copyright © 2000 John Wiley & Sons, Ltd.
This paper explores the tension between two opposite views on how networks create social capital. Network closure (Coleman 1988) stresses the role of cohesive ties in fostering a normative environment that facilitate cooperation. Structural hole theory (Burt 1992) sees cohesive ties as a source of rigidity that hinders the coordination of complex organizational tasks. The two theories lead to opposite predictions on how the structure of an actor's network may affect his ability to adapt that network to a significant change in task environment. Using data from a newly created special unit within the Italian subsidiary of a multinational computer manufacturer, we show that managers with cohesive communication networks were less likely to adapt these networks to the change in coordination requirements prompted by their new assignments, which in turn jeopardized their role as facilitators of horizontal cooperation within a newly created business unit structure. We conclude with a discussion of the trade-off between the "safety" of cooperation within cohesive networks and the "flexibility" provided by networks rich in structural holes.
The evolution of interorganizational networks is shaped by micro and macro processes. At the micro level organizational dyads negotiate relationships in light of their own cost-benefit analysis. At the macro level resources flow through networks and are mobilized by coalitions. Current research is beginning to examine integrating mechanisms which link network dynamics to dyadic relationship formation. In this paper we examine interorganizational brokerage as an integrating mechanism linking micro and macro network processes. We focus on the formation of networks in the global television industry. The Children's Television Network (CTW) has licensed and co-produced its flagship program "Sesame Street" in many countries around the globe. Recently, it has expanded beyond a strategy based on direct first-order linkages to one of brokerage and interorganizational entrepreneurship, entailing the formation of second-order linkages--linkages between organizations with which CTW has direct first-order relationships. In the aftermath of the Oslo Peace Agreement, CTW acted as a broker and sponsor of a joint venture between Israeli and Palestinian broadcasters. The main challenge facing CTW was a high degree of distrust between the parties motivated by fears of opportunistic exploitation. Such fears typically result in high transaction costs, making joint venture formation difficult, if not impossible. In its capacity as broker, CTW worked to reduce transaction costs. This was done by providing resources where needed, and by facilitating interaction and trust building between the parties. We describe CTW's tactics during the formation of this joint venture, and we analyze the outcome of the joint venture from the point of view of CTW's overall strategy. We conclude by discussing CTW's network and brokerage strategy in the aftermath of the joint venture.
The appropriate resources are necessary but insufficient to achieve a competitive advantage. Resources must also be managed effectively. Herein, we develop a resource management process model composed of three components that can lead to a competitive advantage. These components include the resource inventory (evaluating, adding, and shedding), resource bundling, and resource leveraging. We examine resource management in family firms and thus explore the unique characteristics of five resources and attributes of family firms that provide potential advantages over nonfamily firms. The resources are human capital, social capital, patient capital, survivability capital, along with the governance structure attribute.
This paper proposes and tests a model of IJV learning and performance that segments absorptive capacity into the three components originally proposed by Cohen and Levinthal (1990). First, trust between an IJV's parents and the IJV's relative absorptive capacity with its foreign parent are suggested to influence its ability to understand new knowledge held by foreign parents. Second, an IJV's learning structures and processes are proposed to influence its ability to assimilate new knowledge from those parents. Third, the IJV's strategy and training competence are suggested to shape its ability to apply the assimilated knowledge. Revisiting the Hungarian IJVs studied by Lyles and Salk (1996) 3 years later, we find support for the knowledge understanding and application predictions, and partial support for the knowledge assimilation prediction. Unexpectedly, our results suggest that trust and management support from foreign parents are associated with IJV performance but not learning. Our model and results offer a new perspective on IJV learning and performance as well as initial insights into how those relationships change over time. Copyright © 2001 John Wiley & Sons, Ltd.
I examine interfirm cooperation between incumbents and new entrants as a mechanism for incumbents to adapt to radical technological change through exploitation of complementary assets. The research setting is the biopharmaceutical industry, where I analyze 889 strategic alliances between 32 large pharmaceutical firms and providers of the new biotechnology. I find that incumbents that focus their network strategy on exploiting complementary assets outperform incumbents that focus on exploring the new technology. However, there are limits to this strategy due to diminishing marginal returns to alliance intensity. I am also able to show that an incumbent's new product development is positively associated with its performance. Copyright © 2001 John Wiley & Sons, Ltd.
This paper investigates the evolutionary dynamics of network formation by analyzing how organizational units create new interunit linkages for resource exchange. Using sociometric techniques and event history analysis, this study predicts the rate at which new interunit linkages are created between a newly formed unit and all the existing units in a large multinational organization. Two important constructs: social capital, derived from the literature on social structure and network formation, and strategic relatedness, derived from research on diversification and the resource-based view of the firm, are used to explain the rate of new linkage creation. Results show that the interaction between social capital and strategic relatedness significantly affects the formation of intraorganizational linkages. Copyright © 2000 John Wiley & Sons, Ltd.
I find that a firm's innovation output increases with the number of collaborative linkages maintained by it, the number of structural holes it spans, and the number of partners of its partners. However, innovation is negatively related to the interaction between spanning many structural holes and having partners with many partners.
Scholars of the theory of the firm have begun to emphasize the sources and conditions of what has been described as “the organizational advantage,” rather than focus on the causes and consequences of market failure. Typically, researchers see such organizational advantage as accruing from the particular capabilities organizations have for creating and sharing knowledge. In this article we seek to contribute to this body of work by developing the following arguments: (1) social capital facilitates the creation of new intellectual capital; (2) organizations, as institutional settings, are conducive to the development of high levels of social capital; and (3) it is because of their more dense social capital that firms, within certain limits, have an advantage over markets in creating and sharing intellectual capital. We present a model that incorporates this overall argument in the form of a series of hypothesized relationships between different dimensions of social capital and the main mechanisms and processes necessary for the creation of intellectual capital.
We show how the tension between cooperation and competition affects the dynamics of learning alliances. 'Private benefits' and 'common benefits' differ in the incentives that they create for investment in learning. The competitive aspects of alliances are most severe when a firm's ratio of private to common benefits is high. We introduce a measure, 'relative scope' of a firm in an alliance, to show that the opportunity set of each firm outside an alliance crucially impacts its behavior within the alliance. Finally, we suggest why firms might deviate from the theoretically optimal behavior patterns. (C) 1998 John Wiley & Sons, Ltd.
This paper examines the nature of the core capabilities of a firm, focusing in particular on their interaction with new product and process development projects. Two new concepts about core capabilities are explored here. First, while core capabilities are traditionally treated as clusters of distinct technical systems, skills, and managerial systems, these dimensions of capabilities are deeply rooted in values, which constitute an often overlooked but critical fourth dimension. Second, traditional core capabilities have a down side that inhibits innovation, here called core rigidities. Managers of new product and process development projects thus face a paradox: how to take advantage of core capabilities without being hampered by their dysfunctional flip side. Such projects play an important role in emerging strategies by highlighting the need for change and leading the way. Twenty case studies of new product and process development projects in five firms provide illustrative data.
In this article we discuss trust in ethics and management as a qualified and conditional good, arguing that researchers should focus on optimal trust - a mixture of trust and distrust appropriate in most contexts, including business. Trust is an important part of strategic choice, and managers who develop optimal trust in relationships with stakeholders will improve firm performance. We offer a definition of optimal trust, develop propositions based on the definition, and include indicators managers might use to assess whether trust is optimal in relationships with various stakeholders.
Stickiness, i.e. the difficulty to transfer knowledge, is emerging as a central construct for both scholars and practitioners interested in innovation. This paper reports the findings of a systematic empirical investigation into the origins of stickiness in a singularly balanced empirical setting: the barriers to transfer best practice inside the firm.
Trust, which occurs at the organizational and interpersonal levels, is generally believed to be important for the success of interfirm relationships. We explore the effects of interaction between the two types of trust on negotiators' motivation to solve problems of adaptation in relational contracting. What we find is that too much trust is as bad as too little. Solutions are furthest from optimal when both organizational and interpersonal trust are high or both are low.
We propose a social dilemma approach to cooperation induction in multiparty alliances. We first establish that managing the inherent tension between cooperation and competition in alliances is essentially a social dilemma, where an individually rational but socially defecting choice may lead to a higher payoff for an individual partner but where, once all partners adopt such a strategy, the alliance will fail. We then develop propositions on how partners can improve their chances for cooperation, and we discuss the limitations of the social dilemma approach and its implications for future research.
Three types of trust in economic exchanges are identified: weak form trust, semi-strong form trust, and strong form trust. It is shown that weak form trust can only be a source of competitive advantage when competitors invest in unnecessary and expensive governance mechanisms. Semi-strong form trust can be a source of competitive advantage when competitors have differential exchange governance skills and abilities, and when these skills and abilities are costly to imitate. The conditions under which strong form trust can be a source of competitive advantage are also identified. Implications of this analysis for theoretical and empirical work in strategic management are discussed.
This paper employs an inductive, natural-systems approach to explore the complex social and economic factors whose interaction generate trust and distrust between individuals, subunits, and firms in American corporations. The objective of this investigation is to gain a better understanding of the role of interpersonal trust and distrust on the implementation and use of new information technologies in organizational settings. The focus of the investigation is work-group control of information flow across organizational boundaries under conditions of trust and distrust, and the consequences of advanced information technology for such information-control practices. A central finding is that more powerful parties often try to force a shift in the medium of information exchange to gain greater control in specific hierarchical relationships. When these changes threaten the quality or security of information required by less powerful parties, resistance is the result. The discussion suggests that deployment of advanced information technology without the application of local knowledge of social interrelationships increases the risk of implementation failure.
Strategic alliances are an important source of resources, learning, and thereby competitive advantage. Few firms have all of the resources needed to compete effectively in the current dynamic landscape. Thus, firms seek access to the necessary resources through alliances. We examine the management of strategic alliances using the theoretical frames of transactions cost, social network theory and the resource-based view. Alliances must be effectively managed for their benefits to be realized. Effective alliance management begins with selecting the right partner. Furthermore, alliances must be managed to build social capital and knowledge. To maximize cooperation among the partners, a trust-based relationship must be developed. Therefore, we conclude that managing alliances is crucial for firms to gain competitive advantage and create value with strategic alliances.
Companies increasingly collaborate in their technological activities. Collaboration enables firms to learn about uncertain and turbulent technological change, and enhances their ability to deal with novelty. A number of studies reveal the importance for successful collaboration of high levels of inter-personal trust between scientists, engineers, and managers in the different partners. However, these individual relationships are vulnerable to labor turnover and inter-personal difficulties. Using two examples of highly successful technological collaborations, it is argued that the survival of such relationships in the face of these inevitable inter-personal problems requires the establishment of interorganizational trust. Such trust is characterized by community of interest, organizational cultures receptive to external inputs, and widespread and continually supplemented knowledge among employees of the status and purpose of the collaboration.
I argue that the linkage-formation propensity of firms is explained by simultaneously examining both inducement and opportunity factors. Drawing upon resource-based and social network theory literatures I identify three forms of accumulated capital— technical, commercial, and social—that can affect a firm's inducements and opportunities to form linkages. Firms possessing these capital stocks enjoy advantages in linkages formation. However, firms lacking these accumulated resources can still form linkages if they generate a radical technological break- through. Thus, I identify paths to linkage formation for leading as well as peripheral firms. I test these arguments with longitudinal data on technical collaborative linkages in the global chemicals industry. Copyright © 2000 John Wiley & Sons, Ltd.
To examine the effects of interorganizational network structures on acquisition decisions, we propose a model whereby firms learn by sampling the diverse experiences of their network partners. We tested this model by examining the effect of diversity of network partners' experience on firms' acquisition decisions, using data on acquisition premiums and acquirers' stock market performance from 1986 to 1997. Results show that firms tied to others with heterogeneous prior premium experience tend to pay less for their acquisitions and have better-performing acquisitions than those tied to others with homogeneous experience. Firms also pay lower premiums when their network partners (1) have completed deals of diverse sizes, (2) have unique information, and (3) are themselves of diverse sizes. Firms that have multiplex relationships with their partners receive even more benefit. The results extend prior research on networks and learning by showing that collective network experience affects firms' decision quality.
Using data collected from multiple respondents in all the business units of a large multinational electronics company, we examined the relationships both among the structural, relational, and cognitive dimensions of social capital and between those dimensions and the patterns of resource exchange and product innovation within the company. Social interaction, a manifestation of the structural dimension of social capital, and trust, a manifestation of its relational dimension, were significantly related to the extent of interunit resource exchange, which in turn had a significant effect on product innovation.
Previous research on organizational citizenship behavior indicates that such behavior is critical for organizational effectiveness, but little theoretical work details how it might contribute to enhanced organizational functioning. Nahapiet and Ghoshal (1998) argue that a firm's social capital comprises a critical source of sustainable organizational advantage. Based on their work, we suggest that citizenship behaviors enhance firm functioning by contributing to the development of social capital in organizations; specifically, citizenship behaviors contribute to the creation of structural, relational, and cognitive forms of social capital.
This chapter discusses the operationalization of transaction cost economics. Vertical integration, an understanding of which serves as a paradigm for helping to unpack the puzzles of complex economic organization more generally, is described in the chapter. Some empirical tests of the transaction cost hypotheses are summarized in the chapter. Transaction cost economics adopts a contractual approach to the study of economic organization. As compared with other approaches to the study of economic organization, transaction cost economics (1) is more microanalytic, (2) is more self-conscious about its behavioral assumptions, (3) introduces and develops the economic importance of asset specificity, (4) relies more on comparative institutional analysis, (5) regards the business firm as a governance structure rather than a production function, (6) places greater weight on the ex post institutions of contract, with special emphasis on private ordering, and (7) works out of a combined law, economics, and organization perspective. Friction, the economic counterpart for which is transaction costs, is pervasive in both physical and economic systems.
While networking among small and medium-sized manufacturing firms (SMEs) is a growing phenomenon, there has been little empirical study of the factors that lead to the success of these networks. This study identifies the following eight success factors for manufacturing networks of SMEs, which are ranked by perceived degree of importance to the success of the network: (1) participant character; (2) chief executive officer (CEO) support; (3) confidence; (4) dedication; (5) capabilities; (6) external relationships; (7) intermediary; and (8) information technology. Four success factors were perceived to be significantly more important in joint production and marketing networks compared to joint learning and resource sharing networks: (1) participant character; (2) confidence; (3) external relationships; and (4) information technology.
Using data on U.S. investment banking firms’ syndication in underwriting corporate stock offerings during the 1980s, this study explores the factors that drive alliance formation between two specific firms. We compare resource complementarity, status similarity, and social capital as a basis of alliance formation. The findings indicate that the likelihood of investment banks’ alliance formation is positively related to the complementarity of their capabilities, as well as their status similarity. Social capital arising from banks’ direct and indirect collaborative experiences also plays a very important role in alliance formation. The number of deals given by a lead bank to a potential partner over the past three years has an inverted U-shaped relationship to the probability that the lead bank will invite the potential partner to form an alliance. Our findings indicate that status similarity and social capital have a stronger effect on alliance formation in initial public offering deals than in secondary offering deals, as the former are more uncertain than the latter. Using these findings, we discuss the role of complementarity, status similarity, and social capital in alliance formation. Copyright © 2000 John Wiley & Sons, Ltd.
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A considerable amount of research has examined trust since our 1995 publication. We revisit some of the critical issues that we addressed and provide clarifications and extensions of the topics of levels of analysis, time, control systems, reciprocity, and measurement. We also recognize recent research in new areas of trust, such as affect, emotion, violation and repair, distrust, international and cross-cultural issues, and context-specific models, and we identify promising avenues for future research.
Global competition highlights asymmetries in the skill endowments of firms. Collaboration may provide an opportunity for one partner to internalize the skills of the other, and thus improve its position both within and without the alliance. Detailed analysis of nine international alliances yielded a fine-grained understanding of the determinants of interpartner learning. The study suggests that not all partners are equally adept at learning; that asymmetries in learning alter the relative bargaining power of partners; that stability and longevity may be inappropriate metrics of partnership success; that partners may have competitive, as well as collaborative aims, vis-à-vis each other; and that process may be more important than structure in determining learning outcomes.
This paper examines the impact of managers' social capital on managerial performance. Two dimensions of social capital are compared—the structural embeddedness (i.e., configuration) of a manager's network of work relations and the relational embeddedness (i.e., quality) of those relations. Based on a sample of 120 product and sales managers in a Fortune 100 pharmaceutical firm, this paper presents evidence indicating that both elements of social capital influence managerial performance, although in distinct ways: structural embeddedness plays a stronger role in explaining more routine, execution-oriented tasks (managerial sales performance), whereas relational embeddedness plays a stronger role in explaining new, innovation-oriented tasks (managerial performance in product and process innovation). This research considers resource exchanges within firms as key to value creating behaviors and contributes a deeper understanding of how social capital influences productive resource exchanges. Copyright © 2005 John Wiley & Sons, Ltd.
Interorganizational networks generally have been discussed in the context of nonprofit agencies. Providing an alternative between the open market and the internalization of activity the network potentially may be even more important in business. This is especially true in international operations and in industrial and services marketing. Involving technology transfer, information exchange, accounting and finance as well as marketing, network management calls for a holistic approach. To serve as an engine of growth the network also requires strategic planning both at the overall level and in member firms.
This study examined the influence of internal capabilities and external networks on firm performance by using data from 137 Korean technological start-up companies. Internal capabilities were operationalized by entrepreneurial orientation, technological capabilities, and financial resources invested during the development period. External networks were captured by partnership- and sponsorship-based linkages. Partnership-based linkages were measured by strategic alliances with other enterprises and venture capitalists, collaboration with universities or research institutes, and participation in venture associations. Sponsorship-based linkages consisted of financial and nonfinancial support from commercial banks and the Korean government. Sales growth indicated the start-up's performance. Regression results showed that the three indicators of internal capabilities are important predictors of a start-up's performance. Among external networks, only the linkages to venture capital companies predicted the start-up's performance. Several interaction terms between internal capabilities and partnership-based linkages have a statistically significant influence on performance. Sponsorship-based linkages do not have individual effects on performance but linkage with financial institutions has a multiplicative effect with technological capabilities and financial resources invested on a start-up's performance. Implications and directions for future research were discussed. Copyright © 2001 John Wiley & Sons, Ltd.
This paper extends entrepreneurship into the domain of alliances, and investigates the effect of alliance proactiveness on market-based firm performance (defined in terms of sales growth, market share, market development and product development). Alliance proactiveness is defined as the extent to which an organization engages in identifying and responding to partnering opportunities. The effect of alliance proactiveness on performance is tested within a contingency framework, with size and perceived environmental uncertainty as moderators, and using data from 182 firms. We estimated the model using partial least squares. Results indicate that alliance proactiveness leads to superior market-based performance, and that this effect is stronger for small firms and in unstable market environments. Copyright © 2001 John Wiley & Sons, Ltd.
We examine the determinants of trust in 453 supplier–automaker relationships in the US, Japan, and Korea. We define trust and derive a model of its determinants drawing upon (1) an embeddedness (relationship-based) perspective, (2) a process-based perspective, and (3) an economic (hostage-based) perspective. Our findings indicate strong support for the process-based perspective in all countries; embeddedness was only important in Japan, and the economic hostage-based variable (stock ownership) was not important in any country.