Academic journal article Journal of Managerial Issues

An Empirical Examination of the Role of Social Exchanges in Alliance Performance

Academic journal article Journal of Managerial Issues

An Empirical Examination of the Role of Social Exchanges in Alliance Performance

Article excerpt

Strategic alliances have become a major corporate strategy in many high-tech industries such as electronics, telecommunication, pharmaceutical, and machine tools industries (Gulati et al., 2000; Yoshino and Rangan, 1995). Strategic alliances allow firms to develop new competencies quickly, and rapidly expand in geographically disperse locations offering the greatest levels of opportunity and flexibility (Dyer and Singh, 1998; Gulati et al., 2000). While alliances are becoming an attractive option, many strategic alliances have been unstable, ineffective and poorly performing (Arino and Doz, 2000). The potential for conflict and a clash of interest between alliance partners is inherent, because either party can opportunistically use the alliance to learn the other's business or technological secrets (Doz, 1996; Khanna et al., 1998).

Previous alliance research has focused on this issue of partner opportunism and has adopted a transaction cost economics view (Pisano, 1989; Williamson, 1991) to argue that high transaction costs resulting from opportunistic behavior can be alleviated through appropriate contractual controls or equity-based ownership controls (Kogut, 1988; Pisano, 1989). These views, however, neglect the fact that the cost of deterring opportunism is very high and excessive controls may increase coordination costs (Ring and Van de Ven, 1994) and intensify power conflicts between alliance partners (Provan and Skinner, 1989; Steensma and Lyles, 2000; Yan and Gray, 1994). The challenges posed by alliances have encouraged scholars to look beyond the issue of partner opportunism and explore the evolutionary collaborative processes (Arino and Doz, 2000) and, specifically, the role of social ties such as trust in enhancing alliance performance (Doz, 1996; Lazaric, 1998; Ring and Van de Ven, 1994).

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 (Das and Teng, 1998; Gundlach et al., 1995; Steensma and Lyles, 2000; Subramani and Venkatraman, 2003). 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 (Das and Teng, 1998; Dekker, 2004; Provan and Gassenheimer, 1994; Steensma and Lyles, 2000). In addition, there is a need to 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.

THEORY AND HYPOTHESES

Social Exchanges and Alliance Coordination

"Social exchange" is a condition in which the actions of one party provide the rewards and incentives for the actions of another party and vice versa in repeated interactions (Blau, 1964; Homans, 1961). …

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