Revisiting the trust-performance link in strategic alliances.
| Verfasser | Mohr, Alexander T. |
| Posten | RESEARCH ARTICLE - Report |
Abstract:
* We extend research on the trust-performance link in strategic alliances (SAs) by arguing that the traditional focus of research on the influence of trust on performance of SAs needs to be complemented with a more explicit acknowledgment and analysis of the role that SA performance plays in the development of trust.
* Drawing on existing theoretical arguments and empirical findings related to the consequences and determinants of trust we argue for the existence of a bidirectional causal relationship between trust and performance in SAs. We empirically test this bilateral relationship using 3-stage least square regression models on data from 110 strategic alliances.
* Our results support the positive effect of SA performance on trust, but not the commonly stressed positive effect of trust on SA performance. We discuss the relevance of this finding for the theory of inter-firm collaboration. We conclude by discussing the implications of our findings for practitioners and scholars interested in SAs.
Keywords: Strategic alliances * Trust * Performance
Introduction
Trust, defined as "one party's confidence that the other party in the exchange relationship will not exploit its vulnerabilities" (2003, p. 58), has become a key variable in research on inter-organisational relationships and scholars draw on theoretical concepts such as transaction costs, relational governance, and transaction value (e.g., Krishnan et al. 2006; McEvily and Zaheer 2006; Zaheer et al. 1998) to explain the positive effects of trust on the success of strategic alliances (SAs). Existing research highlights the multi-faceted nature of trust and stress integrity, competence and benevolence as its key dimensions (e.g., Davis et al. 2000; Mayer et al. 1995; Sako 1998), reflecting the fact that trust comprises both calculative and non-calculative elements (McEvily et al. 2003; Rousseau et al. 1998). Summarizing the existing theoretical and empirical research on trust in alliances, Krishnan et al. (2006, p. 895) state that "[..] all else being equal, trust improves alliance performance" and Kale and Singh (2009, p. 51) suggest that "[d]eveloping trust during the postformation phase of an alliance is critical to its success in many ways." Yet, current theoretical and empirical research provides good reasons to believe that a positive influence of performance on trust is as likely as a positive influence of trust on performance. For example, Boersma et al. (2003), study four case studies and show that trust is as much an input to IJV processes as it is an output of these processes. The likely influence of performance on the development of trust also follows from research that investigates the effect of the history of inter-firm interactions on the development of trust (e.g., Gulati and Sytch 2008; Jones and George 1998) and is stressed by authors who see trust as part of various feedback loops characterising the evolutionary processes taking place in alliances. Despite these strong indications for a relationship between trust and performance that is more complex that is usually assumed, there has been little empirical research into this issue. We suggest that the possibility of a reverse influence of performance on trust needs to be investigated to clarify our understanding of the role of trust in SAs and the associated recommendations with regard to the development of trust in SAs. We aim to extend research on trust in strategic alliances by complementing the commonly presented uni-directional influence from trust to performance with a theoretical analysis of, and empirical evidence for a more complex relationship between trust and performance in SAs. To reach this objective, we draw on the various theoretical streams and concepts used by prior research in this field, including transaction cost economics (e.g., Boersma et al. 2003; Buckley and Casson 1988; Zaheer et al. 1998), relational governance (e.g., Krishnan et al. 2006; McEvily and Zaheer 2006), and transaction value (e.g., McEvily and Zaheer 2006; Robson et al. 2008).
The paper is structured as follows. Section 2 reviews prior research on both the influence of trust on SA performance and the antecedents of trust. Building on this literature review section 3 revisits the arguments for (relational) trust as a determinant of SA performance and adds the complementary view of SA performance as a predictor of (relational) trust. Section 4 presents the sample and measures used in the empirical part of the study. The findings of our simultaneous test of both effects are presented and analyzed in Section 5. Section 6 concludes the paper by highlighting various implications for research and practice and by discussing the paper's limitations.
Research on Trust in Strategic Alliances
Most scholars studying trust in inter-firm collaboration investigate the consequences of trust for the performance of inter-firm relationships, thereby contributing to the larger body of research into the determinants of alliance performance. The accumulated evidence for a positive influence of trust on alliance performance (e.g., Buckley et al. 2009; Kale and Singh 2009; Krishnan et al. 2006; Sako 1998; Zaheer et al. 1998) conveys importance and legitimacy to research on trust in the inter-organizational context (Van de Ven and Ring 2006). Authors summarizing the existing research on the role of trust in alliances conclude that trust has to be seen as a key factor for, and dominant influence on alliance outcomes (Krishnan et al. 2006; Zaheer et al. 1998). The role of trust as an important determinant of alliance performance is based on a number of studies that investigate the role of trust for the performance of different types of inter-firm relationships. Various studies argue and provide empirical evidence that trust is linked to the success of equity joint ventures (e.g., Luo 2008; Lyles and Baird 1994; Noteboom 1996; Park and Ungson 1997; Ring and Van de Ven 1994; Sarkar et al. 1997) and of buyer-supplier relationships (e.g., Ganesan 1994; McEvily and Zaheer 2006; Mohr and Spekman 1994; Zaheer et al. 1998). Table 1 gives an overview over a number of important studies in this area of research.
While in both areas of research (i.e., JVs and buyer-supplier relationships) theorists present arguments as to why trust should have a positive influence on performance, a smaller number of researchers go further and test particular mechanisms by including mediating variables in the relationships between trust and performance. Zaheer et al. (1998), for example, suggest that trust leads to higher performance via a reduction in transaction costs, although their empirical findings support a direct influence of trust on performance (the test of a mediating effect is denoted as T [right arrow] M [right arrow] P in Table 1). A further development in the study of the trust-performance link in SAs is the integration of moderators that are argued to affect the strength of the relationship between trust and performance including, for example, the existence of conditions for opportunism for the partner firm (Aulakh et al. 1996) and different types of uncertainty (Krishnan et al. 2006) (the inclusion of contingency factors is denoted as T [right arrow] P, C in Table 1). Yet, the majority of existing research on the trust-performance link (implicitly or explicitly) suggests a uni-directional causal relationship between trust and performance. For example, McEvily and Zaheer's (2006) summary of their own and other researchers' work on the trust-performance relationship since the publication of their seminal 1998 paper (Zaheer et al. 1998), continues to focus on an uni-directional influence of trust on performance.
While there thus seems to be agreement with regard to the causal effect of trust on SA performance, a much smaller number of researchers (explicitly) acknowledge the possibility of bidirectional effects in the limitations of their empirical studies, usually after arguing and testing a causal effect of trust on performance (e.g., Fink and Kessler 2010; Hennart 2006; Hennart and Zeng 2005; Inkpen and Currali 1997). After testing a causal effect of trust on performance, Aulakh et al. (1996), for instance, caution that the relationship between trust and performance may be reciprocal in the sense that in addition to the effects that trust may have on performance, performance may affect the development of trust. However, while a small number of researchers raise the possibility of a more complex relationship between trust and performance (e.g., Luo and Park 2004; Zaheer et al. 1998), the only empirical evidence for a reverse or a bidirectional causal relationship between trust and SA performance is anecdotal and comes from case study research (e.g., Boersma et al. 2003). Extending this line of reasoning, we develop our arguments for the existence of a bidirectional causal relationship between trust and performance in SAs will be developed on the basis of two areas of research on trust in organizations. We start by discussing three causal mechanisms that are commonly argued to underlie a positive influence of trust on alliance performance and arguing that these mechanisms can also be deployed in supporting an influence of performance on trust. Subsequently, we revisit and extend research on the development of trust in order to show that SA performance should (also) be regarded as an important, but hitherto neglected, predictor of trust.
Trust and Performance in Strategic Alliances
Theoretical Perspectives on the Trust-performance Relationship
Existing research discusses a range of mechanisms to explain why and how trust leads to an increase in the performance of SAs. In order to structure our discussion, we adopt the classification presented by McEvily and Zaheer (2006) (for a similar classification see Sako 1998). They propose that arguments for the positive outcomes of trust fall into three categories: (1)...
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