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DI-0434-E - IESE IESE UNIVERSITY OF NAVARRA RELATIONAL...

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RELATIONAL QUALITY: MANAGING TRUST IN CORPORATE ALLIANCES Africa Ariño* Peter S. Ring** José de la Torre*** RESEARCH PAPER No 434 March, 2001 * Professor of General Management, IESE ** Professor College of Business Administration, Loyola Marymount University *** Professor, The Anderson School at UCLA NOTE: The authors are listed in alphabetical order to reflect equal contributions to the paper. Research Division IESE University of Navarra Av. Pearson, 21 08034 Barcelona - Spain Copyright © 2001, IESE Do not quote or reproduce without permission IESE UNIVERSITY OF NAVARRA
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RELATIONAL QUALITY: MANAGING TRUST IN CORPORATE ALLIANCES Abstract The management literature has often argued that “trust” plays a key role in economic exchanges, particularly when one or another party is subject to the risk of opportunistic behavior and incomplete monitoring, or when problems due to moral hazard or asymmetric information arise. These conditions are almost always present in the case of corporate alliances and joint ventures. We propose that one aspect of trust, what we call “relational quality,” is fundamental to the maintenance of good working conditions in two-party alliances where past experience and the shadow of the future play important roles. Relying on a growing body of theory and a number of case studies, we develop a framework for thinking about trust in dynamic and practical terms. We conclude that a reservoir of relational quality exists in any such relationship, and that the level of trust implied in such a reservoir will not only influence whether and how future conflicts are resolved, but also is in itself affected by the positive (or negative) resolution of such conflicts. Finally, we identify three elements that contribute to the relational quality reservoir in alliances: 1) the initial conditions surrounding the alliance formation; 2) the cumulative experiences of the parties with each other’s behaviors as the alliance unfolds; and 3) the impact that external events or behaviors outside the alliance’s context have on the perceptions and attitudes the parties have about each other’s trustworthiness. We conclude with some recommendations for more effective management of corporate alliances.
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RELATIONAL QUALITY: MANAGING TRUST IN CORPORATE ALLIANCES Management scholars and practitioners are increasingly concerned with understanding what makes some alliances work so well over time while others flounder or, perhaps worse, end in a flurry of bitter recriminations. It is not only that joint ventures and alliances are so much more popular across a broad spectrum of industries, company sizes and nationalities (1) — due to growing technological complexity, increasing globalization and the demands of a networked, fast-paced economy — but also the glaring differences one observes in their performance.
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