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05-bstieler10b - Asia Pac J Manag(2010 27:299319 DOI...

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Trust formation in Korean new product alliances: How important are pre-existing social ties? Ludwig Bstieler & Martin Hemmert Published online: 26 November 2008 # Springer Science + Business Media, LLC 2008 Abstract The focus of this study is on the nature and influence of social connections versus other relational mechanisms on trust formation in an emerging Asian economy. We examine the role of communication quality, perceived fairness, and pre-existing social relationships for the formation of trust in 47 vertical new product development alliances in South Korea. The empirical results indicate a relatively minor importance of pre-existing social ties vis-à-vis communication quality and fairness for the development of trust. Contrary to widespread perceptions, pre-existing social ties do not appear to directly contribute to establishing trust with external alliance partners in Korea. Multiple explanations are offered for this unexpected finding. Instead, existing social relationships moderate the importance of fairness for trust formation. When conducting partnerships with Korean firms, managers should focus more on a quality communication and fair behavior when trust formation is the objective, than on social connections. Keywords Product development . Alliances . Trust formation . Social ties . Korea Background This research examined trust formation in vertical new product development alliances between independent (non- chaebol ) firms in the South Korean machinery industry and the role concrete social relations play in this process. Given the Asia Pac J Manag (2010) 27:299 319 DOI 10.1007/s10490-008-9124-1 We would like to thank APJM Senior Editor David Ahlstrom, Young-Choon Kim, and two anonymous reviewers for their helpful comments and suggestions on earlier versions of this article. L. Bstieler Whittemore School of Business and Economics, Department of Marketing, University of New Hampshire, McConnell Hall, 15 College Road, Durham, NH 03824, USA e-mail: [email protected] M. Hemmert ( * ) School of Business, Korea University, Anam-dong, Seongbuk-gu, Seoul 136-701, South Korea e-mail: [email protected]
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reportedly widespread networks of social relationships in Korea (Yee, 2000 ) and their perceived importance for effectively conducting business, it is crucial to understand how such social relationships affect the development of trust in R&D partnerships between domestic or with foreign firms. A vertical product development alliance is a project-based working relationship between a manufacturer and a customer or a supplier involved in the conception, testing, production, or marketing of a new product (Anderson & Narus, 1990 ). In relationships where the outcome depends on the intent and behavior of others, trust is a crucial component for a successful cooperation in these often vulnerable relationships (Morgan & Hunt, 1994 ). Trust is defined as one partner s confidence that the other partner will not exploit its vulnerabilities, but act competently and dutifully (Ring & Van de Ven, 1994 ). Given the importance of trust for the
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05-bstieler10b - Asia Pac J Manag(2010 27:299319 DOI...

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