Governing Excharige in Strategic Alliances: The Dynamics of Interfirm Trust Henry Adobor A Thesis in The Department of Management Presented in Partial Fulfilment of the Requirements for the Degree of Doctor of Philosophy at Concordia University Montreal, Quebec, Canada June 1999 O Henry Adobor, 1999 National Library Bibliothèque nationale 191 of Canada du Canada Acquisitions and Acquisitions et Bibliographie Seivices seivices bibliographiques 395 Wellington Street 395. nie Wellington Ottawa ON KIA ON4 OttawaON KlAON4 Canada Canada Yaur bb Vom mlsrsnar Our W Notre referma The author has granted a non- L'auteur a accordé une licence non exclusive licence allowing the exclusive permettant à la National Library of Canada to Bibliothèque nationale du Canada de reproduce, loan, distribute or sel1 reproduire, prêter, distribuer ou copies of ths thesis in microfon, vendre des copies de cette thèse sous paper or electronic formats. la forme de rnicrofiche/film, de reproduction sur papier ou sur format électronique . The author retains ownership of the L'auteur conserve la propriété du copyright in this thesis. Neither the droit d'auteur qui protège cette thèse. thesis nor substantial extracts fiom it Ni la thèse ni des extraits substantiels may be p~tedor otherwise de celle-ci ne doivent êîre imprimés reproduced without the author's ou autrement reproduits sans son permission. autorisation. ABSTRACT Governing Exchange in Strategic Alliances: The Dynamics of Interfirm Trust Henry Adobor. Ph. D. Concordia University, 1999 This thesis focuses on the dynamics of trust in strategic alliances. Trust as a form of qualitative governance is generally seen as a mother Iode for successful partnering. Yet our understanding of this core concept lags behind Our appreciation of its importance. Worse yet, a certain amount of skepticism exists on the idea of governance by trust-based regimes. This thesis aims at filling some of that lacunae. A proposed model of inter-firm trust generating structures and behaviors is presented. The model includes four important and related factors that are ordered into (1) individual partner-specific factors (2) the structure of the specific relationship (3) dyadic interactional sequence behavion and a (4) specification of exogenous context variables. Using a sample of one hundred and ninety one respondents (19 1) from a mail survey and ten (1O) case studies, a number of trust-related hypotheses were tested. Arnong others, the results offer an interesting portrait of strategic behavior on the part of acton even in trust-based regimes. For example, whether partner's intended to use alliances again in the future or not affected their trust behavior in a current alliance. Also, trust was positively associated with relations perceived as long terni, as opposed to those seen as short terni ones. Another iii important finding in the study is that when viewed as a form of sense making, trust building in alliances may be a sort of self-fulfilling prophecy. To some extent, the interpretation of behaviors and the way partners reacted to each other was dependent on the initial categorizations they formed about each other. As predicted, turnover in role persons negatively affected trust building, but contrary to expectations, direct market competition between collaborating partners did not negatively relate to trust, thus suggesting that direct cornpetition between partnering firms need not necessarily be a death leap. By taping at trust from both a sociolog ical, strategic and economic perspective, the present research avoided a premature elevation of one set of explanations to the top of the theoretical pyramid. The implications of the study for alliance research, including specific areas for future research and alliance management are offered. DEDICATION To my brother Louis Yao Adobor and my grandmother Yaya Cecilia Agblesi. No one rnoums for the setting Sun, for it will rise again Source Unknown ACKNOWLEDGMENTS The guidance and support of several individuals on work related to this dissertation is gratefully acknowledged and I wish to thank a number of people for their help. Although some peole have contributed directly and others less so, no contribution is any less valued or appreciated. I must fint and foremost express my thanks to members of my dissertation committee: Dr. Rick Molz, (Dissertation Chair) Dr. Louis Hebert, and Dr. Alfred Jaeger (Faculty of Management, McGill University). I appreciate the cooperation I enjoyed from everyone of them. I must especially thank Dr. Rick Molz for his friendship and sustained confidence in me. Thanks are also due to Dr. Jean McGuire and Dr. Jan Jorgensen (Faculty of Management, McGill University) for sewing on my phase two committee. Special thanks to Dr. McGuire for her support and friendship. Other members of both the academic and administrative staff in the Faculty of Commerce have been very helpful to me in one way or the other. I wish to thank Professors M. Jamal, V.V. Baba; G. Johns; Dr. B. Prince and Dr. U. de Brentani for earlier support and Dr. Terri Lituchy for very helpful and prompt comments on drafts of paperç I gave her from time to tirne. My thanks also to the staff of the Technology Center especially Carol and Ida for their enthusiastic responses to my many requests for diagrams and figures. I must also thank the secretaries of the Management Department, Ms. Wela Domien and Ms. Matteson. for their support. My gratitude also goes to the past and present directors of the doctoral program for their support. Thanks are also due to the assistant director, Ms. Heather Thompson and the program secretary Ms. Theresa Wadey. I must acknowledge with gratitude the help of certain individuals on work reiated to the data collection for the dissertation. 1 wish to thank Mr. Kevin Laframboise for his help during the construction of my questionnaire. Kevin was very patient and helpful. Special thanks also to my very dear friend, Mr. Senyo Dorleku for keeping such meticulous record of al1 retumed questionnaires and for his help in the mailing of the surveys. My cousin, James Bossoh desetves mention for staying up so late to stamp and seal close to a thousand pieces of mail. It is easy to forget the past that led me to this stage of rny academic career, especially those wtiose support in the more distant past made 1all possible. It is in this respect that I wish to thank my family for their many years of moral and material support. I especially wish to thank my mother for her hard work and kindness. Special thanks go to Steven Wola Adrah and his family for their many years of support and generosity. Many thanks also go to my siblings: Rosie, Aku, Ralpti, Dede and Ben. Ralph especially deserves my gratitude and admiration for his sense of duty and generosity. By the way, congratulations on your own achievement of becoming a medical doctor. Rosie and Dede also deserve mention for demonstrating such resilience. Many thanks also to Evelyn for taking such wonderful care of the kids. My daily few minutes with this " legion of three" only goes to show her own strength. Of course, Selali. The Lady Akorfa and Setor, 1 vii couldn't have done this without you guys. You are my motivation. Another important source of support has been the very special friendships 1 have made and sustained through the years. It would be a senous oversight to omit mention of a few. My thanks to rny good friends Kari and Anna Pnnz for their friendship and for making it possible for me to corne to North America to pursue this academic dream. I must thank my dear friend Sybille Jahn because she made it al1 possible. 1 also wish to thank my dear friends Michael Schmidt and Dr. Parnela Wright for their many years of friendship especially in my early years in New York. You guys did just about everything you could to make me feel at home and I cannot forget that. I also wish to thank my friend Mrs. Noriko Takeuchi for such wonderful friendship over al1 these years. I must also mention my high school teacher and dear friend. Isaac Nana Concey. Your friendship has meant a lot to me and 1 have drawn inspiration from your own hard work. 1 also wish to thank al1 my teachers, past and present who have contributed in no small way to setting me on this road. You cannot be forgotten. Thanks are also due to my friends Sylvanus Dzreke and especially Nicole Dessautel for making it so much easier for me to settle in here at Montreal. Merci beaucoup, mes ami. To al1 my friends in the doctoral program at Concordia University, McGill University, University of Montreal (HEC), University of Quebec at Montreal (UQAM) too numerous to mention. a big thank you. I think I have been fortunate to enjoy the fnendship of so many people. Your fdendships made these past years so much happier despite the work. Helena, Bela, Rashmi, Guptaji, Dao, Mohammed, Ali. viii James, the list goes on. Perhaps without knowing it. you have inspired and challenged me to effort. Mohammed and Ali especially deserve my gratitude for their help with my statistical and wmputing problems. t must also single out my wmpatriot Helena for the many vigorous intellectual conversations and debates we had in the last few years. Last, but not the least, I wish to thank al1 my professors. The joint doctoral program gave me the opportunity to interact with some of the best management scholars one can find anywhere. My hope is that I can retain and apply a fraction of al1 I was fortunate to gather from my interaction with such seasoned rninds. Finally to Fodome Axordukor, my elementary school friends and coileagues, this is for you too.