Faems et al. (2008) "Toward an integrative perspective on alliance governance: Connecting contract design, trust dynamics, and contract application
20 important questions on Faems et al. (2008) "Toward an integrative perspective on alliance governance: Connecting contract design, trust dynamics, and contract application
What did they disentangle (losmaken)?
- How contracts with a similar degree but different nature of formalization (narrow versus broad) trigger different kinds of trust dynamics (negative versus positive) at both operational and managerial levels
- How trust dyanmics and contract application (rigid versus flexible) coevolve over time
- How relational dynamics in previous transactions influence the design of contracts in subsequent transactions
Which two different theoretical perspectives have yielded insight into effective and efficient governance?
- The first perspective focuses on the structural design of single transactions and emphasizes the importance of contracts, or agreements in writing between two or more parties, which are perceived as legally binding, as effective and efficient governance mechanism
- The second perspectve focuses on relational processes within ongoing interfirm relationships and emphasizes the importance of trust for safeguarding and coordinating alliances
How do the researchers define trust?
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On which assumption does the structural perspective rest? (focusing on individual alliance transactions and relying on transaction cost theory)
Where does the relational perspective focus on?
What assumption does this perspective contain? (relying on social exchange theory)
How does the structural perspective identify complex contracts, or “contracts with a large number of clauses that are specified in detail”?
What do complex contracts create?
What does the relational perspective promote?
What is the converging understanding where trust refers to?
In which way is argued that trust is a multidimensional concept?
For which two reasons can trust be used as an alternative governance mechanism? (according to the relational perspective)
- Trust provides alliance partners with the assurance that knowledge and information will be used for the greater good. Understanding that trust refers to positive expectations regarding the other party in a risky situation
- Under conditions of trust, members of different partner organizations are likely to engage in extensive communication and information sharing on an informal basis
For what reasons are both structural and relational perspectives on alliance governance criticized?
Why are there, according to the authors, inconsistent findings in previous research?
- First, existing research has exclusively focused on the degree of contractual formalization, or the number of clauses that are defined in a contract.
- Second, these previous studies have tended to focus attention on the initial design of contracts, while ignoring how such structural elements are applied during the alliances.
- Third, studies’ exclusive focus on relational processes at the managerial level. As alliance governance scholars have mainly relied on managers as core informants, they have tended to treat the operational level as a black box.
How to answer the first research question: How does the content of contracts influence trust dynamics at both operational and managerial levels in alliances?
Whereby is a narrow contractual interface structure characterized?
How is a broad contractual interface structure characterized?
How to address the second research question: How does the application of contracts coevolve with trust dynamics at both operational and managerial levels in alliances?
What did the data suggest about that positive goodwill trust dynamics do not reduce the importance of contracts in governing alliances?
What do the authors show on the basis of their findings?
- They provide a process-oriented view of the relationship between contracts and trust
- Conceptualize goodwill trust as a condition that determines how contracts are applied
- Define the contracting process as an incremental learning process that is sensitive to changes in relative bargaining power
- Point to mutual interdependence and competence trust as crucial conditions for subsequent transactions
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