Contracts and Trust in Alliances

Contracts and Trust in Alliances

Discovering, Creating and Appropriating Value

Paul W.L. Vlaar

Paul Vlaar contends that strategic alliances and other forms of cooperation, such as buyer–supplier relationships, joint ventures and offshoring initiatives, increasingly stand at the basis of competitive advantage. Although contracts and trust play a crucial role in such relationships, prior studies on both governance solutions are generally confined to single theories, paradigms and viewpoints. Drawing on an in-depth case study, survey data and conceptual developments, the author advances a more integrative framework. He probes issues such as: • the tension between the need and the ability to contract • trust and contracts as co-evolving and self-reinforcing phenomena • contractual functions other than coordination and control • dialectical tensions stemming from contract application • standardization of contracting practices. By exploring these topics, the book offers novel perspectives on the role of trust in interorganizational relationships, shifting our attention and creation to the discovery of value by collaborating partners.

Preface

Paul W.L. Vlaar

Subjects: business and management, organisational behaviour, strategic management

Extract

Interorganizational relationships – e.g. alliances, joint ventures, outsourcing and offshoring initiatives – feature prominently in contemporary business society. Such relationships are generally attractive, but complex, because members from different organizations with different backgrounds and experiences need jointly to discover and create value. To complicate matters further, they have to make sure that their organization appropriates part of this value and they have to safeguard against opportunistic behaviour by partners and undesired knowledge spillovers. In this manuscript, I explore how contracts and trust relate to the creation, appropriation and discovery of value in interorganizational relationships. More particularly, I capitalize on the observation that contracts and negotiation and contracting processes are frequently hardest when you need them most (Chapter 3), that they assume a non-trivial relationship with trust (Chapter 4) and that they can be conducive to giving, making, demanding and breaking sense (Chapter 5). Moreover, I develop the notion that contracting and other acts of formalization eventuate in tensions with which people have to cope (Chapter 6) and I discuss the implications of standardizing contracting practices (Chapter 7). Finally, I contend that contracts and the processes from which they emerge should not be studied in isolation, as they interact with various other governance mechanisms (Chapter 8). In further developing and exploring these insights, l attempted to accommodate and cherish existing research on contracting and trust in interorganizational relationships, while simultaneously attending to and developing alternative notions and viewpoints. I believe this manuscript gives testimony to the way such endeavours can...