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.

Chapter 8: Governance Trajectories

Paul W.L. Vlaar

Subjects: business and management, organisational behaviour, strategic management


Despite a clarion call for further examination of multiple control mechanisms, few empirical studies have investigated this issue. (Jap and Ganesan, 2000: 227–45) INTRODUCTION Interorganizational governance efforts – attempts to coordinate and control activities and outcomes in external collaborative ventures – are composed of multiple, interrelated decisions that are taken over a relationship’s life cycle. Notwithstanding this multidimensionality, academic studies on interorganizational governance frequently pertain to only one or a few governance choices. Little attention is paid to the interrelationships between governance choices, and to the dynamics characterizing value-creation and value-claiming activities in interorganizational relationships. I challenge this deficiency by conceptualizing interrelated governance decisions made during different stages of a collaborative relationship as ‘governance trajectories’. I propose that the decisions embedded in these trajectories possess dissimilar organization-level and exchange-level antecedents, and that decisions made in earlier stages of cooperation affect decisions made later on. Analyses of six governance decisions for a sample of 911 buyer–supplier relationships support my arguments. By challenging the conventional focus on singular governance decisions, and by replacing it with the concept of governance trajectories, the chapter contributes to a more comprehensive and dynamic picture of interorganizational governance. Interorganizational relationships are believed to consist of several stages, including a search and selection phase, a negotiation phase and a contracting phase (see Buskens et al., 2003a; Jap and Ganesan, 2000; Reuer, 1999, 2000; Zollo and Singh, 2004). These three stages in an interorganizational relationship’s life cycle (see De Rond, 2003; Jap and Ganesan, 2000)...

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