The Role of Trust and Contractual Safeguards on Cooperation in Non-equity Alliances

Because partners may behave opportunistically in alliances, contractual safeguards or trust between partners are necessary for successful outcomes. However, it remains controversial whether safeguards and trust substitute or complement each other. Drawing on transaction cost theory, this study conce...

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Bibliographic Details
Published inJournal of management Vol. 30; no. 4; pp. 471 - 485
Main Authors Lui, Steven S., Ngo, Hang-yue
Format Journal Article
LanguageEnglish
Published Thousand Oaks, CA Elsevier Inc 01.08.2004
Sage Publications
Sage Publications Ltd
Subjects
Alliances
Contracts
Cooperation
Correlation analysis
Strategic planning
Studies
Theory
Hong Kong China
China
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Summary:Because partners may behave opportunistically in alliances, contractual safeguards or trust between partners are necessary for successful outcomes. However, it remains controversial whether safeguards and trust substitute or complement each other. Drawing on transaction cost theory, this study conceptualizes both contractual safeguards and trust as important control mechanisms in non-equity alliances, and develops a model that relates contractual safeguards and trust to cooperative outcomes. We test our hypotheses with data collected from 233 architect–contractor partnerships in Hong Kong. The results show that the relationship between contractual safeguards and cooperative outcomes depends on both the level and type of trust.
ISSN:0149-2063
1557-1211
DOI:10.1016/j.jm.2004.02.002