the role of trust on the performance of strategic alliances in a cross‐cultural context

The role of trust on theperformance of strategic alliances

in a cross-cultural contextA study of the UAE

Yasir Yasin FadolFaculty of Business and Economics, United Arab Emirates University,

Al-Ain, United Arab Emirates, and

Maqsood Ahmad SandhuCollege of Business and Economics, United Arab Emirates University,

Al-Ain, United Arab Emirates

Abstract

Purpose – The purpose of this study is to explore the role of trust in the relationships and long-termcommitment between partners in strategic alliances. A framework is developed for betterunderstanding the role of trust in the performance of strategic alliances in a cross-cultural context.

Design/methodology/approach – The empirical findings of this study are gathered fromstructured and unstructured interviews with some key actors involved in the process of formingstrategic alliances in their own organizations; a case study of the oil industry in the United ArabEmirates (UAE) which illustrates this is analysed. Qualitative analysis is conducted to assess the roleof trust in this cross-cultural context.

Findings – It was noted that building trust between partners helped to avoid bureaucraticobstructions and enhanced the decision making process in the UAE. It was found that trust helpedpartners to exchange resources faster, devote more funds to the venture and exchange knowledge andinformation smoothly. The results clearly show that trust plays an important role in buildingwell-functioning relationships in the oil and gas industry.

Research limitations/implications – This study is limited to the UAE and can be generalized toother similar cultural contexts only to a certain extent. Future research should consider the sameparameters in order to fully generalize the results to other industries.

Practical implications – The paper presents a case study of the nature and characteristics of partnersin the oil and gas industry, which may be applied to other similar industries. It is hoped that presentingpractical tools for understanding the function of trust in strategic alliance performance may be useful.

Originality/value – This framework makes two major contributions; first, it explores a subjectwhich has been under-researched in the literature, that is, the issue of trust between partners ofstrategic alliances in a developing context; and, second, it leads to a set of recommendations andbenchmarks the practitioners in the UAE and similar contexts to help them increase the trust betweenpartners in strategic alliances.

Keywords Benchmarking, Strategic alliances, Performance, Trust, Commitment, Culture,Oil and gas industry, United Arab Emirates

Paper type Research paper

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/1463-5771.htm

The authors are most grateful to the anonymous referees for their constructive and helpfulcomments which helped considerably to improve the presentation of the paper.

BIJ20,1

106

Received 28 December 2010Revised 12 June 2011Accepted 26 August 2011

Benchmarking: An InternationalJournalVol. 20 No. 1, 2013pp. 106-128q Emerald Group Publishing Limited1463-5771DOI 10.1108/14635771311299515

1. IntroductionIn view of the intensive competition, free trade unions, increasing macro-trends ofglobalization, the proliferation of regional trading blocs, accelerating speed oftechnological developments and rapidly changing environment, strategic allianceshave been considered a natural choice for many organizations when they want to expand.The growing popularity of strategic alliances has attracted researchers from all fieldsto study various aspects of alliance management (Chaturvedi and Gaur, 2010). Strategicalliances are basically partnerships of two or more corporations or organizations whichwork together to achieve strategically significant and mutually beneficial objectives(Elmuti and Kathawala, 2001). There are many types of strategic alliance, includinghorizontal alliances between competitors, vertical alliances between buyers andsuppliers and diagonal alliances between firms in different industries (Nooteboom, 2002).However, the focus of our study is an interesting case of the combination of all three typesof strategic alliance, in which a consortium is formed between competitors, buyers andsuppliers.

In today’s environment many authors agree that trust is a critical element in theperformance of strategic partnerships (Chang et al., 2008; Kale and Singh, 2009). Thus,the role of trust appears important in inter-firm alliances because alliances entailsubstantial risk (Das, 2005). Adobor (2005) argues that trust is often credited withlowering the transaction cost associated with economic exchange, for facilitatinginvestment in long-term relationships (Dyer, 1996; Gulati, 1995; Ranjan and Bhatnagar,2010) and reducing opportunism (Wathne and Heidi, 2000). Further, trust guarantees thequality of a relationship by allowing a free exchange of useful information (Larson, 1992).However, Lee and Ding (2010) argue that the level of trust between partners depends onthe extent to which partners invest resources. In spite of several studies, ourunderstanding of the dynamics of the emergence of trust in strategic partnershipsremains fairly rudimentary (Rousseau et al., 1998).

Although there is abundant literature on strategic alliances, data on the role of trustin the performance of strategic alliances are scarce, not least from the oil and gasindustry in the UAE context. In this respect, Butler (2007) argues that researchon strategic alliances in UAE firms is important because the corpus of literature onstrategic alliances is not large in any case. More specifically, no data are available onJapanese, British, French and UAE strategic alliances, although strategic alliancesin the Gulf region have been made in the oil and gas industry since the 1940s. Lack ofresearch on the role of trust in the performance of strategic alliances in a cross-culturalcontext prompted us to study the phenomenon in some depth. In line with the streamsof research, our question is how trust between the partners of a cross-cultural strategicalliance influences the performance of this alliance. This question is rather generic,but by using case study examples, some insights in generalization can be achieved.Our attempt will be to apply an analytical tool for studying an empirical case ofpartners from France, Japan, the UAE and the UK.

In the next section, the concept of trust is explored, followed by a discussion ofstrategic alliances in Section 3. Section 4 discusses the role of trust in the performanceof strategic alliances. Cross-cultural comparison is the subject of Section 5. Next,a discussion about the research methodology precedes an empirical analysis and thena case study in Sections 6 and 7, respectively. Finally, Section 8 summarizes theconclusions, makes some recommendations and proposes future research directions.

Performanceof strategic

alliances

107

2. The concept of trust in strategic allianceTrust is derived from the German word Trost, meaning comfort. It operates at manylevels – interpersonal, intergroup, intra-organizational, inter-organizational andsocietal (Cumming and Bromiley, 1996) and has been explored by personality theorists,economists, sociologists and social psychologists. This paper focuses oninter-organizational trust because there is a reasonable understanding that trustdevelops over time in different contexts and at different levels of analysis (Zand, 1972;Adobor, 2006; Chaturvedi and Gaur, 2010).

The concept of trust varies with individual belief or a common belief among a groupof individuals and this belief is rooted in the culture of an individual, group, industry,national level and on an international level. Morgan and Hunt (1994) define trust as“one party’s confidence in an exchange partner’s reliability and integrity”. In analliance context, the partners’ trust is defined as an individual’s belief or a commonbelief among a group of individuals that another individual or group:

(1) makes good-faith efforts to behave in accordance with any commitments, bothexplicit and implicit;

(2) is honest in whatever negotiation preceded such commitments; and

(3) does not take excessive advantage of another even when the opportunity isavailable (Cumming and Bromiley, 1996).

According to Cumming and Bromiley (1996) trustworthy behaviour means thatindividuals actually behave according to (1)-(3) stated above. However, Luhmann (1979)notes that a fundamental condition of trust is that it must be possible for a partner toabuse trust. Therefore, the definition of trust assumes voluntary behaviour on the partof the actors which makes them vulnerable.

There have been a number of studies on the role of trust in strategic alliances inisolation. For example, Bucklin and Sengupta (1993) discuss the effectiveness of astrategic alliance through reducing power and managerial imbalance for marketingalliances. Mohr and Spekman (1994) discuss partnership between manufacturers anddealers in the computer industry. Varadarajan and Cunningham (1995) have discussedstrategic alliance performance from intra-organizations and inter-organizationalperspective. Aulakh et al. (1996) highlight licensing relationships with firms fromAsia, Europe and Central\South America and describe cross-border inter-organizationalpartnerships while Inkpen and Currall (1997), as well as Sako (1998) and Dyer and Chu(2003) discuss automotive industry joint ventures. Zaheer et al. (1998) focus on Dyadicexchange relationships in USA in the electrical equipment industry. Lane et al. (2001)point out foreign IJVs in Hungary, while Nielsen (2003) discusses trust in high-techindustry. Teeqen and Doh (2002) highlight the impact of culture on relationships ofauthority, trust, and performance in US-Mexican alliance. Lui and Ngo (2004) talk abouttrust in the construction industry, whereas Paul and McDaniel (2004) investigate thehealthcare sector. Cote and Latham (2006) also focus on the healthcare industry inthe USA. Krishnan et al. (2006) in their comprehensive study cover the machinery,transportation and electronic equipment industries from 21 countries operating in India.Lin and Wang (2008) discuss Chinese JVs with partners from the West and Asia. We arealso in line with Wittmann et al. (2009) who argue that trust is related positively tocooperation and lead to superior financial performance. Chen and Liu (2009) study thetourism industry in Taiwan and Lim et al. (2010) study the role of trust in automobile

BIJ20,1

108

insurance companies in South Korea. Although the above studies state that, from thetraditional perspective, basing operations on trust has its problems, there is still a needfor the development of new ideas which integrate the peculiar characteristics of therole of trust in strategic alliances. In line with the above streams of research, the presentstudy prompted us to investigate a very important sector of the oil and gas industry,which has been ignored in previous studies. Our study investigates the role of trust inthe performance of SAs and will be applied as an analytical tool for studying anempirical longitudinal case in the UAE, involving partners from the UAE, Japan, the UKand France.

3. Strategic alliances and their impact on organizational performanceThe definition of strategic alliance (SA) is problematic; as Sulej (1998) states, there isconsiderable debate within the research on strategic alliances and joint ventures as towhat is actually meant by these terms and the way in which they are used. However,researchers observe that the best way to define the term “strategic alliance” is to look atits characteristics, which allow a deeper understanding. For example, Van de Ven (1976)notes early on that the process of inter-organizational relationships can be studied as aflow of resources among organizations. Based on Van de Ven’s (1976) work, Kogut (1988)argues that a joint venture is formed when two or more firms pool a portion of theirresources within a common legal organization. Researchers such as Jarillo (1988),Burgers et al. (1993), Das and Teng (1998) and Hitt et al. (2000) agree that SAs are formedbetween two or more partners for the purpose of achieving strategic goals as well asenhancing the competitive advantage of all the organizations in the alliance. It is worthnoting that researchers emphasize the term “collaborative arrangement” in theirdefinitions of SAs. For example, Hamilton (1996), Buckley and Casson (1998), Gulati(1999) and Abdou and Kliche (2004) define a strategic alliance as a:

[. . .] collaborative durable relationship established between two or more independententerprises, involving the sharing or pooling of resources to create a mechanism (corporate orotherwise) for undertaking a business activity or activities of strategic importance to one ormore of the partners, for their mutual economic advantage.

SAs’ benefits will accrue only if the alliance is successful and performssatisfactorily. However, studies have shown that between 30 and 70 per cent ofalliances fail; in other words, they neither meet the goals of their parent companies nordeliver the operational or strategic benefits which they purport to provide (Robson et al.,2002). Researchers argue that performance may be negatively affected by the risksassociated with strategic alliances. Das and Teng (1998) suggest that there are twodistinctive and equally important types of risk which may influence the performance ofSAs: relational risk and performance risk. Relational risk is concerned with cooperativerelationships, or the probability that the partner does not comply with the spirit ofcooperation. Opportunistic behaviour from the partners (Williamson, 1983, 1985) is atypical source of relational risk. Performance risk, for its part, refers to the possibility thatthe intended strategic goals of an alliance may not be achieved, even though thecooperation between the partners is satisfactory. The presence of these risks will affect theoutcome of the strategic alliance. Elmuti and Kathawala (2001) find that a survey byTechnology Associates and Alliances (1999) which asked 455 CEOs to rank theimportance of certain success factors for SAs revealed that these factors are senior


alliances

109

management commitment, similarity of management philosophies, an effective andstrong management team, frequent performance feedback, shared goals and objectiveswhich are clearly defined, thorough planning, clearly-understood roles, internationalvision, partner selection, communication between partners and maintaining relationships.Although SAs are influenced by several factors such as government policies and the levelof economic development of the partners’ countries, the two which dominate, according tothe literature, are trust between partners and partners’ national and corporate culture.However, the focus of our study is the role of trust in the performance of the alliance itself.The next part discusses the role of trust in the performance of strategic alliances.

4. Role of trust in the performance of strategic alliancesAlthough only limited empirical evidence is available to substantiate the normative biastowards the view that trust between the partners enhances performance in strategicalliances, a review of the alliance literature reveals mixed findings (Robson et al., 2008).A stream of research (Chaturvedi and Gaur, 2010; Chen and Liu, 2009; Lane et al., 2001)finds that inter-partner trust creates beneficial economic outcomes and enhances theperformance of the SA, while several other studies (Inkpen and Currall, 1997; Sarkar et al.,2001) reveal the absence of a significant direct link between trust and performance. Lylesand Salk (1996), indeed, conclude that inter-partner trust is risky, costly and ultimatelydetrimental to alliance performance. In the literature, trust has been identified as animportant component which makes partnerships, strategic alliances and networks offirms successful (Chaturvedi and Gaur, 2010).

Cullen et al. (2000) further argue that, for several reasons, mutual trust and commitmentare core values for SAs. This could be due to several factors: first, no contract or otheragreement, no matter how complete or detailed, can account for every issue or everycontingency that might arise. Likewise, it is not feasible for partner companies to rewritean agreement every time a new issue or situation arises. Necessarily, much of what happensbetween partners in alliances develops informally in the alliance relationship (Cullen et al.,2000). Ultimately, in evolving or long-term alliances in particular, managers must fall backon trust and commitment, the social fabric of the relationship, to fill the gaps in the formalagreement and to keep the relationship running smoothly (Kale and Singh, 2009).

Second, the alliance of two or more companies creates a strong potential for dysfunctionalconflict and mistrust. Companies often differ in the strategic goals and objectives whichthey set for an alliance; they differ in the extent and type of experience of alliances that theyhave. Companies also differ in organizational cultures and management philosophies andin their routine policies and procedures. When the partners are from different nationalcultures, these differences are magnified and commonly generate misunderstandings (Britoand Silva, 2009). Without a sense of mutual trust and commitment to each other, partnersoften fail to work out the inevitable problems of cross-national alliances.

Third, mutual trust is important because successful cooperation requires allianceparticipants to contribute quality inputs to the alliance organization. When partners donot trust each other, they hold back information or take unfair advantage of each other ifgiven the opportunity. If this happens, the alliance seldom produces all the mutualbenefits possible from cooperation. The exchange of information and scientificknowledge necessary for developing new technologies may never take place. Nielsen andNielsen (2009) support this view by arguing that trust not only directly facilitates learningbut also conditions the effect of knowledge suppression on innovative outcomes.

BIJ20,1

110

Fourth, trust and commitment are important for the SAs’ learning and often cited asamong the major benefits and motivations for SAs. According to Inkpen (2005), firmswithin an alliance can learn from their partners’ past experiences and transfer theirknowledge and experiences back to the parent organization. In this sense, trust is essentialif alliance partners are to be willing to share key information on a strategic and operationallevel (Whipple and Frankel, 1998). Partners share information with confidence becauseof the development of trust (Nielsen and Nielsen, 2009). If partners do not trust each otherand are not committed to the alliance, the transfer of technology is greatly inhibited.

In summary, the benefits of inter-firm trust in strategic alliances include reducingtransaction costs (Robson et al., 2008), gaining full cooperation and transferringresources between partners (Nielsen and Nielsen, 2009; Ireland et al., 2002), reducing theextent of formal contracts (Kale and Singh, 2009; Larson, 1992), facilitating disputeresolution (Ring and Van de Ven, 1994) and ultimately improving alliance performance(Chaturvedi and Gaur, 2010; Chen and Liu, 2009; Zaheer et al., 1998). Studies show thattrust is one of the most important factors in establishing a good customer relationshipand it ultimately affects the customer’s purchasing behaviour (Kim and Ahn, 2006) andalso leads to increased partner satisfaction with the alliance and the achievement ofjoint action and goal fulfillment (Schreiner et al., 2009). However, lack of trust andsuspicion are common in the business world. Lack of trust is viewed as a reason foralliance failure and, as such, has a significant impact on the performance of alliances(Larson, 1992; Sherman, 1994). Lack of trust can be attributed to several factors.Hitt et al. (2001d), for example, maintain that cultural, economic and institutionaldifferences across countries increase the difficulty of developing trust between partnerswhose home bases lie in separate countries.

5. Cross-cultural comparisonThere are innumerable definitions of the term “culture”. Indeed, the word has differentmeanings for the same people in different contexts. For the present study, “culture” canbe understood as the transmitted patterns of values, ideas and other symbolic systemswhich determine the patterns of behaviour (Kroeber and Kluckohn, 1981). Used in thisway, the term “culture” can refer to the organisational or national culture among workersin a strategic alliance, seeking to achieve the organizational goals of each party.Hofstede’s (1980) work is considered a major contribution to the scholarly knowledge ofcross-cultural comparisons. In a major study involving 40 countries, Hofstede (1980)developed four dimensions of national culture; the power distance index (PDI),individualism (IDV), masculinity (MAS) and the uncertainty avoidance index (UAI).In a later work, Hofstede (1992) developed a fifth dimension, namely, long-termorientation (LTO).

Hofstede’s (1980) study of cultural values listed among others a category of “Arab”countries, which included Saudi Arabia, Kuwait, Egypt, Lebanon, Libya, Iraq and theUAE. Along Hofstede’s four dimensions, this Arab group, as opposed to Westerncultures, scored high in power distance, uncertainty avoidance, collectivism andmasculinity. In business, Rice (2003) describes the culture of the Arabs as beinghigh-context, relying considerably on complex nonverbal communication, and adds thatbusinesspeople are expected to arrive late at meetings and take a considerable amount oftime to arrive at a decision before signing the contract. This means that businessnegotiations and dealings are typically made with family relationships, social contacts


alliances

111

and social status in mind. Well-connected business people can get things done muchfaster than their counterparts who do not know the ins and outs of the system. Therefore,we can infer that informal relationships and trust are two critical factors in SA inthe UAE.

The rankings in the cultural dimensions of the UAE, UK, France and Japan areshown in Table I, which does not show the LTO for the UAE and France.

Also it is argued that trust is rooted in the culture, since in some societies a contractis merely a piece of paper and people believe more in spoken commitments, while in othersocieties written documents and more paper work are preferred. Hofstede (1992) namedthis dimension “uncertainty avoidance” (UAI). This dimension focuses on the level oftolerance for uncertainty and ambiguity within the society. A high UAI ranking indicatesthat a society has a low tolerance for uncertainty and ambiguity. This reflectsa “rule-oriented” society which relies on laws, rules, regulations and controls to reduce theamount of uncertainty. A low UAI ranking indicates that a society has less concern aboutambiguity and uncertainty and a greater tolerance for a variety of opinions. Japanese,UK and French societies, for example, have a high UAI and people are unlikely to beginany project until formal agreement has been reached among the relevant parties and theperformance indicators have been agreed in the contract; whereas the UAE was rankedlow in UAI (Hofstede, 1992) and business practices can start without any formalagreement.

The long-term orientation (LTO) dimension focuses on the degree to which a societyembraces a long-term commitment to traditional values. A high LTO ranking indicatesthat a society subscribes to long-term commitments and respect for tradition. Thisreflects a strong work ethic whereby long-term rewards are expected as a result of hardwork; however, business can take longer to develop in such a society, particularly for an“outsider”. A low LTO ranking indicates that a society has less commitment to along-term traditional orientation. In such a culture, change can occur more rapidlybecause long-term traditions and commitments are not impediments to change. Generallyspeaking, management in the UAE tends to have a short-term orientation; in contrast,planning in Japanese and UK and French companies often takes a long time fromconception to implementation.

6. MethodologyIn order to study the role of trust in strategic alliances, we selected a case with foreignpartners from countries with different cultural backgrounds. The case study method iswidely used in the field of management and organizational studies. The case researchmethod is appropriate to the study of the development of trust over time (Yin, 1989;Stafford, 1995; Parkhe, 1993). A common criticism of the case study method, however,

Dimensions UAE UK France Japan

PDI 80 35 68 54IDV 38 89 71 46MAS 52 66 43 96UAI 68 35 86 92LTO – 25 – 80

Table I.Hofstede’s culturaldimensions of the UAE,UK, France and Japan

BIJ20,1

112

is that it provides little basis for scientific generalization. Furthermore, the limitations ofusing only one case of SA should be borne in mind throughout the present paper.However, Yin (1989) argues that “case studies, like experiments, are generalizable totheoretical propositions and not to a population or universe”. With the case studymethod, the investigator aims to expand and generalize theories (“analyticgeneralization”) and not to enumerate frequencies (“statistical generalization”)(Yin, 1989). Nevertheless, in our case, the relative cultural differences between thepartners do allow us to focus on issues of trust, which might be obscured if wide culturalsimilarities were encountered.

In order to ensure the suitability of selected cases and accuracy of data, companieswere selected according to specific criteria, as follows:

. A company should have formed at least one strategic alliance.

. A company should be a joint venture between a local company and foreigncompanies.

. Partners of a strategic alliance should have different cultural backgrounds.

. A decision maker should be available and accessible by an interviewer.

. Documentary records should be available and accessible.

Under these criteria, the Abu Dhabi Gas Liquefaction Company (ADGAS), a subsidiaryof the Abu Dhabi National Oil Company (ADNOC) was selected. The reasons forselecting this company for the purpose of conducting this study are as follows. First, thequality of access was favourable to the extent that the executives whom we met in thiscompany were able to supply rich and relevant data. Second, the respondents were incharge either of forming or managing SAs in their companies; had participated inmaking decisions relevant to SAs, a situation that secures the issue of theoreticalrelevance; or had direct access to data. Third, the executives in the case company whomwe met showed some degree of enthusiasm for the study and maintained properdocumentary records which are considered important for studying the role of trust onthe performance of SAs.

Once the company was selected, negotiations started with top executives to select thecase within the company which would be studied. The process of case selection started atthe first interview, when the interviewees were asked to explain the SAs most importantto their companies. Importance was broadly defined in terms of novelty (non-routine),complexity and difficulties faced, demand for a commitment of a substantial amount ofresources, shareholders’ reaction, industry reaction and expected outcome. Consequently,one case study was nominated by the ADNOC, namely, the Abu Dhabi Gas LiquefactionLimited (ADGAS): a joint venture formed in 1973 by ADNOC, British Petroleum (BP)-UK,Tokyo Electric Power Company (TEPCO) which is represented by Mitsui and Co.Ltd-Japan, and Total-France to produce, sell and deliver Liquefied Natural Gas (LNG),Liquefied Petroleum Gas (LPG), Sulphur, and Paraffinic Naptha. From a legal point ofview, partners agreed to call their joint venture a “closely held company”. Then,executives in each company were asked to identify the decision makers involved in eachalliance and to permit them to attend interviews and provide necessary data.Respondents were selected on the basis of the roles occupied in the strategic alliance:these were such roles as directors, department heads and project managers.


alliances

113

6.1 Data collectionData were mainly collected by conducting in-depth interviews. Data obtained fromdifferent interviewees were reciprocally cross-checked and checked against thedocumentary evidence and observations (i.e. triangulation). The researchers preparedan interview guide, which included the sequence of themes to be covered as well assuggested questions. The interview guide should always indicate the topics and relevantquestions and their sequence, because this makes it easier to focus on the topics and askquestions from different angles in order to collect rich information and manage timeefficiently and effectively (Kvale, 1996). Interview questions were developed from theliterature in relation to the research objectives and the research questions. Interviews wereconducted in Abu Dhabi from February to March 2010. The people interviewed includedmanaging directors/chief executive managers. All respondents seemed reluctant to havetheir interviews recorded. The researchers thus preferred to rely on note-taking because itwas observed to be more convenient to the interviewees. These two types of reportingmethod each bring several advantages and disadvantages (Walsham, 1995, p. 78).

The researchers had the opportunity to access internal documentary evidence inconjunction with the interviews. Internal documentary analysis is important, becausethe information contained in documents may not be available in spoken form, butendures in the form of texts giving historical insights (Hodder, 1998; Yin, 1998).Considerable materials from the files and official records of the companies studied werecollected, concerning the enterprise, the case under study and the broader context. Thedocumentary records used included joint venture contracts, annual reports, promotionalmaterial and parent company documentation. In addition to the available documentsreviewed in each company, the researchers also used the latest data from the Institute ofAdministrative Development, the UAE Centre for Strategic Studies and Research, theFederal Research Division, Chambers of Commerce and Industry, the UAE Universityand the relevant ministries.

We conducted 19 interviews with the key personnel involved in the SA formationprocess. We began interviews with the top management who further guided us tointerview middle management and we also had an opportunity to talk to the projectmanagers. Respondents included managing directors, chief executive managers andproject managers and were mostly men between 40 and 55 years old. Some respondentswere re-interviewed for further clarification of data. Re-interviewing a person wascounted as a new interview in the total numbers. Each interview lasted 1-2 hours,depending on the nature of the on-going discussion. Many insights were noted duringinformal discussions at lunch times and coffee breaks. The interviewees wereencouraged to provide information openly and the interviewers sought to stimulate thisby “interplaying” information which had been received from other respondents. Thiswas done to test the validity and reliability of the information received. The researchersalso had the opportunity to access internal documentary evidence in conjunction withthe interviews. The documentary records reviewed included joint venture contracts,annual reports, correspondence, promotional material and parent companydocumentation. The total number of pages of these documents was over 1,000.

Therefore, some of the main steps that we took to ensure the validity and reliabilityof the research methods were as follows:

. Companies, case studies and interviewees were selected systematically,according to established criteria.

BIJ20,1

114

. Interview questions were cross-checked by ourselves and our colleagues for theirsuitability.

. Interview questions were designed and administered to make them consistentlyunderstandable, by avoiding ambiguous words and defining the key terms in ourquestions.

. The role of the interviewer was reduced to the minimum in order to avoid anybias or guidance of the data collection process by the researchers.

. All interviews were recorded in note form because it was found more convenientfor the interviewees than tape-recording.

. To avoid misunderstandings and to maintain the reliability of the data, theinterviews were transcribed and sent back to the interviewees for comment andto have their accuracy checked. This cross-checking improved the quality of thedata.

. Data were also cross-checked and feedback received from other independentsources. These sources were different independent informants such as professorsfrom the Faculty of Business and Economics at the UAE University. Commentsand additional information received from feedback sessions were very valuablein raising the quality of this research.

6.2 Data analysisThis research adopted qualitative methods for the purpose of data analysis. Aftercompleting each interview, the researchers began by transcribing the interviews, fieldnotes, documents and summarizing the relevant information from the interview. Thetranscribing of data is a process of converting spoken words into readable writtenformat. Therefore, transcribing the interview from an oral to a written mode was thebeginning of the analysis. Transcribing entails organizing and reducing a large volumeof collected qualitative data and field notes without stripping the data from their context.Transcribing involved what is referred to by Strauss and Corbin (1998) as themicroanalysis of data. The purpose of this analysis is to organize the recording ofinformation collected during the interview when the memory is fresh. They furtherargue that microanalysis demonstrates that analysis is not a structured, static or rigidprocess; rather it is a free-flowing and creative one in which analysts move quickly backand forth between types of coding, using analytic techniques and procedures freely inresponse to the task of the analyst (Strauss and Corbin, 1998).

The researchers used a narrative approach to describe what was going on in the case,what the case looked like and how the people involved were acting. This helps in dealingwith a surge of data. Having read the case narratives, a categorizing strategy in the formof coding was applied. The goal of coding was to fracture the data and rearrange theminto categories which facilitates the comparison of data within and between thesecategories and aid in the development of theoretical concepts.

Having coded the data, they were then conceptualized. The conceptualization wasused to convert the data described earlier into abstract concepts, categories andsubcategories, with the intention of relating them to each other. Subsequently, the datawere cross-checked against each other and we looked for similarities, differences andrelationships between various themes emerging in the course of the analysis.


alliances

115

7. The case of the Abu Dhabi Gas Liquefaction CompanyIn this section we discuss the historical background of the case company and theprocess of its forming a strategic alliance and highlight the role of trust in strategicalliance performance.

7.1 Historical perspectives of strategic alliance formationThe present partners of ADGAS have a long history of oil exploration and production inthe Gulf region. This situation has helped to strengthen their relationships with theUAE’s government to improve the trust between partners. As far back as 1928, a groupof UK, Anglo-Dutch and US international oil companies formed the Iraq PetroleumCompany (IPC) with a concession (a license to start a granted business opportunity)which came to cover most of Iraq. Once the IPC was formed, each partner agreed thatit would not hold concessions in any other part of the former territory of the OttomanEmpire, except in association with all the other partners and in the same proportions asthe IPC. Most of the Persian Gulf states, including Abu Dhabi but excluding Kuwait,were included in this area. Thus, when attention turned to searching for oil in the TrucialStates, as the UAE was known until 1971, a consortium was formed with exactly thesame ownership structure as the IPC. In 1935, a new UK company was formed, thePetroleum Development (Trucial Coast) Ltd, commonly referred to as PDTC. PDTC’sownership was identical to that of the IPC, with the Anglo-Persian Oil Company (laterBritish Petroleum), Shell, Companie Francaise des Petroles and a group of two UScompanies – Exxon and Mobil Oil – owning 23.75 per cent each of the shares, while theinterests of investor Calouste Gulbenkian owned the remaining 5 per cent. PDTCcontacted all the Sheikdoms, offering arrangements for concession rights to explore foroil and to develop production should oil be found. In 1939, Abu Dhabi granted PDTCsuch concessions for a period of 75 years (UAE Yearbook, 2005).

However, during the late 1960s resentment grew in Abu Dhabi, as elsewhere in theMiddle East, at the foreign ownership of oil resources, in particular the consortiumsystem. In 1971, the government established the ADNOC as a wholly state-ownedcompany. The finalization of this decision was complicated by BP’s announcement inDecember 1972 of the sale of a 30 per cent interest of its operations in the UAE to theJapan Oil Development Co. ( JODCO), formed by a consortium of Japanese companies.The government withheld its approval for this deal until March 1973, when BP agreed tofinance the construction of an ADNOC-owned refinery in Abu Dhabi (UAE Yearbook,2006). However, the UAE is distinctive among the members of the Organization of thePetroleum Exporting Countries (OPEC) in the Gulf in retaining the formerconcessionaire companies as equity holders in its operating companies. It did not,as elsewhere, seek to remove foreign ownership entirely. ADNOC, therefore, developedas a holding company with an intricate web of majority and minority equity stakes inother producing companies. The government was motivated to follow this strategy by adesire to pursue production and exploration as energetically as possible. As part of thisaim, from the 1960s onwards various new partnerships in the form of joint ventures andstrategic alliances were formed with key international oil and gas companies.

Abu Dhabi Gas Liquefaction (ADGAS) is a joint venture between ADNOC,a UAE-based company; Mitsui, a Japan-based company; BP, a British-based company andTOTAL, a French-based company. The company was established in 1973 to exploit theUAE’s abundant gas resources and produce LNG and LPG. When extensive studies

BIJ20,1

116

showed that natural gas was one of the cleanest and most environmentally friendlyfuels available, several large industrialized countries were looking for a reliable, clean andefficient energy supply to address their growing demands. Based on these factors, thedecision was made to construct a gas liquefaction plant on Das Island, in the UAE.Although ADNOC possesses natural gas resources, it then lacked the technical knowledgeto transform gas from its gas state to a liquefied state. ADNOC contacted some foreign oilcompanies which were operating in the UAE to form an alliance by pooling the necessaryresources and to collaborate in producing gas to the competitive advantage of all thepartners. BP and TOTAL were selected to provide technical know-how and expertise.

This was confirmed by ADGAS’s deputy manager, Mr Hassan Al Marzoqi:

Using a set of selection criteria, ADNOC evaluated some potential partners, such as BritishPetroleum (BP), Total, Exxon Mobil and Shell. The evaluation process revealed that very fewoil and gas companies worldwide satisfied ADNOC’s selection criteria. However, the focuswas on two companies; British Petroleum (BP) and the French, Total. Both companies possessthe required technology to start this project. They were and still are among the biggest oil andgas companies in the world. Moreover, the two companies were already operating in the UAEand, therefore, ADNOC had historical ties and good relationships with these companies.

When asked about the criteria used by ADNOC to select its partners, Mr Al Marzouqistated that:

The technical and administrative issues of producing and transporting LNG and otherassociated gas products was another challenge facing the project. ADNOC was searching forpartners to provide technology and know-how to process LNG. The major criterion set byADNOC for the selection of the partners of its new project was the partners’ competency andexpertise in the area of gas liquefaction. Other criteria set by ADNOC for selecting partners werefinancial capacity, compatibility and trust between ADNOC’s management and partners’management teams and partners’ readiness to form a strategic alliance and commit resources.

In 1972, the TEPCO represented by TEPCO signed a 20-year agreement to purchasethe LNG and LPG to be produced at the plant for use in power generation in andaround Tokyo. The following year, ADGAS was officially founded and registered inBermuda as a joint venture with an initial 20 per cent shareholding for ADNOC (whichwas gradually rose to 70 per cent), 35 per cent for TEPCO and Co. Ltd (which graduallyreduced to 15 per cent), 30 per cent for BP (which was gradually reduced to 10 per cent)and 15 per cent for TOTAL (which was gradually reduced to 5 per cent). This was clearfrom the account of Mr Saif Ahmed Al Ghafli, General Manager of ADGAS:

All partners with no exception were interested in the equity joint venture form of strategicalliance, which requires establishing an independent company to be managed by anindependent management. Consequently, ADGAS was founded and registered in Bermudain 1973 with an initial shareholding of 20 per cent for ADNOC, 35 per cent for TEPCO,30 per cent for BP and 15 per cent for TOTAL.

However, when asked about the reasons for selecting the equity joint venture form ofstructure, Mr Al Ghafli, ADGAS’ general manager said:

The selection of this particular form of structure was based on several reasons. First, theproject is strategic in its nature which requires the long-term commitment of huge resources.Therefore, to ensure future cooperation and desirable behaviour, partners were willing tocommit and tie each other to the project by having an equity share. Secondly, as the projectappeared to be very successful and profitable, each partner was keen not only to have


alliances

117

an equity share but to maximize its share in the project. Thirdly, from the perspective ofADNOC, the form of equity joint venture is in alignment with the strategy that it has followedsince the 1960s, which aims at maintaining collaborative relationships and partnerships withWestern companies to provide the technology that ADNOC lacks.

In 1977, the company was incorporated in Abu Dhabi shortly before the plant becameoperational. In the same year, two gas processing trains (gas is processed through aprocess train) came online, producing the Middle East’s first ever LNG and LPG. Thetwo gas processing trains were designed to produce LNG with an annual designedcapacity of 2.5 million tons; 800,000 tons per year of LPG; 220,000 tons per year ofButane, in addition to 220,000 tons per year of Pentane (ADGAS’s internal records).It was not only the first of its kind in the Middle East, but also was and still is, the onlyplant in the world capable of processing both associated and non-associated gasstreams. In addition, seven LNG and LPG storage tanks were completed in 1986 and anambitious sea-water intake project in 1988. In 1990, ADGAS upgraded the Das Islandplant control system to a fully computerized digital command centre. Later the sameyear, as testimony to the strong business relationship developed over almost twodecades, ADGAS and TEPCO signed a new 25-year agreement – doubling the amountof LNG to be delivered to TEPCO as of 1994. To meet its obligations under this newagreement, ADGAS immediately constructed a third gas processing train on Das Island,adding another 3 million tons annually to the plant’s production and doubling itscapacity (ADGAS’s internal records). ADGAS shareholders also decided to renew andexpand the LNG tanker fleet. The new fleet comprises eight of the world’s most moderntankers, each with a capacity of about 135,000 cubic meters.

Documentary analysis also revealed that ADNOC was not satisfied with its 20 per centshareholding. Accordingly, ADNOC struggled to increase its equity share and establisha controlling stake in the project. ADNOC was successful in increasing its shareholdingtwice over. The negotiations for the first rise started immediately after the constructionof the ADGAS plant. In 1975 ADNOC was successful in increasing its shareholding to51 per cent. Negotiations for the second rise, from 51 to 70 per cent, started immediatelyafter the company built a third LNG processing train to meet the increasing demand forits products. This US$1.3 billion train (including the cost of installations and storagetanks) was totally financed by ADNOC. The third train was added to meet the increasingdemand for the company’s products.

Demand for LNG and other gas products in Japan increased steeply due to theindustrialization of the economy. This led TEPCO to sign another 25-year agreement in1990 by which it would buy a doubled quantity of LNG products. The empirical evidencerevealed that ADNOC had a very long and hard job to persuade its partners to reducetheir equity share in the venture; it took seven years, from 1990 to 1997. This wasmainly because ADGAS has been quite profitable: annual income in 1995 was aboutUS$1.5 billion against a total expenditure of US$600 million. In order to persuade itsforeign partners to reduce their equity share and consequently increase its own, ADNOCoffered the partners two kinds of incentive. First, foreign partners were granted new oilconcessions in Abu Dhabi to invest in new oil and gas projects. Second, foreign partners’participation in ADGAS was extended until 2019. After lengthy negotiations,an agreement was signed between the partners in July 3, 1997 which raised ADNOC’sshare to 70 per cent and reduced that of the others. It is worth noting here that ADNOChas met its promise of providing its partners with new oil concessions. Today BP,

BIJ20,1

118

TOTAL and TEPCO are shareholders or project leaders of a number of ADNOC’s oilprojects which reflects the role of trust in the performance of the strategic alliance(the Participant Agreement).

7.2 Role of trust in the performance of ADGASADGAS’ partners entered this strategic alliance with pre-established common andprivate goals. The major goals of ADNOC were:

(1) to stop gas flaring in the atmosphere, which wasted resources and polluted theenvironment; and

(2) to exploit these resources as a source of income for the nation.

While TEPCO aims at securing a long-term supply of clean energy to support Japan’sgrowing economy and industrialization, BP and TOTAL seek access to new businessopportunities overseas. But even though each partner entered this alliance with goals ofits own, attaining an individual partner’s goals obviously led to attaining the commongoals of the strategic alliance (ADGAS, From Vision to Reality – the First 25 Years,2003). When asked about the criteria used by partners to measure the allianceperformance, Mr Al Suwaidi, CEO of ADNOC stated:

To ensure attainment of their private goals and the common goals of the alliance, the partnersof ADGAS agreed to measure the performance of the alliance on a regular basis. The partnersagreed on common criteria to be used for performance evaluation. These criteria are theproject’s sales, profitability, growth and longevity. Partners also have another undeclaredcriterion used for performance evaluation, which is the transfer of knowledge and organizationallearning. The evaluation process takes place on a regular basis and the results are discussed bythe partners at the end of each year during the meetings of the Board of Directors.

The empirical evidence revealed that all partners have attained their goals and are verysatisfied with the company’s performance. ADNOC stopped gas flaring and the technologywhich it uses today reduces environmental pollution by 72 per cent (ADNOC Annual HSEReport, 2007). Between 1977 and 2009, ADGAS successfully delivered over 100 milliontons of LNG to TEPCO. This amounts to almost 1,600 round-trips made by tankersbetween Das Island in the UAE and the receiving terminals in Tokyo. Over the sameperiod, nearly 15 million tons of LPG, which account for almost 400 tanker consignments,was also supplied to TEPCO (ADGAS, Thirty-year Story of Success, 2007). This is veryclear in the words of Mr Susumu Shirakawa, TEPCO’s Executive Vice President:

[. . .] over these three decades, ADGAS has exported almost 30 per cent of all the LNG thatTEPCO has received, which equals eight years of electric power, based on the electricitydemands today of Tokyo’s population of 13 million people. It is clear how important thisproject is to the Japanese government. We have had many difficulties and challenges in thepast, but every time we have faced a new challenge, the power to overcome these challengeswas the communicative and cooperative attitude based on the relationship of trust betweenthe partners involved in the project (ADGAS News, March 2009).

Clearly, the growth of the LNG market over the last few years and the dramatic increasein the number of players on the production side, as well as the consumer side, havehelped ADGAS to put in an outstanding performance. Mr Shirakawa commented:

I believe the value of the LNG in the world has been recognized. Although this project’scontract period continues to 2019, I am sure that we will be able to meet the challenges of the


alliances

119

era of dramatic change together and to continue to mark the history by enhancing the projectand by further strengthening the mutual trust relationship which we have cultivated over along period of time under the cooperation of the people concerned, both as sellers and buyers(ADGAS News, March 2007).

It is interesting to note here that the successful performance of ADGAS encouraged thepartners to extend the operations of the company and to look for new opportunities toexpand in the region and beyond, to sustain the company’s performance in the long run.The following episode supports our argument about the partners’ satisfaction withthe project’s performance. To start with, due to the success of ADGAS in satisfyingcustomer needs, in 1990 the partners signed an agreement allowing ADGAS to double itsproduct. As a result, a third gas processing train, the largest of its kind in the world, wasbuilt, adding another 2.5 million tons annually to the plant’s production and doublingits capacity. The success of the third gas processing train, along with the increasingdemands for LNG, encouraged the partners to plan for the addition of a fourth gasprocessing train, including storage facilities and shipping vessels. The plan isprogressing despite the shortage of space on Das Island, which required the project tobe modularized before it could be implemented. Major items of equipment, new facilitiesand large portions of the gas processing train will have to be pre-fabricated and broughtin on a large barge. ADGAS also intends to expand the Das jetty, the Halcrow Grouphaving done a study for this (ADGAS Corporate Brochure, 2007).

Notwithstanding the agreement between partners to use common criteria forperformance evaluation, each partner implicitly monitors its own progress in learningnew technology and acquiring knowledge from partners. The transfer of knowledge andorganizational learning is another undeclared criterion used by each partner individuallyto measure the performance of the alliance. This criterion is used individually by eachpartner to gauge the degree to which the strategic alliance has helped in acquiring newtechnology and learning new systems. ADNOC was motivated to form this strategicalliance by the prospect of access to new production technology and managementsystems and of transferring this knowledge to its subsidiary companies. In this sense,ADNOC successfully learned gas processing technology and used this technology toindependently establish a new gas project, the Abu Dhabi Oil Refining Company(TAKREER). BP, Total and TEPCO acquired knowledge of the local market, learnedabout gas opportunities in the Gulf region and consequently developed new gas projectsnot only in Qatar, Oman and Yemen but also in Malaysia, Indonesia and Russia. Partnerslearned from the project and became international players in LNG processing, mainlydue to the successful performance of the ADGAS strategic alliance. Our discussion is inline with the executives of the partner companies, who argue that their success may beattributed mainly to trust.

Trust between partners plays a vital role throughout the different phases of theformation of ADGAS. Trust helped the partners to create value in the strategic alliance andeased the process of its formation and management. Trust also helped when combining thepartners’ capabilities so that the strategic alliance and the competitive advantage of allpartners were improved further than any partner could have achieved alone. Moreover,trust and cooperation helped the partners to quickly commit more resources as neededand to implement their joint project, a decision which speeded up the decision-making.This last area represents an essential requirement for alliance success, above all in today’sfast-changing environment. It was found that BP and TOTAL have confidently committed

BIJ20,1

120

many of their resources of technical know-how, ADNOC has committed more naturalresources in the form of natural gas and TEPCO has been committed to buying thecompany’s production. This situation helped ADGAS partners to rely more on informalcontracts and commitment-based trust. Although there were many changes in the initialagreements, they were based on trust and commitment and on the long-term relationship.All four partners have different cultures, goals and objectives, experiences, resources anddifferent management philosophies and systems, yet the alliance has been very successfuland no major conflicts or difficulties have ever been reported in the last four decades.

Trust between ADGAS partners also has an important effect in enhancing theperformance of the strategic alliance because it helped all the partners to share informationand transfer technical know-how, which, without trust between partners, might be difficult.Trust between ADGAS partners resulted in high levels of cooperation, commitment,reliability and fairness and no opportunistic behaviour on the part of the ADGAS partners.For example, during the last three decades ADGAS experienced many performancedifficulties, in particular when the price of oil and gas collapsed. Nevertheless, becausethe partners focused on the long-term goals of the project and on building and developinga relationship based on trust, the alliance survived. This emerges from the words ofMr Al Marzouqi:

For the smooth operation of the project, in good times and bad times, the spirit of mutual trustof the partners as well as of the seller and buyer is substantial since the contract runs for thelong term. Because this project was established on a one to one relationship which is uniquein LNG transactions, fortunately, the potency of such a spirit of mutual trust can be seen toprove the strength of the 30-year alliance.

To promote trust, ADGAS partners consistently work close to each other to enhancecommunication and a common understanding of the alliance’s goals. Each one also workshard to show good faith by committing resources to the project as needed and by meetingits promises. Obviously, building trust among partners is a process which has requiredhard work from them all. This point indicates that trust and cooperation are outcomes ofa long-lasting positive relationship which is characterized by mutual respect, honestyand shared interests and goals. The adoption of the equity joint venture form of structurein ADGAS’s strategic alliance contributed to a sense of the strategic importance of theproject and hence promotes trust between partners. The implication of this argument isthat the adoption of the equity joint venture form has enhanced trust between the alliancepartners. Therefore, the role of trust on the performance of strategic alliances in across-cultural context is depicted in a form of input-output process in Figure 1.

8. ConclusionWe proposed a dynamic framework for the better understanding the role of trust in theperformance of strategic alliances. The framework suggests that the development of trustis a very convoluted and longitudinal process and has important implications for thesuccess or failure of an alliance. We discussed four major reasons for the importance of trustin the effective performance of strategic alliances. The major benefits of inter-organizationaltrust in strategic alliances include reducing transaction costs, gaining full cooperationand transferring resources between partners, reducing the extent of formal contracts,facilitating dispute resolution and ultimately improving alliance performance.

The empirical findings were gathered through a case study of a strategic allianceformed by four partners from cross-cultural backgrounds. Hofstede’s dimensions


alliances

121

of culture were utilized to look at the cultural difference between the UK, France, Japanand the UAE. In spite of the great cultural differences, we found the strategic alliance wasvery successful due to the role of trust in enhancing cooperation and establishinglong-term relationship. For example, over the last three decades, ADGAS has exportedalmost 30 per cent of all the LNG that TEPCO has received, which equals 8 years ofelectric power, based on the electricity demands today of Tokyo’s population of 13 millionpeople (ADGAS Annual Report, 2007).

Our findings were in line with the developed framework, since trust reducedtransaction costs of the strategic alliance, more specifically, the costs of negotiationduring the formation of the alliance. Trust also enhanced coordination and cooperation,which in turn reduced administration costs. Building trust among alliance membershas improved their overall satisfaction with the alliance.

Despite the importance and originality of the study, some limitations were inevitable.First, the lack of relevant strategic alliance literature on developing countries in generaland the Middle East region in particular, is an unavoidable difficulty. We had to rely onWestern-based publications on the subject, which have been criticized for overlookingstrategic alliances in developing countries. Second, although only one case study wasused, it was formed by four partners, a situation which means that the generalizabilityof the findings is limited. Third, the study focuses on a critical and sensitive strategicissue within UAE enterprises and therefore the interviewees required assurances ofconfidentiality about most of the data dealt with. Due to this sensitivity, the issue ofboth obtaining and maintaining access to data was a real obstacle. We had to spend aconsiderable time negotiating access and building trust with respondents. Someinterviewees did not give full answers in spite of the insistence and persistence ofthe researchers. Fourth, this study focuses on governmental types of organization in theUAE. However, there is another type of organization, which was not covered, namely,private undertakings.

On the basis of the above discussion it appears that trust affects the performance ofstrategic alliances. The following propositions are made as findings of our study:

Figure 1.Input-output analysis oftrust in strategic alliance

BIJ20,1

122

P1. Trust between partners plays a vital role throughout the different phases ofthe alliance formation process.

P2. The adoption of an equity joint venture enhances trust and encouragespartners to commit the necessary resources which positively affect theperformance of the alliance.

P3. Cultural differences between partners have positive influence and no negativeinfluence on the alliance performance.

P4. Historical business relationships between alliance partners mitigate culturaldifferences, enhance trust and improve performance.

P5. Trust plays a vital role in enhancing communication and cooperation, whichis reflected positively in the performance of the strategic alliance.

P6. Trust plays a vital role in increasing the profitability, growth and longevity ofthe strategic alliances in a cross-cultural context.

This study developed a descriptive framework for the role of trust in the performanceof strategic alliances on a leading enterprise in the UAE. In this respect, this studysuggests two streams for further research. The first one is needed to explore the effectof trust in privately owned organizations. The second is needed to test the significanceof this framework by considering large samples of enterprises along with several caseswithin each enterprise in the UAE and look at the differences and similarities betweendifferent industries. We hope that this study will stimulate other scholars to conductresearch on an interesting, yet challenging subject.

References

Abdou, K. and Kliche, S. (2004), “The strategic alliances between the American and Germancompanies: a cultural perspective”, European Business Review, Vol. 16 No. 1, pp. 8-27.

Adobor, H. (2005), “Trust as sensemaking: the microdynamics of trust in interfirm alliances”,Journal of Business Research, Vol. 58 No. 3, pp. 330-7.

Adobor, H. (2006), “Optimal trust? Uncertainty as a determinant and limit to trust ininter-firm alliances”, Leadership and Organization Development Journal, Vol. 27 No. 7,pp. 537-53.

Aulakh, P., Kotabe, M. and Sahay, A. (1996), “Trust and performance in cross-border marketingpartnerships: a behaviour approach”, Journal of International Business Studies, Vol. 27No. 5, pp. 1005-32.

Brito, C. and Silva, C.S. (2009), “When trust becomes the fourth ‘C’ of cooperation”, TheMarketingReview, Vol. 9 No. 4, pp. 289-99.

Buckley, P.J. and Casson, M.C. (1998), “Analysing foreign market entry strategies: extending theinternalization approach”, Journal of International Business Studies, Vol. 29 No. 3,pp. 539-61.

Bucklin, L.P. and Sengupta, S. (1993), “Organizing successful co-marketing alliances”, Journal ofMarketing, Vol. 57 No. 2, pp. 32-46.

Burgers, W.P., Hill, C.W.L. and Kim, W.C. (1993), “A theory of global strategic alliances:the case of the global auto industry”, Strategic Management Journal, Vol. 14 No. 6,pp. 419-32.


alliances

123

Butler, C. (2007), “Cross-border strategic alliances: co-operation between firms from theUnited Arab Emirates and international partners”, Strategic Change, Vol. 16, Publishedonline in Wiley InterScience, available at: www.interscience.wiley.com

Chang, S.C., Chen, S.S. and Lai, J.H. (2008), “The wealth effect of Japanese-US strategic alliances”,Financial Management, Summer, pp. 271-301.

Chaturvedi, S. and Gaur, A.S. (2010), “A dynamic model of trust and commitment developmentin strategic alliances”, IIMB Management Review, September 2009.

Chen, T.Y. and Liu, H.H. (2009), “The influence of partner characteristics and relationship capitalon the performance of international strategic alliances”, Journal of Relationship Marketing,Vol. 8, pp. 231-52.

Cote, J. and Latham, C.K. (2006), “Trust and commitment: intangible drivers of inter organizationalperformance”, Advances in Management Accounting, Vol. 15, pp. 293-325.

Cullen, J.B., Johnson, J.L. and Sakano, T. (2000), “Success through commitment and trust:the soft side of strategic alliance management”, Journal of World Business, Vol. 35,pp. 223-40.

Cumming, L.L. and Bromiley, P. (1996), “The organizational trust inventory (OTI): developmentand validation”, in Kramer, R.M. and Tyler, T.R. (Eds), Trust in Organizations: Frontiersof Theory and Research, Sage, Thousand Oaks, CA, pp. 302-30.

Das, T.K. (2005), “Deceitful behaviors of alliance partners: potential and prevention”,Management Decision, Vol. 43, pp. 706-19.

Das, T.K. and Teng, B. (1998), “Between trust and control: developing confidence inpartners cooperation in alliance”, Academy of Management Review, Vol. 23 No. 3,pp. 491-512.

Dyer, J.H. (1996), “Specialized supplier networks as a source of competitive advantage:evidence from the auto industry”, Strategic Management Journal, Vol. 17 No. 4,pp. 271-91.

Dyer, J.H. and Chu, W. (2003), “The role of trustworthiness in reducing transaction costs andimproving performance: empirical evidence from United States, Japan, and Korea”,Organization Science, Vol. 14 No. 1, pp. 57-68.

Elmuti, D. and Kathawala, Y. (2001), “An overview of strategic alliances”, Management Decision,Vol. 39 No. 3, pp. 205-18.

Gulati, R. (1995), “Does familiarity breed trust? The implications for repeated tiesfor contractual choice in alliances”, Academy of Management Journal, Vol. 38 No. 1,pp. 85-112.

Gulati, R. (1999), “Network location and learning: the influence of network resources andfirm capabilities on alliance formation”, Strategic Management Journal, Vol. 20,pp. 397-420.

Hamilton, D.P. (1996), “Murdoch joins growing held in Japanese TV”, Asian Wall Street Journal,13 June.

Hitt, M.A., Ireland, R.D., Camp, S.M. and Sexton, D.L. (2001), “Strategic entrepreneurship:entrepreneurial strategies for wealth creation”, Strategic Management Journal, Vol. 22,pp. 479-91 (Special Issue).

Hitt, M.A., Dacin, M.T., Levitas, E., Arregle, J. and Borza, A. (2000), “Partner selection inemerging and developed market contexts: resource-based and organizational learningperspectives”, Academy of Management Journal, Vol. 43, pp. 449-67.

BIJ20,1

124

Hodder, I. (1998), “The interpretation of documents and material culture”, in Denzin, N. andLincoln, Y.S. (Eds), Collecting and Interpreting Qualitative Materials, Sage, ThousandsOaks, CA.

Hofstede, G. (1980), Culture’s Consequences: International Differences in Work-Related Values,Sage, Thousands Oaks, CA.

Hofstede, G. (1992), Cultures and Organizations: Software of the Mind, McGraw-Hill, London.

Inkpen, A.C. (2005), “Learning through alliances: general motors and NUMMI”, CaliforniaManagement Review, Vol. 47 No. 4, pp. 114-36.

Inkpen, A.C. and Currall, S.C. (1997), “International joint venture trust”, in Beamish, P.W. andKilling, J.P. (Eds), Cooperative Strategies, Lexington Press, San Francisco, CA,pp. 308-34.

Ireland, R.D., Hitt, M.A. and Vaidyanath, D. (2002), “Alliance management as a source ofcompetitive advantage”, Journal of Management, Vol. 28, pp. 413-46.

Jarillo, J.C. (1988), “On strategic networks”, Strategic Management Journal, Vol. 9, pp. 31-41.

Kale, P. and Singh, H. (2009), “Managing strategic alliances: what do we know now, and where dowe go from here?”, Academy of Management Perspectives, August, pp. 45-62.

Kim, M.S. and Ahn, J.H. (2006), “Comparison of trust sources of an online market-maker in thee-marketplace: buyer’s and seller’s perspectives”, Journal of Computer InformationSystems, Vol. 47 No. 1, pp. 84-94.

Kogut, B. (1988), “Joint ventures: theoretical and empirical perspectives”, Strategic ManagementJournal, Vol. 9, pp. 319-32.

Krishnan, R., Martin, X. and Noorderhaven, N.G. (2006), “When does trust matter to allianceperformance?”, Academy of Management Journal, Vol. 49 No. 5, pp. 894-917.

Kroeber, A. and Kluckohn, C. (1981), “Culture”, Choice and Action: An Introduction to Ethics,Macmillan, New York, NY.

Kvale, S. (1996), Interviews: An Introduction to Qualitative Research Interviewing, Sage, NewburyPark, CA.

Lane, P.J., Salk, J.E. and Lyles, M.A. (2001), “Absorptive capacity, learning, and performancein international joint ventures”, Strategic Management Journal, Vol. 22 No. 12,pp. 1139-61.

Larson, A. (1992), “Network dyads in entrepreneurial settings: a study of the governance ofexchange relationships”, Administrative Science Quarterly, Vol. 37, pp. 76-104.

Lee, H.W. and Ding, J.H. (2010), “The effects of e-business on the performance of strategicalliances”, Total Quality Management, Vol. 21 No. 7, pp. 707-24.

Lim, S., Sukho, L., Hur, Y. and Koh, C. (2010), “Role of trust in adoption of online auto insurance”,Journal of Computer Information Systems, Winter.

Lin, X. and Wang, C.L. (2008), “Enforcement and performance: the role of ownership,legalism and trust in international joint ventures”, Journal of World Buisness, Vol. 43,pp. 340-51.

Luhmann, N. (1979), Trust and Power, Wiley, Chischester.

Lui, S.S. and Ngo, H.Y. (2004), “The role of trust and contractual safeguards on cooperation innon-equity alliances”, Journal of Management, Vol. 30 No. 4, pp. 471-85.

Lyles, M.A. and Salk, J.E. (1996), “Knowledge acquisition from foreign parents in internationaljoint ventures: an empirical examination in the Hungarian context”, Journal ofInternational Business Studies, Vol. 27, pp. 877-904.


alliances

125

Mohr, J. and Spekman, R. (1994), “Characteristics of partnership success: partnership attributes,communication behaviour, and conflict resolution techniques”, Strategic ManagementJournal, Vol. 15 No. 2, pp. 135-52.

Morgan, R. and Hunt, S. (1994), “The commitment-trust theory of relationship marketing”, TheJournal of Marketing, Vol. 58 No. 3, pp. 22-38.

Nielsen, B.B. (2003), “Determining international strategic alliance performance”, Phd series,Department of International Economics and Management, Copenhagen Business School(Denmark).

Nielsen, B.B. and Nielsen, S. (2009), “Learning and innovation in international strategic alliances:an empirical test of the role of trust and tacitness”, Journal of Management Studies, Vol. 46No. 6, pp. 1031-56.

Nooteboom, B. (2002), Trust: Forms, Foundation, Functions, Failures and Figures, ElgarPublishing, Cheltenham.

Parkhe, A. (1993), “Strategic alliance structuring: a game theoretic and transaction costexamination of inter-firm cooperation”, Academy of Management Journal, Vol. 36,pp. 794-829.

Paul, D.L. and McDaniel, R.R. (2004), “A field study of the effect of international trust of virtualcollaborative relationship performance”, MIS Quarterly, Vol. 28 No. 2, pp. 183-227.

Ranjan, J. and Bhatnagar, V. (2010), “A framework for analytical CRM: a data miningperspective”, International Journal of Business Excellence, Vol. 3 No. 1, pp. 1-18.

Rice, G. (2003), “The challenge of creativity and culture: a framework for analysis withapplication to Arabian Gulf firms”, International Business Review, Vol. 12, pp. 461-77.

Ring, P.S. and Van de Ven, A.H. (1994), “Structuring cooperative relationships betweenorganizations”, Strategic Management Journal, Vol. 13 No. 7, pp. 483-98.

Robson, M.J., Katsikeas, C.S. and Bello, D.C. (2008), “Drivers and performance outcomes of trustin international strategic alliances: the role of organizational complexity”, OrganizationScience, Vol. 19 No. 4, pp. 647-65.

Robson, M.J., Leonidou, L.C. and Katsikeas, C.S. (2002), “Factors influencing international jointventure performance: theoretical perspectives, assessment, and future directions”,Management International Review, Vol. 42 No. 4, pp. 385-418.

Rousseau, D.M., Sitkin, S.B., Burt, R.S. and Camerer, C. (1998), “Not so different after all:a cross-discipline view of trust”,Academy ofManagement Review, Vol. 23 No. 3, pp. 393-404.

Sako, M. (1998), “Does trust improves business performance?”, in Lane, C. and Bachmann, R. (Eds),Trust Within and Between Organization, Oxford University Press, Oxford.

Sarkar, M., Echambadi, R. and Jeffrey, S. (2001), “Alliance entrepreneurship and firm marketperformance”, Strategic Management, Vol. 22 No. 6, pp. 701-11.

Schreiner, M., Kale, P. and Corsten, D. (2009), “What really is alliance management capability andhow does it impact alliance outcomes and success?”, Strategic Management Journal, Vol. 30No. 13, pp. 1395-419.

Sherman, S. (1994), “Are strategic alliances working?”, Fortune, Vol. 21, pp. 77-8.

Stafford, E.R. (1995), “Opportunities for alliance research in marketing: an argument for amulti-method case research strategy”, Am. Mark. Assoc., pp. 508-15.

Strauss, A. and Corbin, J. (1998), Basics of Qualitative Research: Techniques and Procedures forDeveloping Grounded Theory, 2nd ed., Sage, Newbury Park, CA.

Sulej, J.C. (1998), “UK international joint ventures in technology and innovation: an analysis ofpatterns of activity and distribution”, European Business Review, Vol. 98 No. 1, pp. 56-66.

BIJ20,1

126

Teeqen, H.J. and Doh, J.P. (2002), “US-Mexican alliance negotiations: impact of culture onauthority, trust, and performance”, Thunderbird International Business Review, Vol. 44No. 6, pp. 749-75.

UAE Yearbook (2005), Ministry of Information and Culture, Dubai.

UAE Yearbook (2006), Ministry of Information and Culture, Dubai.

Van de Ven, A.H. (1976), “On the nature, formation, and maintenance of relations amongorganizations”, Academy of Management Review, Vol. 1, October, pp. 24-36.

Varadarajan, P.R. and Cunningham, M.H. (1995), “Strategic alliances: a synthesisof conceptual foundations”, Journal of the Academy of Marketing Science, Vol. 23 No. 4,p. 282.

Walsham, G. (1995), “Interpretative case studies in IS research: nature and methods”, EuropeanJournal of Information Systems, Vol. 4 No. 2, pp. 74-81.

Wathne, K.H. and Heidi, J.B. (2000), “Opportunism in interfirm relationships: forms, outcomes,and solutions”, Journal of Marketing, Vol. 64, pp. 36-51.

Whipple, J.M. and Frankel, R. (1998), “The alliance formation process”, International Food andAgribusiness Management Review, Vol. 1 No. 3, pp. 335-57.

Williamson, O.E. (1983), “Credible commitments: using hostages to support exchange”,American Economic Review, Vol. 73, pp. 519-40.

Williamson, O.E. (1985), The Economic Institution of Capitalism, The Free Press, New York, NY.

Wittmann, C., Hunt, S. and Arnett, D. (2009), “Explaining alliance success: competences,resources, relational factors, and resource-advantage theory”, Industrial MarketingManagement, Vol. 38 No. 7, p. 743.

Yin, R. (1989), Case Study Research: Design and Methods, Sage, Newbury Park, CA.

Yin, R.K. (1998), “The abridged version of case study research”, in Bickman, L. and Rog, D.J. (Eds),Handbook of Applied Social Research, Sage, Thousand Oaks, CA, pp. 229-59.

Zaheer, A., McEvily, B. and Perrone, V. (1998), “Does trust matter? Exploring the effects ofinterorganizational and interpersonal trust on performance”, Organization Science, Vol. 9No. 2, pp. 141-59.

Zand, D.E. (1972), “Trust and managerial problem solving”, Administrative Science Quarterly,Vol. 17, pp. 229-39.

Further reading

Eisenhardt, K.M. (1989), “Building theory from case study research”, Academy of ManagementReview, Vol. 14 No. 4, pp. 532-50.

About the authorsDr Yasir Yasin Fadol is an Assistant Professor of Management at the College of BusinessAdministration, University of Dubai, UAE. He has also been actively involved in executivetraining and business consultancy. He has been working with several UAE and internationalinstitutions such as Morgan Institution in conducting SHRM; PHR and SPHR certification. He isalso working with the National Research Foundation (NRF) as a team member of a major projectto study strategic planning practices in the UAE public sector. His research interests are ininternational business, strategic management, organizational behaviour, HRM, andcross-cultural management. He has authored and co-authored a number of research articlesthat have appeared in leading international refereed journals.

Dr Maqsood Ahmad Sandhu has an excellent record of research and teaching as well asadministrative experience as the Head of the Department of Business Administration at the College


alliances

127

of Business and Economics (FBE) at United Arab Emirates University. He has collaborated not onlyin curriculum innovation and development, but also in joint research projects and outreachactivities. Having worked for several years as a manager in a multinational corporation in Finland,he retains close links with industry and academia. His teaching and research experience span over16 years from graduates to undergraduate and doctoral students at the University of Vaasa (UV),Swedish School of Economics (Hanken), Vaasa University of Applied Sciences (PUV),Oulu Business School (OBS), University of Maryland University College (UMUC) and sinceAugust 2008 at the United Arab Emirates University (UAEU). He has published (includingaccepted manuscripts) over 26 articles in high quality international journals and about 60 researchpapers in international conference proceedings. He has been very active in initiating collaborativepartnerships amongst academia, industry and policy-making bodies. He has supervisedseveral Master’s theses and has had the privilege of reviewing and supervising some Doctoraltheses. He is interested in doing research in international business and entrepreneurship.Maqsood Ahmad Sandhu is the corresponding author and can be contacted at: [email protected]

BIJ20,1

128

To purchase reprints of this article please e-mail: [email protected] visit our web site for further details: www.emeraldinsight.com/reprints

the role of trust on the performance of strategic alliances in a cross‐cultural context

Documents