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  • Subject area(s): Marketing
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  • Published on: 14th September 2019
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The influence of trust on the instability of International Joint Ventures

The international form of long-term strategic cooperation allows organizations to access the partners' complimentary resources and to develop their capabilities across borders (Deitz et al., 2010). One form of long-term cooperation is the international joint venture. Previous research in the area of international joint ventures (IJVs) has tended to emphasize structural and partner selection issues, often in a way that harms the relationship process which effectuates instability (Deitz et al., 2010). It fails, however, to provide a consistent definition of the concept instability and shows limited insight into factors effectuating instability.

Following Inkpen and Beamish (1997), instability, as a result of a negative relation process, can be defined as a significant change in the partner relationship development, that one or both partners view as early and unintended. Instability, however, can also be defined as a recurrent shift of control of the IJVs operational and strategic management between the parent firms (Yan, 1998). This paper follows the definition of Inkpen and Beamish (1997) as it precisely describes the change from stability to instability at the level of significant change while the latter approach allows for a wide interpretation of recurrent shift of control.

A factor influencing the attitudinal commitment, and thus the JV instability, is trust (Yan, 1999; Deitz et al., 2010). Trust can be defined as a generalized expectation regarding an exchange partner's reliability and integrity (Morgan & Hunt, 1994). Complementary to this definition, Mayer, Davis, and Schoorman (1995) focus more on the reliability aspect and define trust as the willingness of a party to rely on another party's actions in a situation involving risk and uncertainty (Mayer, Davis, & Schoorman, 1995). Combining the two, this paper defines trust as a generalized expectation regarding and exchange partner's reliability and integrity in a situation involving risk and uncertainty. Within previous research, time has not been taken into consideration when measuring trust. However, trust also is a developmental construct and can change over time (Ren et al., 2009).

Building trust has a negative influence to the alliance instability, as trust enables partners to work more cooperatively in order to resolve conflict and address changing priorities (Madhok, 1995; Deitz et al, 2010). When cooperation between partners decreases, willingness to stay within- and willingness to commit to an alliance would decrease (Das & Rahman, 2010). Therefore, it can be said that cooperation between partners reduces the level of the alliance instability.

References

Das, T. K., and Rahman, N. 2010. Determinants of partner opportunism in strategic alliances: a conceptual framework. Journal of Business and Psychology, 25(1): 55-74

Deitz, G. D., Tokman, M., Richey, R. G., & Morgan, R. M. 2010. Joint venture stability and cooperation: Direct, indirect and contingent effects of resource complementarity and trust. Industrial Marketing Management, 39(5): 862-873.

Inkpen, A. C., & Beamish, P. W. 1997. Knowledge, bargaining power and international joint venture instability. Academy of Management Review, 22: 177-202.

Madhok, A. 1995. Revisiting multinational firms' tolerance for joint ventures: a trust-

based approach. Journal of International Business Studies, 26: 117−137.

Mayer, R. C., Davis, H. J., & Schoorman, F. D. 1995. An integrative model of organizational trust. Academy of Management Review, 20: 709-734.

Morgan, R. M., & Hunt, S. D. 1994. The commitment-trust theory of relationship marketing. Journal of Marketing, 58(3): 20.

Yan, A. 1998. Structural Stability and Reconfiguration of International Joint Ventures. Journal Of International Business Studies, 29(4): 773-795.

Kim Schoenmakers - S3741354

Amber van Spronsen - S2732084

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