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LITERATURE REVIEW & RELATED HYPOTHESES

    Three primary research streams have guided the current research.  First, the issue of trust is examined as a critical factor to consider in interorganizational arrangements.  Second, resource–based theory is applied to explain the improved performance that comes about from some alliances.  Third, a view of knowledge and learning is matched to the benefits of alliances.

Trust and Alliances
 
    Parkhe (1993) describes factors which build trust in interorganizational arrangements, and elaborates on the components of trust.  The potential value of building trust comes from the reduction of the costs of longer term exchange relationships and has been described in the context of transaction cost economics (Williamson, 1983; Ghoshal & Moran, 1996).

For the purpose of this paper, the most salient aspect is Parkhe’s (1993) introduction of the construct of opportunistic behavior as a factor to consider when analyzing the performance of alliances.  Opportunism is defined as the pursuit of self interest at the expense of cooperative endeavor.  But there are counter forces which work against potential opportunistic exploitation by one party or the other.  These are trust, reciprocity, and forbearance.  Positive trust makes such opportunism less likely to occur and encourages cooperation.  Reciprocity, a “tit–for–tat” retaliatory behavior, creates costs for opportunistic exploitation.  Forbearance involves declining to behave opportunistically due to trust or to perceived reciprocity costs.  Table One, a hypothetical 3x3 matrix of firm performance when similar firms cooperate, fail to cooperate, or behave opportunistically, illustrates the impact of opportunism and trust based cooperation.  The numbers assigned do not have an ordinal meaning, they are used to make comparisons.
 

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