The role of trust in strategic alliances Essay Example | Topics and Well Written Essays - 2000 words

The role of trust in strategic alliances - Essay Example Added to this is the input from those who actually involved in this business, giving us a "real world" perspective. This essential input often gives us insider accounts of a contemporary world which we are not normally privileged to see. Before examining the role of trust in Strategic Alliances the notion of Strategic Alliance itself should be descried. In the literature there are different definitions proposed to describe the nature of Strategic Alliances. The first layer of literature (Austin 2000; Lewis 1999) used this term to describe joint ventures which do not involve equity investment by the partners and co-operative activities in areas other than manufacturing. In this case, Strategic Alliances are described as co-operative business activities between two or more firms, entered into for strategic reasons, involving the creation of a separate business entity under joint control and ownership. They can involve equal shareholdings. Strategic Alliances can "involve 'passive' partners who invest money in the operation without taking an active role in its management. alliances are "formed between firms with similar capabilities and capacities usually from industrialised countries; companies involved in strategic alliances are often direct competitors operating in the same product and geographic markets; they are usually entered into for reasons other than market access or the pooling of synergistic resources". While examining the role of trust in Strategic Alliances the research will be based on the second interpretation of the notion strategic alliance. The importance of trust In ordinary day-to-day practice most strategic alliances when making decisions tend to combine these different approaches, although frequently without being aware of the mental processes they are using. It is helpful to be aware of whether one is thinking in terms of 'acts' or 'ends', especially when analysing a dilemma. Theories proposed by Lewicki et al (1998) base a conception of right action on a conception of trust for duty's sake and mainly differ in so far as they specify two different sources of these duties. In order to make the correct moral choices, a strategic alliance simply has to understand what its trust concepts are and what correct rules exist which regulate the duties between the partners. When the parties of a strategic alliance follow their duty, it is behaving morally. When they fail to follow trust policy, it is immoral. It has also been acknowledged that strategic alliances have important obligations to a variety of stakeholders and not just the shareholders, and this should be reflected in their statements of trust (Bleeke, Ernst, 1995). To some extant trust within strategic alliances is based on the codes of ethics or a formal statement of what strategic alliances expects in the way of ethical behavior. It can serve as a guide for employee conduct to help employees determine what behaviors are acceptable. Since the purpose of trust is to let everyone know what is expected and what is