Money Can't Buy Me Trust: Evidence of Exogenous Influences Crowding out Process‐based Trust in Alliances
| Date | 01 January 2017 |
| DOI | http://doi.org/10.1111/1467-8551.12189 |
| Published date | 01 January 2017 |
British Journal of Management, Vol. 28, 135–153 (2017)
DOI: 10.1111/1467-8551.12189
Money Can’t Buy Me Trust: Evidence
of Exogenous Influences Crowding out
Process-based Trust in Alliances
Jeppe Christoersen and Matthew J. Robson1
Copenhagen Business School, Solbjerg Plads 3, DK-2000, Frederiksberg,Denmark and 1Leeds University
Business School, University of Leeds, Maurice Keyworth Building, Leeds, LS2 9JT, UK
Corresponding author email: mjro@lubs.leeds.ac.uk
In this study we investigate how external interventions shape process-based trust devel-
opment in cross-border alliances. Specifically, we exploit a unique opportunity to observe
the magnitude of external intervention throughpublicly available amounts of money given
by the foreign, developed country partners’ government to support alliances with local,
developing country partners. Applying motivation crowding theory to trust processes, we
develop theoreticallogic explaining how and under what conditions such third-party finan-
cial support negatively aects the local partner’s trust. Our assertions were tested using
archival and survey data on 105 international strategic alliances. We find that amount
of support is detrimental to local partner trust but that the negative relationship can be
dampened via interaction between partners and agreement throughoutthese interactions.
This shows a need for partners to think through trust development consequences of ex-
ternal interventions during the setting up of their alliances, in order to be able to act in a
manner which promotes trust.
Introduction
The proliferation of international strategic al-
liances (ISAs) has generated much debate. ISAs
are relatively enduring cooperative arrangements
that use resources of independent firms, based in
dierent countries, for the joint accomplishment
of individual objectives (Robson, Katsikeas and
Bello, 2008). Alliances oer potential benefits to
firms but often fail to meet set objectives (Lavie,
Haunschild and Khanna, 2012). In response,
a major stream of work on ISA performance
has emerged. Recent reviews show not only that
trust is the performance driver most often tested
(Christoersen, 2013), but also that it is reliablein
its influence (Krishnan, Geyskens and Steenkamp,
2015). Trust improves alliance outcomes as it low-
ers transaction costs, leads to faster decisions and
facilitates investmentin relationship-specific assets
(Heidl, Steensma and Phelps, 2014; Thorgren and
Wincent, 2011).
The thrust of trust development research is
guided by the two opposing logics of economics
and embeddedness (Lado, Dant and Tekleab, 2008;
Lui and Ngo, 2012). First, trust may be produced
through alignment of partners’ economic incen-
tives. Firms may behave in a trustworthy man-
ner due to credible commitments they have made
(Katsikeas, Skarmeas and Bello, 2009). Second,
the embeddedness view eschews cost–benefit cal-
culations in favour of non-calculative aspects of ex-
change. When transactions are embedded within
social relationships, trust emerges from the fre-
quency and intensity of interactions between the
partner firms’ personnel (McEvily and Marcus,
2005).
Dyer and Chu’s (2000) seminal study on trust
development within international automaker–
supplier relationships emphasized process-based
© 2016 British Academy of Management. Published by John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4
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136 J. Christoersen and M. J. Robson
trust as a neglected, third way to generate trust.
Process-based trust development concerns institu-
tionalized processes for fairly and reliably dealing
with a partner firm (Zaheer, McEvily and Perrone,
1998; Zucker, 1986). Dyer and Chu (2000) iden-
tified that processes for selecting partners and re-
sponding to their problems were better predictors
of trustworthiness than economic and embedded-
ness drivers. Nonetheless, these authors’ later ret-
rospective (2011, p. 34) suggested: ‘ ...wehavenot
seen much follow-up research . .. on our notion of
process-based trust’.
Research on process-based trust development
has argued that alliance partners should deploy
stable and enduring, institutionalized exchange
processes (Zaheer, McEvily and Perrone, 1998).
Indeed, experienced partners often formalize pro-
cedural frameworks and respective obligations in
their alliances (Mayer and Teece, 2008). Exter-
nal intervention, however, can aect partner in-
teractions (Abdi and Aulakh, 2012; Hitt et al.,
2004). For instance, partner firms’ cross-border al-
liance processes may be rendered less reliable and
more uncertain through state regulator interven-
tions (Merchant and Schendel, 2000). Similarly,
high-technology alliances usually involve subcon-
tractors and other external parties (Tiwana, 2008),
whose work might shape what the main partners
deem to be fair and reliable processes for inter-
actions. Within systems involving interventions by
third parties external to the ISA partnership, trust
based on fair processes is more dicult to deploy.
The evident gap in knowledge concerning such
process complexities prompts our study.
Our study contributes to the alliance manage-
ment literature in three ways. First, while studies
on process-based trust have established its critical-
ity for eective cross-border alliances (Dyer and
Chu, 2011), they are silent as to the deleterious ef-
fect of external intervention on such trust building.
This is the first study to consider how external in-
tervention undermines activities required to build
generalized expectations and predictions concern-
ing trust in ISAs.We exploit a novel opportunity to
observe external intervention magnitude through
publicly available amounts of money given to
support alliances, and use this opportunity to
examine how and under which conditions the spe-
cific influence alters trust perceptions. We examine
a situation in which the start-up of ISAs between
foreign (developed country) and local (developing
country) partners is supported financially in a
development aid programme by the foreign firm’s
government via reimbursements of some of the
costs associated with particular activities.
Second, prior research (e.g. Hu and Chen, 1996)
has revealed circumstances wherein government
economic incentives do not yield superior alliance
outcomes. Our study goes one step further in the-
orizing that increasing amounts of support can be
detrimental to trust development. Trust processes
involve incremental activities building toward
long-term exchange outcomes. By extending mo-
tivation crowding theory (e.g. Deci, Koestner and
Ryan, 1999) to alliances, we argue that financial
support crowds out the motivation to engage in
such processes. As per theory suggesting trust
expectations evolve through mutually satisfying
interactions (Rempel, Holmes and Zanna, 1985),
we also assert that the crowding out eect can be
dampened through interaction of the partners in
early strategic processes of the alliance and their
level of agreement during such interaction.
Third, our approach to theorizing trust demon-
strates how researchers can respond to Zhong
et al.’s (2014) call for depth and specificity in
hypotheses on interorganizational trust develop-
ment. We do so by recognizing that organizations
cooperate via managerial boundary spanners and
invoking psychological literature on motivation
crowdingand trust. We present results specific to fi-
nancial support to alliances and local partner trust
but forcefully demonstrate a more general point
being that process-based trust development can be
disrupted. We identify a pertinent external inter-
vention −the inflow of financial support −which
most rational managers would welcome, and show
that the complexities of process-based trust can in
fact make it detrimental.
Theory and hypotheses
Trust pro cesse s
As trust has been addressed within dierent
disciplines, including economics, psychology and
sociology (Rousseau et al., 1998), it is not surpris-
ing that dierent conceptions of the phenomenon
have been advanced. However, ‘nearly all concep-
tions begin with the recognition that, whatever
else it may encompass, trust is fundamentally
a psychological state characterized by several
components, the most important of which is some
sort of positive expectation regarding others’
© 2016 British Academy of Management.
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