Understanding the Processes Underlying Inter‐firm Collaboration: Mutual Forbearance and the Principle of Congruity
| Date | 01 January 2021 |
| DOI | http://doi.org/10.1111/1467-8551.12463 |
| Published date | 01 January 2021 |
| Author | Claudio De Mattos,Peter J. Buckley |
British Journal of Management, Vol. 32, 20–39 (2021)
DOI: 10.1111/1467-8551.12463
Understanding the Processes Underlying
Inter-rm Collaboration: Mutual
Forbearance and the Principle of Congruity
Peter J. Buckley 1and Claudio De Mattos 2
1Centre for International Business, Leeds University Business School, University of Leeds, Maurice Keyworth
Building, Leeds, LS2 9JT, UK, and 2University of Hudderseld, Queensgate, Hudderseld, HD1 3DH, UK
Corresponding author email: c.demattos@hud.ac.uk
This paper makes a theoretical innovationby integrating two key principles – mutual for-
bearance and the principle of congruity – into one general process model. It examines
the micro-mechanisms underlying the formation of a mutual-forbearance agreement and
explicates the roleof time and of individual actions. We further understanding of the pro-
cess of cooperation building by drawing a parallel between early stages of the formation
process of mutual forbearance and cooperation, and argue that mutual forbearance may,
under certain conditions, lead to long-term cooperation or, if mismanaged, completely
smother any chances of it. A prospective agreement may be put at risk when potential
contributions are evaluated differently by each party and no action to mitigate the conse-
quences is taken; even moreso in a mutual-forbearance context when the parties can only
observe their counterparts’ actions through the market.Our model takes into account the
micro-mechanisms associated with the time between the actions of one entity/individual
(e.g. the top manager) and the reaction of another entity/individual, the boundary condi-
tions of the background to those actions and the alternative actions available during this
time. Propositions for further exploration and implications aredrawn.
Introduction
The critical issue in establishing and managing an
alliance is to create a structure that fosters trust
and builds condence in the alliance, such that all
parties to the alliance bring their best efforts and
resources into the alliance. A successful alliance is
based on relationships that foster condence in all
the contracting parties, so that all are willing to in-
vest in the alliance. The creation of relationships
based on mutual forbearance and on the congruity
of actions with other parties’ frame of reference
(the principle of congruity) is critical to the under-
standing of alliance formation and operation. This
conceptual paper presents a process model that
combines the concept of mutual forbearance with
the principle of congruity in the formation of a
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cooperative agreement such as a strategic alliance,
thus contributing to the cooperation literature.
Mutual forbearance is dened as the ‘situation
in which all parties forbear on a reciprocal basis’
(Bernheim and Whinston, 1990; Buckley and Cas-
son, 1988, p. 35). We develop a time-based model
for the evolution of mutual forbearance. Mutual
forbearance is not full cooperation (Danese, 2011;
Parkhe, 1993b, 1993c) as it relies on implicit or
indirect interactions (cf. Ames, Weber and Zou,
2012). Mutual forbearance may lead to coopera-
tion under certain conditions. It also diminishes
rivalry (Ryu, Reuer and Brush, 2020; Theeke and
Lee, 2017).
Mutual forbearance is a pre-cooperation mech-
anism. Prospective cooperation partners tend to
evaluate their own potential contributions to the
venture as well as those of their partners differently
(Buckley, Cross and De Mattos, 2015; De Mattos
and Salciuviene, 2019; Stopford and Wells, 1972).
© 2021 The Authors.British Journal of Management published by John Wiley & Sons Ltd on behalf of British Academy
of Management. Published by John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main
Street, Malden, MA, 02148, USA.
This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs Li-
cense, which permits use and distribution in any medium, provided the original work is properly cited, the use is non-
commercial and no modications or adaptations are made.
Inter-rm Collaboration and Mutual Forbearance 21
When they take action towards the other party
based on their evaluations, cooperation may be
jeopardized. The mutual-forbearance process al-
lows the parties to maintain (as a minimum) a neu-
tral negotiation atmosphere, and progress towards
cooperation (Luo, 2001). In the context of in-
ternational cooperation, differences between cul-
tures may become a hindrance (Adair, Weingart
and Brett, 2007; Lee, Yang and Graham, 2006). A
breakdown of interactions is more likely between
parties from differentcultures (Adler and Graham,
1989; Liu et al., 2012a; Shenkar,Luo and Yeheskel,
2008). In interactions between two or more cul-
tures, the effectivenessof mutual forbearance lead-
ing towards inter-rm cooperationis inuenced by
the amount of time needed for the consecutive acts
of forbearance to take place, and the perceived
equivalence (Ring and Vandeven, 1994) of acts of
forbearance.This study sheds light on these micro-
mechanisms, taking an individualor ‘top manager’
perspective.
Mutual forbearance is used as a strategyby rms
targeting several markets concurrently, adopting
multi-market strategies (Gimeno, 1999; Golden
and Ma, 2003; Kocak and Ozcan, 2013). Mutual-
forbearance practices are an integral part of the
strategic portfolio of multinational corporations.
Cases of mutual forbearance have been identi-
ed across a number of sectors, including airlines
(Ciliberto and Williams,2014; Evans and Kessides,
1994; Jayachandran, Gimeno and Varadarajan,
1999; Prince and Simon, 2009; Van Reeven and
Pennings, 2016; Yu, Subramaniam and Cannella,
2009), telecommunications (Parker and Roller,
1997), banking and nancial markets (Baum,
Bowers and Mohanram, 2016; Bowers et al., 2014;
Heggestad and Rhoades, 1978; Martinez, 1990)
and hotels (Fernandez and Marin, 1998; Ingram
and Baum, 1997; Kalnins, 2004). Mutual forbear-
ance has been examined through different theo-
retical lenses, including economics (Ciliberto and
Williams, 2014; Evans and Kessides, 1994), strat-
egy and competitive dynamics (Chen and Miller,
1994; Gimeno, 1999), marketing (Jayachandran,
Gimeno and Varadarajan, 1999; Kang, Bayus and
Balasubramanian, 2010; Shankar,1999) and game
theory (Arend and Seale, 2005; Seale, Arend and
Phelan, 2006). Most studies are at the rm (Baum
and Korn, 1996, 1999) or industry/market level
(Feinberg, 1984), with few studies atthe individual
or managerial level (Baum, Bowers and Mohan-
ram, 2016; Bowers et al., 2014). Although mutual
forbearance is a well-established phenomenon,
studies have not fully considered the micro-
mechanisms underlying mutual forbearance as an
antecedent of a cooperative venture-formation
process, nor have they considered what is known
about the micro-mechanisms of the cooperative
venture-formation process to explain mutual for-
bearance. Literature investigating the process of
mutual forbearance at the individual or top man-
ager level is scarce.Moreover, few studies of coop-
erative agreementsare at the individual level. Most
work examines managerial characteristics, includ-
ing trust-related studies (Bhattacharya, Devinney
and Pillutla, 1998; Fulmer and Gelfand, 2012;
Jones and George, 1998; Kim and Parkhe, 2009),
game theory studies (Rao and Schmidt, 1998) and
negotiation process studies (Chertkoff and Esser,
1976; Huffmeier et al., 2014; Lander and Kooning,
2013; Walters, Stuhlmacher and Meyer, 1998).
Theroleoftimeintheformationprocessof
mutual-forbearance agreements has not been in-
vestigated. Studies on the role of time in the con-
text of collaborations have considered different
perspectives,for instance, at the rm level the inu-
ence of time (e.g. the rm’s age) in the cooperation
process (Fernández-Olmos and Ramírez-Alesón,
2017) or in building trust (Vanneste, Puranam and
Kretschmer, 2014). Studies at the individual level
have not examined the subjective and often cul-
turally based perceptions of time (Adair, Weingart
and Brett, 2007; Mosakowski and Earley, 2000),
nor the role of common individual characteris-
tics in strengthening interpersonal ties that foster
collaboration (Dahlander and McFarland, 2013).
Despite the importance assigned to mutual for-
bearance as a viable inter-rm strategy, little is
understood about the pre-formation stage of
mutual-forbearance agreements when the parties
take tactical steps, signals are interpreted and re-
active tactics emerge.
Past literature distinguishes two types of re-
search procedures in investigating processes. We
propose a third process type. The rst type exam-
ines dynamic changes within variablesand the sec-
ond type focuses on the progression of a sequence
of events over time towards an expected outcome
(Das and Vande Ven, 2000; Langley,1999; Monge,
1990; Vande Ven and Huber,1990; Van de Ven and
Poole, 1995). The latter category offers a dynamic
perspective with due consideration to the succes-
sion of events, as well as the intensity and du-
ration of each (Das and Van de Ven, 2000). We
© 2021 The Authors.British Journal of Management published by JohnWiley & Sons Ltd on behalf of British
Academy of Management.
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