Toward An Integrative Perspective on Alliance Governance: Connecting Contract Design, Trust Dynamics, and Contract Application

Abstract

On the basis of a case study of two sequential alliances between the same firms, we develop a more integrative perspective on alliance governance, providing insights into the interactions between structural and relational aspects, both within and between transactions. In particular, we disentangle (1) how contracts with a similar degree but different nature of formalization (narrow versus broad) trigger different kinds of trust dynamics (negative versus positive) at both operational and managerial levels, (2) how trust dynamics and contract application (rigid versus flexible) coevolve over time, and (3) how relational dynamics in previous transactions influence the design of contracts in subsequent transactions.