Balancing risk and trust for strategic alliance formation decisions

Abstract

PurposeTrust entails the assumption of risk by the trustor to the extent that the trustee may act in a manner unaligned with the trustor's interests. Before a strategic alliance is formed, each firm formulates a subjective assessment regarding whether the other firm will behave in a trustworthy manner and not act opportunistically. To inform this partner analysis and selection process, the authors leverage the concept of value of information to quantify the benefit of information gathering activities on the trustworthiness of a potential trustee.Design/methodology/approachIn this paper, the authors develop a decision model that explicitly operationalizes trust as the subjective probability that a trustee will act in a trustworthy manner. The authors integrate the concept of value of information related to information gathering activities, which would inform a trustor about a trustee's trustworthiness.FindingsTrust inherently involves some degree of risk, and the authors find that there is practical value in carrying out information gathering activities to facilitate the partner analysis process. The authors present a list of trustworthiness indicators, along with a scoring sheet, to facilitate learning more about a potential strategic alliance partner.Originality/valueThe need for a quantitative model that can support risk-based strategic alliance decision-making for partner analysis represents a research gap in the literature. The modeling of strategic alliance partner analysis decisions from a value of information (VOI) perspective adds a contribution to the trust literature.

Security screening metrics for information‐sharing partnerships

“…The managerial implications are as follows. The implications can be separated into the internal characteristics of the partner firms and the external actions taken to incentivize trustworthy behavior (Collier et al., 2022). Regarding the internal characteristics, partner firms interested in collaborating do not have clear information about the privacy policies and practices of their potential partners.…”

“…Performance risk involves a lack of competence in carrying out a particular task that is important to alliance objectives (Das & Teng, 2001). Such trust decisions are risk-based (Collier et al, 2022), grounded on future expectations about how the partner will behave (Das & Teng, 2004). As the likelihood of untrustworthy behavior increases, whether in the form of relational risk or performance risk, the greater the risk incurred by the firm entering into the partnership (Inkpen & Currall, 2004).…”

“…Certain attributes, such as communication, information sharing, shared values, and competence in a certain domain, may serve as proxies for the careful handling of confidential information (Paluri & Michal, 2020). Collier et al (2022) provided a checklist with potential trustworthiness indicators for companies to evaluate before entering into a strategic alliance with another firm. The metrics for handling sensitive data could be further indicators of overall trustworthiness.…”

Dyadic, network and ecosystem alliances: systematic literature review and research agenda

“…, 2004). Leading authors have covered areas such as structure of alliance (Kale and Singh, 2009); partner selection (Bierly and Gallagher, 2007), governance and risk (Collier et al. , 2021; de Man and Roijakkers, 2009), knowledge and other resources, alliance management (Hansen et al.…”

“…Consequently there has been increased interest from academia in studying alliances and growth in articles on the subject (Brass et al, 2004). Leading authors have covered areas such as structure of alliance (Kale and Singh, 2009); partner selection (Bierly and Gallagher, 2007), governance and risk (Collier et al, 2021;de Man and Roijakkers, 2009), Dyadic, network and ecosystem alliances…”