Isolating Trust Outcomes from Exchange Relationships: Social Exchange and Learning Benefits of Prior Ties in Alliances

Abstract

Social exchange theory is a broad theory that has been used to explain trust as an outcome of various exchange relationships, and research commonly presumes trust exists between exchange partners that have prior relationships. In this paper, we contribute to research on social exchange theory by isolating the trust outcomes of interorganizational exchanges from other outcomes emphasized by learning and knowledge-based perspectives, and by specifying important boundary conditions for the emergence of trust in interorganizational exchanges. We make such a theoretical contribution within the domain of strategic alliances by investigating the effects of previous alliance agreements, or prior ties, between the partnering firms. We find that prior ties generally lead to learning about a partner's anticipated behavioral patterns, which helps a firm predict when self-interested behavior may occur and know how to interact with the partner during the coordination and execution of the alliance tasks. By contrast, it is evident that the kind of trust emphasized in social exchange theory is not generally rooted in prior ties and only emerges from prior relationships under certain conditions. We discuss the implications of these findings for research on social exchange theory.

Attacking your partners: Strategic alliances and competition between partners in product markets

“…Different from the traditional “rivalrous view” of competitive dynamics, which highlights a firm‐centric perspective (Chen & Miller, ), the “relational” view emphasizes the necessity of understanding others’ needs and preferences, as well the interdependencies between self and others, before deciding on competitive moves. Our research extends this line of argument by suggesting that firms can increase their “relational” savvy through learning in various forms of interactions, including alliances (Lioukas & Reuer, ), competitions (Tsai, Su, & Chen, ), and the transition between the two; all of these relationships may inform subsequent competitive encounters.…”

“…Second, repeated collaborations restrain a firm’s incentive to compete by improving the effectiveness of formal governance mechanisms, such as contracts, in preventing opportunistic learning in exploratory activities. Repeated ties help firms learn how to work together effectively by helping them discover their partners’ self‐serving behaviors and patterns, which in turn leads them to anticipate similar behavior in the future (Doz, ; Lioukas & Reuer, ). Firms normally incorporate such knowledge into improving their contracts and other defensive mechanisms to guard against competitive behaviors from the same partners (Mayer & Argyres, ).…”

The effects of prior co‐investments on the performance of venture capitalist syndicates: A relational agency perspective

“…Past research has explored various theoretical mechanisms linking prior collaborations with a focal partnership's performance. Studies in the entrepreneurial finance, networks, and strategic alliance literatures have argued that prior collaborations between partners improve current partnership performance by fostering relationship continuity, mutual learning, facilitating trust, and triggering the development of collaborative capabilities, norms, and routines (Coleman, ; Gulati, ; Lioukas & Reuer, ). Other studies, however, have suggested that there are limits to the benefits conferred by prior collaborations, which can lead to increasing resource redundancy, overconfidence, and inertia (Li & Rowley, ; Uzzi, ).…”

Strengthening graduate employee commitment through internal marketing in the South African retail banking industry

“…Therefore, the exchange secures outcomes for all parties involved that is founded on mutually rewarding transactions (Malmström and Johansson, 2016). Considering this, Lioukas and Reuer (2015) argue that the theory of social exchange is founded on the reciprocity belief. This belief is the departing argument for social exchange theory from an internal marketing perspective seeing that both the organisation and the employee has a responsibility to recompense for benefits received.…”