Abstract for: Interdependent Governance Mechanisms and Performance Feedback in Strategic Alliances

We develop a more integrative view on alliance governance dynamics, using a system dynamics approach. We suggest that studying dynamic interdependencies between formal mechanisms and trust as well as understanding related performance implications requires a better understanding of the interplay of (1) behavioral dynamics related to perceptions of opportunism and missed performance expectations, and (2) learning outcomes related to the use of formal governance, for example monitoring. This allows building up discernment capabilities, which help distinguishing between opportunistic behavior and external factors when performance shortfalls occur. Due to this learning effect, alliance partners can avoid overreactions in governance adaptations and eventually achieve trust and performance gains. Furthermore, our study shows how the debate on alliance governance dynamics can fruitfully benefit from an introduction of simulation techniques.