Abstract for: Trust Dynamics During Early Alliance Operation: The Role of Partner Engagement

Alliances offer valuable strategic options for firms. Yet, such arrangements are failure-prone because partner engagement may break down when coopetitive tension requires partners to navigate a delicate balance between collective with private interests. While in such situations high interpartner trust is considered essential for alliance success, paradoxically, the role and dynamics of trust are still not understood. Taking an endogenous view on trust we synthesize a dynamic model from the literature that captures how joint value results from the coevolution of interpartner trust and partner engagement. Our computational analysis reveals a trust tipping threshold separating regimes of alliance failure from success. We explore factors that affect this threshold and show how and under what conditions well-intended, seemingly rational private and collective strategies, aimed to build interpartner trust or manage openness yield subpar alliance results and hidden failure-risk. We discuss implications for management theory and practice.