Professional Documents
Culture Documents
in Joint Ventures
Steven C. Currall*
RtC:K UNtVHRSITY
Andrew C.
THUNDHRBIRD
This article examines issues of level
in the study of joint venture trust In
particular, we explain how international joint venture (IJV) trust can
be conceptualized and measured at
the person, group, and firm levels.
To do this, we (1) provide a definition of IJV trust applicable to persons, groups, and firms, (2) promote
alignment of levels of theory and
esearch ovor the past decades on international joint ventnres (IJVs) and
strategic alliances (e.g., Buckley and ("Casson, 1988; Inkpeu and Beamish, 1997;
Madhok, 1995; Yan and Gray, 1994) has
repeatedly argued Ihat mutual trust is
essential for succossful I|Vs. In thoir
.study of a failed IJV, Ariiio and de la
Torre (1998) concluded that, in tbe absfuico of a reservi! of trusi, IJVs that experience throats to stability often dissolve. As noted bv Child and Faulkner
'StiiV(;ii C;. Ouri'ail is tin; William N. and Stephanin Sick Proftis.sor of Eiilroprtmourship and
Associate Prelis.sor of Miiiiagomtint, Psyc:h(.)l(igy, and Statistics in the Jones Graduate School
of Maiiagonient al Rici; Lliiiversity.
**Andrew (i. tnk])(;n is l'r()tn.s.s()r of Managmnticit at ThuiHlerbird. His rts.sfsarch fbcustis on
various asp(!cls ot international straUigic alliaiic(!s .such as inler-partner trust, organizational
learning, and alliancn slahilily.
For helptul cuimnent.s ami SLiggoslions wo tliank participants in tin; Academy of Management
Thoory Duvidupmont Woiksliop and Iht; MESO Organization Sluditjs Group as well a.s David
Bi)W(in, C:hi^y(Mino Currall. I.on Ann Matossian, Karon Schnit'tz, Dong Schnler, t)uane Windsor
imd two anonymous revit^wors.
i. (IF l\'TRn.\A-ri()\'Ai.
479
Research on organizations has identified "level of theory" and "level of measuremont" as fundamental concepts
(e.g., Klein, Dansoreau, and Hall, 1994;
Kousseau, 1985),' "Level of theory" refers to the unit (person, group, or firm)
the researcher seeks to explain and about
which attributions and generalizations
aro mado. For example, if one examines
how trust botwoon IJV parent firms may
affect the iJV's finan[:ial performance,
then the unit of theory is the firm. Altornativoly, if tho focus is on trust as a fac-
480
In showing how organizational context shapesand is shaped bytho actions and porceptions of individuals,
multilevel research enriches our understanding of organizational life (Klein,
Tosi, and C:annella, 1999, p, 243). A multilevel approach contributes in two main
ways to research on IJV trust. Eirst, givon
the complox interpersonal, intergronp,
and interfirm dynamics typically found
in [jVs, it is likely that more precise research findings will come to light whon a
nndtilovol approach is applied to [JV
trust quostions. Second, clarity of moasuroment at the person, group, and firm
lovels facilitates more rigorous theory
to,sting. As Bacharach (1989) argued, tho
falsifiability of theories is dependent on
rigorous hypothesis testing, which, in
turn, is dependent on solid measures of
constructs.
LEVEL OE T H E O R Y AND LKVEL OF
MEASUREtVIKNT
STI^DIES
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Sitkin, Burt, and Camerer, 1998). We define 1)V trust as the decision to rely on
another IJV party (i.e., person, group, or
firm) under a condition of risk. Beliance
is action through which one party permits its late to be determined by another
(Currali und judge, 1995). Reliance is
based on positivo expectations of or confidHnce" in IIH; trustworthiness of fiuolher party (Kiiusseau ot al., 1998). Risk
is the potential that tho trusting party
will experionco nogative outcomes, i,e.,
"injury or loss" (March aud Shapira,
1987; Sitkin and Pablo, 1992), if tho
other party proves iintrnstworthy. Risk
creates an opportunily for trnst (Ruus,sean el al., 1998). Thus, trust arises from
social judgeuients (e.g., assessment of
tbn othei' party's bonovolonco, motivation to be trustworthy, etc) together with
assossmcnt of tho costs (i.e., risk) if tho
other party turns out to bo untrustworthy.
Tho measurement of trust must capturo a party's decision to rely on another.
As other writers bavo noted (Currali and
ludgo, 1995; Koo and Knox, t97(); Mayer
ot al., 1995; Nooleboom, Berger, and
Noorderhaveu, 1997), the literature has
focusod on trust as an action (e.g,, an
action that puts one party's fate in tho
hands of anothor) or trust as an expectation (o,g., a porceived probability concerning anothor party's future t:rustworthiiiess). To show that (JV trusi operates
and can be measured at niulliple levels,
wo view trust as a decision to act in ways
that place ono's fate in another's hands.
Thus, luider a condition of risk, a [jarty's
trust is signified by a decision to ongage
in action (i,e,, re!ianc:o) that allows its
fate to be dotermined by tho other party
(C:urrall and fudge, 1995).-'
Our concept oi' trust as a decision applies to persons, groups, and firms. As
we explain kiter, all throo are capable of
trnst decisions and tbe measurable ac-
484
FIGURE 1
CONCEPTUALIZING IJV TRUST AT THREE LEVELS
Person
Model P-P
(faiterpersonal)
Firm
(Person - Group)
Model P-*F
(Person - Rrm)
Model G-G
0nlergroup}
Model G-F
(Group - Firm)
Model F-*G
(Firm - Group)
Person
Mtxfcl 0-+P
Tnistor
IJV
Partner
(Group - Person)
Group
Model F-^F
(Interfirm)
Firm
UVM = international joint venture manager. Anows indicate trust by the trustor toward the It^tee.
nicating and monitoring the IJV implementation and shaping tho collaborative
structure. Therefore, one could construct
an interaction model [Ring and Van de
Ven, 1994) that examines the impact of
interpersonal trust on IJV outcomes. A
trust network of multiple individual
trustors and trustees is a possible extension of Model P^-P. Variations of ihe
interperstmal model are Model P ^ G , in
which the trustor is a single person and
the trustee is a group of IJV managers in
the partner Brm, and Model P-F, which
reflects an IJV manager's trust in the partner firm as an entity.
One can also mode! IJV trust between
groups. On the diagonal of Figure 1,
Model G^-G defines one group of IJV
managers as the trustor and another
group of IJV managers from a partner
firm as the trustee. Model F ^ F repre485
Measuring IJV:
Procedures and Examples
Another option is to interview or survey an IJV manager about Iheir [last decisions to trust. One could lap, for example, lhe Open ("omnuuiication and Information Exchange dimension by asking
tbe manager lo indicate the frec|uency
with which a trustee has been given inlormHtiou tbat could jeopardize tho iJV
or a parent firm.
The hivol of trust botweon two IJV
managers mtiy bo examined through data
collected from each of thom (soo Johnsoii, (ailleri, Sakano. and Takenouchi,
1996). For instance, to assess Task C^oordiuation, the two managors both would
complete survey items tbat assess tho
dogree to which tbey have roliod on each
other to mako stratogic and operati(.)rml
decisions or for support in ox(!(:uting a
job function.
Somo recent work has gone boyond
provious studies' exclusive reliance on a
single key informant. For oxnmjile, following Modol P ^ F , Johnson ot al.
(1996) moasurod trust betwoon matched
dyads of managers from both sides of Iho
alliance partnership. !n addilion to using
the Modol P*F level of measurement,
Inkpon imd Currail (1997) added an additional trust nioasure based on Model
P ^ P (i.o,. key informant's trust in a
count or jiart managor Irom tbo partnor
486
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489
BL'SINESS
S'rUDIES
measured at more than one level. Eirmlevol trust is tho level of theory (i.e., the
level at which hypotheses are stated) in
most IJV studies (e.g., see Das and Teng,
2000; 1998). The level of theory in somo
of tho studios, however, tnight be more
appropriate at tho group or individual
lov(Us. Fur example, theories predicting
Iho relationship botween trust and opportunistic behavior might be moro appropriate for the group level. Theories
concerning the evolution of trust and IJV
performance could be built up from the
study of individual-lovel trust and its
uuti:om.es, then group-level Irust and ils
outcomes, and riually firm-level trust
and porformanco outcomes.
Many challenging theoretical questions in the IJV area involve considerations of trust at multiple levels. The
complex nature of IJV trust may be best
captured througb simultaneous assessment al multiple levels; tbat is, by triangulating measures of trust. Triangulation
involves use of multiple operational
measures of a construct to better understand its properties. We urgo researchers
to use this approac;h in ordor to examine
tbe convergent and discriminant validity
of trust measures. Sucb analyses, tbough
raro in previous work on 1|V trust, will
illuminate tho nature of tho trust coustruct itself by identifying similarities
and distinctions across levels thoroby
enhancing tho mothodological rigor of
empirical work on IJV trust. By idontifying where trust is strong and whore it
may be weak, nniltiple nieasuroments
across lovels will clarify the role of trust
in various i)V outcomes, such as forbearanco, opportunism, conflict, and financial i)orformanc:o,
492
NOTES
MULTILEVEL
VENTURE TRUST
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494
495