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The Role of Trust and Contractual Safeguards on Cooperation in Non-equity Alliances

Steven S. Lui¹; Hang-Yue Ngo²

¹ Department of Management, City University of Hong Kong, Kowloon Tong, Hong Kong · ² Department of Management, Chinese University of Hong Kong, Shatin, Hong Kong

Because partners may behave opportunistically in alliances, contractual safeguards or trust between partners are necessary for successful outcomes. However, it remains controversial whether safeguards and trust substitute or complement each other. Drawing on transaction cost theory, this study conceptualizes both contractual safeguards and trust as important control mechanisms in non-equity alliances, and develops a model that relates contractual safeguards and trust to cooperative outcomes. We test our hypotheses with data collected from 233 architect–contractor partnerships in Hong Kong. The results show that the relationship between contractual safeguards and cooperative outcomes depends on both the level and type of trust.

DOI

10.1016/j.jm.2004.02.002

Volume

30 (4)

Pages

471-485

Language

en

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Sources

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