Trust-performance relationship in international joint ventures: the moderating roles of structural mechanisms

Tahir Ali · Saba Khalid

35 citations0/0 files storedJournal of Business and Industrial Marketing

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International Business and FDI Innovation and Knowledge Management Outsourcing and Supply Chain Management

Abstract

Purpose This study aims to investigate the relationship between trust and performance in international joint ventures (IJVs) with the moderating effects of the structural mechanisms from transaction cost approach. Design/methodology/approach Using web-survey, data are collected from 89 IJVs of Northern European firms in Asia, Europe and America. Empirical data are analyzed with structural equation modeling and estimates moderating effects of symmetric dependence, symmetric equity share and resource complementarity. Findings The findings offer some interesting insights for transaction cost and the social exchange theory. This study demonstrates that a symmetric equity share between IJV partners does not moderate the trust–performance relationship, while a symmetric dependence and resource complementarity between partners effect positively. Therefore, trust takes on greater importance in enhancing IJV performance under symmetric dependence and resource complementarity and symmetric equity share between IJV partners deprecates the importance of equity distribution. Practical implications A symmetric dependence prevents the deceit from either partner in trusting relationships. Further, a trustful relationship enhances IJV performance regardless of the equity share in IJVs. IJVs with asymmetric equity share can also be successful, provided that IJV partners develop inter-partner trust. Originality/value The extant research has not examined how the trust–performance relationship is contingent on structural mechanisms of IJVs that transaction cost economics deem necessary to prevent opportunistic behavior. Three structural mechanisms of symmetric dependence, symmetric equity share and resource complementarity moderate the trust–performance relationship in IJVs.

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References

1981Evaluating Structural Equation Models with Unobservable Variables and Measurement Error 2003Common method biases in behavioral research: A critical review of the literature and recommended remedies.1994The Commitment-Trust Theory of Relationship Marketing 2011PLS-SEM: Indeed a Silver Bullet 2017Exchange and Power in Social Life 1998The partial least squares approach for structural equation modeling.1977Estimating Nonresponse Bias in Mail Surveys 1977Estimating Nonresponse Bias in Mail Surveys

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