Strategic management - trust, commitment and culture

Essay by archdukeUniversity, Bachelor'sA, October 2006

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Literature review

Despite the abundance of work on alliances, there is a disparity evident in the literature giving more attention to the reasons for the creation of alliances than on how to manage them (Child and Faulkner, 1998). Many literatures tend to gloss over the actual "how-to" of management and implementation of alliances. This tends to reflect the focus of attention most managers give to the formation of alliances rather than to running them once they are established. "Too often, top executives devote more time to screening potential partners in financial terms than to managing the partnership in human terms." (Child and Faulkner, 1998) They neglect the "softer side" of alliance issues such as relationship management including the building of trust, commitment and cultural compatibility. Concentrating only on the alliance formation is not enough for the manager whose job is to see promised synergies and alliance value come to fruition from the contract.


Strategic alliances have increased in importance over the past two decades. Many major companies are involved in strategic alliances. A successful alliance can give firms quick and flexible access to markets, technology, and other resources. It can also provide the flexibility to handle change and hedge risks. (Hoffman, 2005) Alliances have dramatically altered the business landscape as many firms have integrated the pursuit of alliances into their overall strategy. Alliances between firms and their distributors, suppliers and buyers, between clients and even between competitors are becoming critical to competitive success. For instance, Sony and Ericsson formed the joint venture Sony Ericsson as means to enter the mobile handset business. Alliances can also benefit partners located in different geographic regions as a way to access new markets (Bamford, Casseres, Robinson, 2003).

However, despite of the advantages a strategic alliance provides, the relationship of the...