The effect of dual relational embeddedness and trust on alliance governance

• Pages: 913-926
• Published date: 02 October 2017
• DOI: https://doi.org/10.1108/CG-10-2016-0193
• Date: 02 October 2017
• Author: Dan Li,Jianjun Yang
• Subject Matter: Strategy,Corporate governance

The effect of dual relational

embeddedness and trust on

alliance governance

Dan Li and Jianjun Yang

Dan Li is based at School

of Management, Xi’an

Jiaotong University, Xi’an,

China. Jianjun Yang is

based at Xi’an Jiaotong

University, Xi’an, China.

Abstract

Purpose –Previous studies have illustrated that relational embeddedness is an important factor in

alliance governance, but the homogeneity of it turned out to be an obstacle in the path of alliance

governance research. In light of this theoretical gap, the purpose of this study is to answering the

following questions: Is relational embeddedness homogeneous? How does dual relational

embeddedness and inter-firm trust influence alliance governance (especially the equity governance)?

Design/methodology/approach –Based on the perspective of transaction cost economics, there is

traditional “transaction characteristics-prevention cost-alliance governance” framework from Williamson. In

this study, we firstly introduce relational embeddedness and inter-firm trust into new model as moderating

variable which based on the primary hypotheses in traditional framework; secondly, from the social network

view, we analysis the dual nature of relational embeddedness and inter-firm trust. Thirdly, the authors refine

the above moderating effect from different type of relational embeddedness and inter-firm trust. The authors

conduct empirical analyses based on survey data of 328 Chinese manufacturing enterprises, and multiple

regression analyses were used to test the above mentioned moderating effect.

Findings –The results show: ERE (economic relational embeddedness) and SRE (social relational

embeddedness), respectively, lead to deterrence-based trust and knowledge-based trust. The ERE

and deterrence-based trust strengthen the tendency towards hierarchical equity cooperation, while

SRE and knowledge-based trust weaken the likelihood of equity cooperation choices being made.

Research limitations/implications –This study has made some encouraging progress, but there are

still some problems and elements worthy of further study. First, from the view of independent variables,

the authors did not include any transaction characteristics (such as asset co-specificity) in our

integrated model. Secondly, and most importantly, the authors found some variables outside the

analysis framework (such as whether involving R&D or core technology). After interaction with these

variables, it is possible that the moderating role of relational embeddedness and trust, and especially

the effects of SRE and KBT on equity cooperative governance, may be reversed.

Practical implications –Inter-firm cooperation is an important and special organization, which can joint

interdependent resources to create value. This paper provides suggestions to Chinese enterprises which

could help them realize the duality of relationship character and how to properly implement alliance

governance. It helps enterprises to realize that relational embeddedness is not homogeneous and clarify the

relationship between inter-firm trust and alliance governance. This research indicates the firm manager that

effective alliance governance comes from appropriate relational embeddedness and inter-firm trust.

Originality/value –Overall, three contributions emerge: first, the authors construct a relational

embeddedness and classical framework that overcomes the traditional deficiencies of being static and

one-sided. Secondly, the forward research of dual embeddedness and trust improves the relational

embeddedness theory and provides new ideas for subsequent research. Last but not least, the

research clearly indicates that ambidextrous relational embeddedness leads to ambidextrous trust,

which not only refines the existing research into trust mechanisms, but also clarifies the relationship

between trust and alliance governance.

Keywords Alliance governance, Deterrence-based trust, Economic relational embeddedness,

Knowledge-based trust, Social relational embeddedness

Paper type Research paper

Received 26 May 2016

Revised 6 June 2017

Accepted 13 June 2017

Funds support: National

natural science funds: Study

of Technological Knowledge

Sharing and Creation During

Collaborative Innovation of

Enterprise Key Generic

Technology (71572139);

National natural science funds:

the effect research of bilateral

relationship on distributed

innovation cooperation mode

and knowledge sharing in

open network (71272138).

DOI 10.1108/CG-10-2016-0193 VOL. 17 NO. 5 2017, pp. 913-926, © Emerald Publishing Limited, ISSN 1472-0701 CORPORATE GOVERNANCE PAGE 913