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Trust between international joint venture partners: Effects of home countries

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Abstract

Trust is an important factor in interorganizational relations. Interorganizational trust in cross-border relationships is likely to be influenced by the home countries of both partners. Using data on 165 international joint ventures (IJVs), we show that the perceived trustworthiness of an IJV partner is influenced by the general propensity to trust in the trustor's home country. Moreover, the trustworthiness perceived by a focal parent firm is also affected by the home country of the other IJV partner. This second effect is mitigated by experience between the partners.

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Notes

  1. Huff and Kelley (2003) measure both general propensity to trust and trust in interorganizational relations, in eight countries and regions. From their Table 1, a significant positive correlation between the two constructs can be calculated.

  2. Our sample contains IJVs with focal parents from 12 countries (on average 13.8 observations per country), and other partners from 16 countries (on average 10.3 observations per country).

  3. We thank an anonymous reviewer for suggesting this significant extension.

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Acknowledgements

All authors contributed equally to this article. We acknowledge the special contribution of Dongyoub Shin, Yonsei University, who helped design the survey and collect the data. We would like to thank Africa Ariño, Youtha Cuypers, Don Ferrin, Rekha Krishnan, Anoop Madhok, Klaus Mayer, Mario Schijven, Aks Zaheer, the Associate Editor Ulf Andersson, and three anonymous reviewers for their insightful comments. We have also benefited from comments by participants at presentations at Singapore Management University and Simon Fraser University. All remaining errors are ours.

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Authors and Affiliations

  1. Lee Kong Chian School of Business, Singapore Management University, Singapore, Singapore

    Gokhan Ertug & Ilya R P Cuypers

  2. Center for Innovation Research, Tilburg University, Tilburg, The Netherlands

    Niels G Noorderhaven

  3. INSEAD, Fontainebleau, France

    Ben M Bensaou

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  1. Gokhan Ertug
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  2. Ilya R P Cuypers
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  3. Niels G Noorderhaven
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Accepted by Ulf Andersson, Area Editor, 19 January 2013. This paper has been with the authors for three revisions.

Appendices

APPENDIX A

Survey Items

The focal parent's trust in the other parent (α=0.86)

Do you agree or disagree with the following statements about the other parent?

  1. 1)

    The other parent will stick to the promises they made in the contract even if it may cost them.

  2. 2)

    The other parent company may violate the contract if it were in their interest (reverse-coded).

  3. 3)

    The other parent is a highly competent partner.

  4. 4)

    The other parent may not always be capable of performing its responsibilities in the partnership (reverse-coded).

  5. 5)

    Even if it is not required by the contract, the other parent will readily make extra efforts to move the joint venture forward.

  6. 6)

    The other parent's commitment to the partnership goes far beyond what they promised in the contract.

  7. 7)

    If the situation changed to their benefit, they would readily demand changing the terms of the contract (reverse-coded).

  8. 8)

    The other parent would be quite prepared to take advantage of a situation not covered in the contract, even if it could hurt our side (reverse-coded).

For all items, the response options ranged from 1, “strongly disagree,” to 7, “strongly agree.”

Asset specificity of the investments by the focal parent and the other partner

To what extent are the investments made in this JV's facilities by the other parent useful only for this joint venture and cannot be easily transferred to other businesses?

Strongly disagree 1 2 3 4 5 6 7 Strongly agree

To what extent are the investments made in this JV's facilities by your parent useful only for this joint venture and cannot be easily transferred to other businesses?

Strongly disagree 1 2 3 4 5 6 7 Strongly agree

Strategic importance of the JV for the focal parent and the other partner

If this joint venture were to fail, how much damage would it cause to the overall performance of each parent company?

To your parent company: Very marginal damage 1 2 3 4 5 6 7 Very critical damage

To the other parent company: Very marginal damage 1 2 3 4 5 6 7 Very critical damage

Competitive overlap

How much overlap is there between the parents’ served markets?

No overlap 1 2 3 4 5 6 7 Direct competitors

Technological uncertainty

What is your general evaluation of the technology in the market in which this joint venture operates?

Slow changes in technology 1 2 3 4 5 6 7 Rapid changes in technology

APPENDIX B

Common Method and Single-Respondent Bias

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figure a

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Ertug, G., Cuypers, I., Noorderhaven, N. et al. Trust between international joint venture partners: Effects of home countries. J Int Bus Stud 44, 263–282 (2013). https://doi.org/10.1057/jibs.2013.6

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