AIB 2012 Conference Proceedings - Academy of International ...

SUNDAY
Session: 1.4.7 - Competitive
Track: 4 - Strategy, Alliances, and Competitiveness
Trust and Information Asymmetry in International Alliances
Presented On: July 1, 2012 - 14:30-15:45
Chair: Ilya Cuypers, Singapore Management University
Information Asymmetry and Partner Selection in International Alliances
Amol M. Joshi, University of Hawaii at Manoa
Nandini Lahiri, University of North Carolina at Chapel Hill
We extend prior research on intra-firm language barriers by investigating inter-firm language barriers in crossborder
alliances. Integrating concepts from sociolinguistics and information economics, we posit that language
barriers between potential partners exacerbate information asymmetries, while market signals of the
commercial value of a partner's knowledge counteract these asymmetries. To test these ideas, we quantify
language barriers using a distance measure of linguistic differences and we analyze data on semiconductor
alliances during 1988-2001. Controlling for cultural, geographical, and technological distances, our empirical
results suggest that firms overcome large language distances by relying on market signals of a prospective
partner's level of disclosure, stock of knowledge, and degree of specialization. Stronger signals significantly
dampen the negative impact of language distance on the chances of forming an alliance. (For more information,
please contact: Amol M. Joshi, University of Hawaii at Manoa, USA: amol@hawaii.edu)
Home Country Effects on Trust in International Joint Ventures
Gokhan Ertug, Singapore Management University
Ilya Cuypers, Singapore Management University
Niels Noorderhaven, Tilburg University
Ben Bensaou, INSEAD
Trust is an important factor in interfirm relations. Interorganizational trust in cross-border relationships is likely
to be influenced by both home and host country factors. Using data on 165 international IJVs, we show that the
trust expressed in the other IJV parent company is influenced by the general propensity to trust in the focal
firm's home country. Moreover, trustors also differentiate between the home countries of the partner parent
firm. This second effect is mitigated by experience between the partners. (For more information, please contact:
Gokhan Ertug, Singapore Management University, Singapore: gokhanertug@smu.edu.sg)
Coping with Low Trustworthiness in International Joint Ventures: The Moderating Effect of Performance
Satisfaction
Linda Hy Hsieh, University of Birmingham
Suzana Braga Rodrigues, Erasmus University
This paper contributes to the ongoing scholarly debate on the links between trust, performance satisfaction and
governance. It draws upon the multi-method analysis of a survey of 71 international joint ventures (IJVs) and 4
case studies of IJVs in Taiwan. The survey results show that the relationship between trust and ex post
governance is moderated by performance satisfaction. The case studies corroborate and enrich the survey
findings by illustrating that the trust-governance nexus is more complex than previous research has indicated.
Low trustworthiness may not necessarily lead to the extensive application of ex post governance. The cases
suggest that the decision to revise governance, through the intensification of existing controls or the devising of
new ones, is primarily taken under conditions of performance dissatisfaction. When low trust is combined with
AIB 2012 Conference Proceedings
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