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Trust formation in Korean new product alliances: How important are pre-existing social ties?

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Abstract

The focus of this study is on the nature and influence of social connections versus other relational mechanisms on trust formation in an emerging Asian economy. We examine the role of communication quality, perceived fairness, and pre-existing social relationships for the formation of trust in 47 vertical new product development alliances in South Korea. The empirical results indicate a relatively minor importance of pre-existing social ties vis-à-vis communication quality and fairness for the development of trust. Contrary to widespread perceptions, pre-existing social ties do not appear to directly contribute to establishing trust with external alliance partners in Korea. Multiple explanations are offered for this unexpected finding. Instead, existing social relationships moderate the importance of fairness for trust formation. When conducting partnerships with Korean firms, managers should focus more on a quality communication and fair behavior when trust formation is the objective, than on social connections.

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Authors and Affiliations

  1. Whittemore School of Business and Economics, Department of Marketing, University of New Hampshire, McConnell Hall, 15 College Road, Durham, NH, 03824, USA

    Ludwig Bstieler

  2. School of Business, Korea University, Anam-dong, Seongbuk-gu, Seoul, 136-701, South Korea

    Martin Hemmert

Authors
  1. Ludwig Bstieler
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  2. Martin Hemmert
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Correspondence to Martin Hemmert.

Additional information

We would like to thank APJM Senior Editor David Ahlstrom, Young-Choon Kim, and two anonymous reviewers for their helpful comments and suggestions on earlier versions of this article.

Appendix

Appendix

Measurement of key constructs and factor analyses results.

 

Communalities

Factor loadings

Trust in partner (α = 0.90)

 This partner’s representatives were frank in dealing with us

0.756

0.870

  

 Promises made by the partner’s representatives were reliable

0.828

0.910

  

 If problems (such as delays) arose, the partner’s representatives were honest about the problems

0.680

0.824

  

 The partner’s representatives made sacrifices for us during the project

0.593

0.770

  

 We felt the partner’s representatives were on our side

0.757

0.870

  

 Eigenvalue

 

3.61

  

 Variance extracted (%)

 

72.28

  

Communication (α = 0.93)

 The communication between us and the partner representatives was untimely/timely

0.796

0.879

0.136

0.076

 …inaccurate/accurate [you can rely on it]

0.834

0.880

0.242

−0.026

 …inadequate/adequate

0.880

0.912

0.209

−0.065

 …incomplete/complete

0.859

0.904

0.188

0.080

Fairness (α = 0.87)

 Disagreements were fairly resolved

0.764

−0.007

0.820

−0.302

 Benefits were evenly shared

0.716

0.266

0.791

−0.141

 Adjustments to project specific agreements were mutually resolved

0.601

0.347

0.669

−0.183

 Benefits were fair compared to efforts

0.712

0.236

0.769

0.256

 Benefits were fair compared to partner

0.795

0.162

0.871

0.102

 Pre-existing social relationships (count of relationships identified)

0.850

0.032

−0.085

0.917

 Prior to this project, the following relationships between representatives of our firm and the partner existed: (a) family relationships, (b) school network relationships, (c) regionally based relationships, (d) industry network-based relationships, (e) other personal relationships

 Eigenvalue

 

3.47

3.26

1.08

 Variance extracted (%)

 

34.71

32.57

10.79

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Bstieler, L., Hemmert, M. Trust formation in Korean new product alliances: How important are pre-existing social ties?. Asia Pac J Manag 27, 299–319 (2010). https://doi.org/10.1007/s10490-008-9124-1

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