Content area
Full Text
Robert Frankel: East Carolina University, Greenville, North Carolina, USA
Judith Schmitz Whipple: Western Michigan University, Kalamazoo, Michigan, USA and
David J. Frayer: Michigan State University, East Lansing, Michigan, USA
Introduction
The application and use of strategic alliances is of considerable interest to both industry practitioners and academics. However, recent research has shown that the balance between theoretical and practical knowledge concerning alliances is far from equivalent[1, 2, 3]. Specifically, practical knowledge is lacking which links alliance theory (what to do) with alliance practice (how to do it).
One area of significance to industry practitioners is the establishment and maintenance of long-term commitment between alliance partners. In particular, what mechanism can managers utilize to facilitate economic and social co-operation of allying parties over the life of the alliance? Although traditional business practice relies considerably on formal contractual arrangements to achieve such commitment[4, 5], informal social contracts or "handshake agreements" are also utilized[6, 7, 8]. With the increased experimentation and development of strategic alliances, the role of formal and informal agreements has become of particular interest to alliance participants, especially with respect to the level of loyalty, co-operation, trust and success the agreement affords[9].
The purpose of this article is to examine the role of formal written contracts and informal social contracts on logistical alliances. Specifically, the paper will:
consider the role of contracts in alliance arrangements;
compare and contrast research results that examine the use of formal written contracts to informal social contracts in actual alliance practice; and
discuss the impact of these results to offer managers concrete guidelines for positioning successful alliance practice.
The article begins with background information which defines the type of strategic alliances examined in this research. Next, the nature of contracts in general is examined. Literature that compares formal written contracts to informal verbal agreements is briefly reviewed. Then the role of formal and informal contracts in alliances is considered by examining the results of ten case studies of actual alliance practice. This section reviews how and when contracts were utilized in best practice alliances and discusses the effect of contractual provisions on alliance success. Finally, the impact of the case study results will be detailed to offer managers guidelines for creating successful long-term alliances. In particular, the discussion will focus...