The 17 PROPAT Characteristics
- A willingness to change and take risks
- Acceptance of interdependence
- Trust
- Seeking absolute not relative advantage
- Long-term Commitment
- Capacity to learn
- Communication
- Coordination
- Flexibility
- Objective self assessment
- Active membership in social networks
- Awareness about alliances
- Ability to resolve conflict
- Patience
- People before structure
- Loyalty to existing members
- Thrift
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Trust in business relationships
Successful business relationships are built on trust
Perhaps the single most important factor underlying the successful formation of alliances is trust. “Successful alliances require partners who behave toward each other in honourable ways that justify and enhance mutual trust. They do not abuse the information they gain, nor do they undermine each other." (Kanter 1994). Not surprisingly therefore, from the perspective of the entrepreneur, trust in business relationships is the characteristic which attracts most attention in the research.
Definition of trust
In its simplest form trust in relationships is the belief that a party's word is reliable and that a party will fulfil its obligation in an exchange (Spekman and Mohr 1994). It refers to the confidence that a partner will not exploit the vulnerabilities of the other (Barney and Hansen (1994). Trust provides a prospective partner with confidence that the other’s actions will be beneficial rather than detrimental to it (Child 1998). A more complete definition of trust in the context of business alliances is offered by Zaheer et al. (1998) who emphasise trustee characteristics and define trust as: “the expectation that an actor (1) can be relied on to fulfil obligations, (2) will behave in a predictable manner, and (3) will act and negotiate fairly when the possibility of opportunism is present.”
From the trustor’s perspective a level of uncertainty and risk must therefore be present for there to be a need for trust. Risk entails the consequences the trustor will suffer if the trust is violated (Lane 1998). According to Good (1988) trust is based on an individual’s theory as to how another person will perform on some future occasion. It is a function of the other person’s current and previous claims, either implicit or explicit, as to how they will behave. Trust, particularly in alliances with prospective partners with whom the firm has had no prior experience, requires significant boldness. This is implied by Lorenz (1988) who defines trusting behaviour as one “that (1) increases one’s vulnerability to another whose behaviour is not under one’s control, and (2) takes place in a situation where the penalty suffered if the trust is abused would lead one to regret the action”. Notwithstanding the fact that trust offsets fears about the risk that the other party will behave irrationally in some way and abuse the relationship, it must be noted that this risk remains real (Ingram and Roberts, 2000). Trust itself could therefore be defined as a matter of risk (Mayor et al. 1995).
The extent of trust placed by the trustor depends to a great extent on the characteristics of the trustee, i.e. the trustee’s ‘trustworthiness’. Desirable trustee characteristics include loyalty, accessibility, integrity, consistency of behaviour, competence, reliability, fairness, predictability, commitment and goodwill (Argandona 1999). Such attributes of the prospective partner increase the likelihood that they will be able to do the work, be counted on to hold up their part of the deal, work consistently, and contribute to the good of the alliance.
It is the interaction of these various characteristics which is relevant and not any single characteristic in isolation. Reliability, for example, refers to the chances that the trustee will fulfil his obligations. Predictability, on the other hand, refers to the consistency with which a trustee acts (Brenkert 1998). Also, although a partner may be competent in carrying out a task this is of no value to the partnership unless the partner can also demonstrate sufficient desire and commitment to carry it out. Whilst competence may be objectively verified, desire and commitment are subjective factors which cannot be easily assessed. According to Argandona (1999) trust is more reciprocal in alliances than in any other form of economic activity. This leads to a circular argument: one party must first place trust in the other in order to be trusted in return. Breaking out of this vicious circle requires one of the parties to display a sign of trust, so that the other party will do the same. Trust is therefore always essential, even under the best of circumstances.
The risk associated with trust does not come unrewarded. According to Williamson (1985) exchange relationships exhibiting trust are able to manage greater stress and display greater adaptability. Trust enhances information exchange and reciprocity and increases the effectiveness of joint problem solving (Zand 1972). Andersen and Narus (1990) found that once trust is established firms learn that joint efforts will lead to outcomes that exceed what the firm would achieve had it acted solely in its own best interests. Trust is highly related to firms’ desires to collaborate and the chances of a new partnership succeeding will increase if the companies can build on established trust relationships (Gulati 1998).
The most tangible proof of trust in busiess relationships is the level of investment that each party is willing to contribute to the alliance since the general assumption is that trust precedes commitment (Morgan and Hunt 1994).