® Academy of Management Review 2003,
Vol. 28, No. 4, 587-605.
ACHIEVING COOPERATION IN MULTIPARTY
ALLIANCES: A SOCIAL DILEMMA APPROACH
TO PARTNERSHIP MANAGEMENT
MING ZENG INSEAD and Cheung
Kong Graduate School of Business
XIAO-PING CHEN
University of Washington
We propose a social dilemma approach to cooperation induction in multiparty alliances. We
first establish that managing the inherent tension between cooperation and competition in
alliances is essentially a social dilemma, where an individually rational but socially defecting
choice may lead to a higher payoff for an individual partner but where, once all partners adopt
such a strategy, the alliance will fail. We then develop propositions on how partners can
improve their chances for cooperation, and we discuss the limitations of the social dilemma
approach and its implications for future research.
Alliance is a broad term that captures many forms
of interorganizational cooperative arrangements,
including equity joint ventures, strategic supplier
arrangements,
research
and
development
partnerships, and so forth (Doz & Hamel, 1998;
Koza & Lewin, 1998; Parkhe, 1993). One of the
fundamental problems alliances face, especially those
alliances involving multiple partners, is the inherent
tension between cooperation and competition among
partners (Hamel, 1991; Larsson, Bengtsson,
Henriksson, & Sparks, 1998; Roehl & Truitt, 1987;
Yoshino & Rangan, 1995). On the one hand, an
alliance is formed to achieve certain objectives, when
doing so is more effective than if any one partner
operated independently or through acquisitions.
Therefore, without cooperation, partners are unlikely to realize the potential of an alliance. On the
other hand, the benefits of alliances are shared
among partners, and each partner has a strong
incentive to compete for a larger portion of the
benefits (Buckley & Casson, 1988; Hamel, 1991;
Yoshino & Rangan, 1995). As a result, alli-
ance partners face a constant tension between
cooperation and competition.
Recognizing such inherent tension, alliance
researchers have debated a great deal about whether
partners should pursue “stormy open marriages”
(Roehl & Truitt, 1987), learning races (Hamel, 1991),
or “cooperative specialization” (Zeng & Hennart,
2002). In the majority of the alliance research,
scholars have nevertheless tended to emphasize
either the cooperative or the competitive side, failing
to pay sufficient attention to the complex interactions
between cooperation and competition within
alliances (e.g., Das & Teng, 2000; Larsson et al.,
1998). For example, some authors argue that the
essence of alliance management is to work toward
harmonious relationships by various means—
sharing power, enhancing communication, building
trust, and so forth (Harrigan, 1985; Kanter, 1994;
Killing, 1983; Lei & Slocum, 1992; Perlmutter &
Heenan, 1986)—whereas other authors (Hamel,
1991; Pucik, 1988; Reich & Mankin, 1986) emphasize
the learning race view, postulating that alliances are,
by nature, competitive collaborations and that
partners are involved in a learning race attempting
to absorb the capabilities of their alliance partners as
fast as possible.
Although these different perspectives have
significantly advanced our understanding of the
various aspects of partner interactions in alliances,
an overarching theoretical framework is needed to
guide researchers in studying the
We thank Warren Boecker, Jason Harris-Boundy, JeanFrancois Hennart, Tom Jones, Tom Lee, Terry Mitchell, Michael
Peng, Richard Peterson, Andy Wicks, Aimin Yan, the three
anonymous reviewers, and former associate editor Albert A.
Cannella, Jr., for their thoughtful and constructive comments and
suggestions on earlier versions of this paper. Part of the paper was
presented at the annual meeting of the Academy of Management,
in Toronto, Canada.
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complex interdependence between cooperation and
competition embedded in multiparty alliances. For
example, while trust is essential in promoting
cooperation in alliances, an over-trusting partner can
become an easy target for exploitation by its greedy
partners. Conversely, while a partner might adopt a
competitive strategy and get more out of a particular
alliance, this could lead to potentially detrimental
outcomes for the alliance in the long term should all
partners adopt similar strategies. How should
alliance partners choose between cooperation and
competition?
In this article we propose a social dilemma
approach to partnership management in alliances.
As illustrated later, we apply the social dilemma
theory to study the tension between cooperation and
competition among interdependent parties. With this
theory we examine the benefits and costs associated
with
both
cooperation
and
competition,
simultaneously, explain the rationales behind both
types of behaviors, and investigate the mechanisms
that could promote cooperation among the social
actors pursuing self-interest. Therefore, the theory
provides a comprehensive perspective and better
understanding of the challenges alliance partners
face in managing the balance between cooperation
and competition.
The focus of this paper is cooperation1 induction
among multiparty alliance partners. We focus on
partner cooperation, because it has been identified as
a necessary condition for alliance success (e.g.,
Kanter, 1994). Many scholars cite the lack of
cooperation as an important cause of the relatively
high failure rate of alliances (Park & Russo, 1996;
Teece, 1992; Yan & Zeng, 1999), yet there is little
systematic investigation of how cooperation can be
achieved and sustained in alliances (Arino & de la
Torre, 1998; Doz, 1996). We focus explicitly on
multiparty alliances because of their increasing
popularity and importance over the last decade (Doz
& Hamel, 1998; Makino & Beamish, 1999). For
example, Makino
1
Although cooperation can be defined in many different ways
(for a review, see Smith, Carroll, & Ashford, 1995), we define it
here as the willingness of a partner firm to maximize the joint
interests of the alliance. Cooperation includes performing the
described responsibilities on written contract, as well as making
intangible contributions beyond the contract that help the alliance
operate more smoothly and effectively.
and Beamish (1999) found that, of their sample of
737 joint ventures, 55 percent had more than two
partners. However, theoretical or empirical research
on these alliances remains rather limited (for an
exception, see Gomes-Casseres, 1996). By providing
the social dilemma conceptual framework to study
the cooperation dilemma partners face in multiparty
alliances, we advance our understanding of these
important yet underex-plored topics.
In the following sections we first analyze the mixed
motives of competition and cooperation inherent in
alliances, and we explain why the social dilemma
approach provides an appropriate framework for
understanding partner dynamics. Drawing from the
social dilemma literature, we then propose various
structural and motivational mechanisms that are
effective in inducing cooperation among alliance
partners. Finally, we discuss the limitations of this
approach and its implications for alliance management and research.
COOPERATION DILEMMA IN
MULTIPARTNER ALLIANCES
Alliances are formed when there is the potential
for joint value creation in combining resources or
capabilities from different partners and when it is
difficult to exchange these resources or capabilities in
the open market (Hen-nart, 1988; Kogut, 1988). To
realize the potential for joint value creation, partners
must exchange information, share knowledge, and
make investments that are specific to the
relationship. Nevertheless, fulfilling these basic
requirements of alliances also exposes the valuable
investments and proprietary knowledge of partners
to opportunistic hazards because of the temptation of
each partner to pursue self-interests. (Shuen, 1994).
The pursuit of self-interest undermines the value
creation process in alliances in two important ways.
First, partners bargain over the stream of economic
benefits that comes directly from successful value
creation in alliances (the “hold-up problem”). To
avoid being held up by their counterparts, partners
often underinvest in alliance-specific assets/skills—a
major reason for alliance failures (Doz & Hamel,
1998; Shuen, 1994). Such a risk has been well
documented in the literature, where researchers have
built mostly on transaction cost economics (Hennart,
1988; Williamson, 1985). Second, partners may
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Zeng and Chen
internalize each other’s skills and apply them to
areas outside the alliance (the “leakage problem”;
Hamel, 1991; Khanna, Gulati, & Nohria, 1998). Such
leakage can have dire consequences if partners are
current or potential competitors. For fear of such
risks, partners may overprotect their contributions
to the alliance and block the information and
knowledge exchange necessary for collective gains by
members of the alliance. Therefore, while it is
individually rational for each partner to invest less in
and gain more from the alliance, such efforts often
undermine the foundation of partner cooperation
and destroy value creation.
The conflict between individual rationality and
collective rationality described above is, in fact, the
key characteristic of a social dilemma. In theory, a
social dilemma is defined by two simple properties:
(1) each individual receives a higher payoff for a
socially defecting choice than for a socially
cooperative choice, no matter what the others do, but
(2) all individuals are better off if all cooperate than
if all defect (Dawes, 1980). In the alliance context, the
dilemma manifests itself in the sense that partners of
an alliance face a conflict between maximizing their
own self-interest (defection; e.g., bargain for a larger
share of the pie, withhold key information and
knowledge or send second-tier employees) and
maximizing the interests of the alliance as a whole
(cooperation). It is generally more profitable for a
partner to defect, but if all do so, all are worse off
than if all choose to cooperate. It is clear that, in this
case, a short-term individual partner’s self-interested
choice, albeit rational, will lead to a long-term
alliance failure, which therefore poses a social
dilemma (Dawes, 1980; Messick & Brewer, 1983;
Yama-gishi, 1986a) for each of the partners.
In sum, alliance partners face a social dilemma in
managing the inherent tension between cooperation
and competition among themselves. How can
partners manage such a dilemma and achieve
sustainable cooperation in alliances? In the following
sections we first model the cooperation dilemma
using the public goods paradigm2 and then apply the
insights
2
A brief review of the social dilemma literature reveals that
there are two types of social dilemmas of interest in general: a
public goods dilemma (Olson, 1965) and a resource (or commons)
dilemma (Hardin, 1968). A public goods dilemma is a situation in
which voluntary contributions are needed to establish or maintain
a public good, which, once
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from the social dilemma literature to develop our
propositions accordingly.
MODELING THE COOPERATION DILEMMA
WITH THE PUBLIC GOODS PARADIGM
The dilemma nature of cooperation development
in alliances can be illustrated further through the
following hypothetical example. Consider an alliance
consisting of six partners, A, B, C, D, E, and F. The
partners estimate that, by combining all their
resources, the alliance (public good) will be able to
achieve at least twice the total profit volume (benefits
associated with the public good) than if each were to
work alone. Within the alliance, each partner is
motivated to contribute, because the profit will be
doubled if all do so. At the same time, however, each
partner has an incentive to contribute as little as
necessary, because it is possible either that
contributions from other partners will be sufficient
to double the profits or that, if other partners do not
contribute much, goals will not be achieved and the
partner’s own contribution will be wasted.
To simplify the problem, assume that each partner
has an equal amount of resource S that will result in
an equal amount of profit P, if each were to operate
independently. Assume also that, if all parties
contribute all of their resources, the alliance will
make a profit whereby each party will receive 2P. In
the typical continuous public goods dilemma,3 each
partner is free to choose to contribute any amount of
its resources (from 0 to S) to the public good. All
contributions made to the public good will increase
their value (due to synergy), but the total
established, can exclude no one from sharing its benefits,
regardless of one’s contribution. A resource dilemma is a situation
in which one needs to decide how much to take or consume from a
common resource. Once the resource has been overconsumed, it
may be depleted, and no one can enjoy it any more. Although the
two types of social dilemmas represent different paradigms, they
share the same type of conflict and tension between cooperation
and competition. Since alliance partners have to invest (or
contribute) first to create value and then share the benefits, we
choose to adopt the public goods paradigm to model alliance
cooperation.
3
Although the literature makes a distinction between a
continuous public goods paradigm and a step-level public goods
paradigm (Komorita & Parks, 1994), we believe the differences
between the two are not substantial enough for the issues
investigated in this paper. To simplify the matter, we use a
continuous public goods paradigm as an illustration.
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Academy of Management Review
value of the public good will be distributed equally
among all partners. Resources kept for oneself,
however, will not increase value but will belong only
to oneself. Moreover, the higher the total amount of
the contribution made to the public good, the higher
the amount of profit all will be able to share.
Consider the AOL alliance with drkoop.com,
GTE, US West, Sun, and Nintendo. Six partners are
involved in this alliance. Each company has its own
expertise (or core competence), technology, customer
base, and market share. Except for those
contributions that are clearly stipulated in the
contracts and, thus, easy to monitor, each partner
has some discretion over how much intangible asset
to invest in the alliance. The more resources accrued
in the alliance, the higher the profit all will be able to
share. For our hypothetical example, assume that the
amount of resource each partner has is 10(S = 10),
that the profit each earns when choosing to operate
independently is 10(P = 10), and that the value for
resources contributed to the alliance is doubled. The
payoff matrix for this problem is presented in Table
1.
We can see from Table 1 that when the alliance is
not formed (0, 0), each partner has its own payoff of
10, and when all partners contribute all of their
resources (10, 10), all receive a payoff of 20,
suggesting that the payoff of universal cooperation is
higher than that of universal defection. However, no
matter what the other
partners’ average contribution is, the more a partner
contributes, the lower the payoff will be for that
partner (the payoff of the upper rows is always
higher than that of the lower rows), suggesting that
the temptation for defection or competition is always
embedded in such a situation. This payoff matrix
simulates the tension embedded in the multipartner
strategic alliance.
As we suggested above, the public goods dilemma
paradigm can be used to model the cooperation
problem in a multipartner alliance. Such modeling,
even with rather limiting assumptions, captures the
essence of the dilemma nature of partner interactions
in alliances and, hence, provides a good starting
point toward better understanding intra-alliance
dynamics. Naturally, after initial validation of the
propositions derived from the model, subsequent research can relax the assumptions and test for
generalizability.
In previous alliance research, scholars have not
explicitly adopted a social dilemma approach, except
for the few studies (i.e., Heide & Miner, 1992;
Parkhe, 1993) using the prisoners’ dilemma game to
model the dyadic relationship. However, the iterated
two-person prisoners’ dilemma is much narrower in
scope than the social dilemma and generally cannot
represent multipartner alliances (Dawes, 1980;
Orbell & Dawes, 1981), for several reasons. First, in
the two-person dilemma, all harm of noncooperation (or defection) completely falls on the other
TABLE 1 A Payoff Matrix for a Six-Partner Continuous Public Goods
Dilemma
Mean Contribution of Other Partners
Your Firm’s Contribution
0
1
2
3
0
1
2
3
…
10
11.67
13.33
15.0
…
26.67
9.33
8.67
8.0
11.0
10.33
9.67
12.67
12.0
11.33
14.33
13.67
13.0
…
…
…
26.0
25.33
24.67
3.33
5.0
6.67
8.33
…
20.0
10
•
10
Note: Each member of the six-partner alliance voluntarily contributes 0 to 10 units of its company’s resources to the alliance. The total
contribution in the alliance earns an interest of 100 percent (value doubled), and the resources not contributed earn no interest. Each
partner’s total payoff is an equal share from the alliance plus whatever each keeps for its own firm, as shown in the following formula:
Your Firm’s Payoff = (10 — C) + 2[(n — 1)MC + C]/n
where C denotes your firm’s contribution, n denotes the total number of partners in the alliance (six in this case), and MC denotes the mean
contribution of other partners.
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Zeng and Chen
player; hence, harm is focused rather than spread
out, whereas in multipartner alliances, gain for
noncooperation accrues directly to the self, while
harm is diffused over a considerable number of
partners. Thus, a partner in the multipartner
situation will feel less guilt toward any particular
partner when choosing not to cooperate and, in turn,
will be more likely to defect than a partner in the
two-party situation.
Second, in a multipartner strategic alliance, one
partner’s noncooperative behavior is more likely to
be kept anonymous than it is in the two-person
dilemma. In other words, partners may not easily
detect who did what in the multipartner situation,
whereas in the two-person dilemma, there is much
less uncertainty about the other partner’s behavior.
As a result, a partner in the multiparty situation will
have a stronger incentive to defect than a partner in
the two-party situation, because it is easier to get
away with defection.
Finally, in the iterated two-person dilemma, each
player can “punish” (or “reward”) the other for
noncooperation (or cooperation) by choosing
noncooperation (or cooperation) in the subsequent
interaction. Thus, each player can attempt to shape
the other’s behavior and, hence, indirectly determine
the alliance outcome through the choice of his or her
own action. This degree of “influence potential” in
the two-person iterated dilemma is clearly diluted in
the multi-player case, where it is much harder for
any single player to shape the group dynamics effectively, unless there is a clear, dominant player.
This sense of lack of controllability of others’
behavior and, thus, of the alliance outcome is more
likely to increase the defective behavior of a partner
in the multiplayer situation than in the two-party
situation.
Owing to the specificity of harm, better knowledge
of partner behavior, and higher potential use of one’s
own behavior to shape the other’s behavior, a twoperson iterated prisoners’ dilemma cannot be
considered representative of the multipartner
problem. On the contrary, it is only a special case of
the social dilemma (when n = 2). Therefore, while the
mechanisms effective in solving the multipartner
problem can be applied in the two-partner case, the
reverse does not hold. We further elaborate the
implications of such differences between two-person
prisoners’ dilemma and social dilemma for alliance
management in the Propositions section.
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SOLUTIONS DERIVED FROM THE SOCIAL
DILEMMA RESEARCH
After several decades of research on social
dilemmas (Komorita & Parks, 1995; Messick &
Brewer, 1983; Olson, 1965; Pruitt & Kimmel, 1977),
researchers have suggested and tested numerous
solutions in different experimental and empirical
settings. A distinction is often made between
structural and motivational solutions (for an extensive
review, see Komorita & Parks, 1994; Messick &
Brewer, 1983; and Yamagishi, 1986a). Generally
speaking, structural solutions focus on the effects of
the structural (or technical) parameters of the
dilemma (e.g., payoff matrix, group size) on
individual behavior. They include (1) changing the
structure of the payoff matrix (Dawes, Orbell,
Simmons, & van de Kragt, 1986; Komorita, Chan, &
Parks, 1993; Marwell & Ames, 1979, 1980;
Rapoport, 1967), (2) introducing sanction systems
(Caldwell, 1976; Chen & Yao, 2003; McCusker &
Carnevale, 1995; Yamagishi, 1986a; Yamagishi &
Sato, 1986), (3) reducing group size (Fox & Guyer,
1977; Komorita & Lapworth, 1982), or (4) changing
allocation rules (Chen, 1999; Rap-oport & Amaldoss,
1999).
Motivational solutions, however, focus on changing
partners’ perceptions of the social environment (e.g.,
expectations of other partners’ behavior; feelings of
group identity, trust, self-efficacy), and therefore
their motivation for cooperation. These solutions
include (1) introducing face-to-face discussion of the
dilemma before making contribution decisions
(Bouas & Komorita, 1996; Dawes, McTavish, &
Shaklee, 1977; Edney & Harper, 1978a,b; Jerdee &
Rosen, 1974; Kerr & Kaufman-Gilliland, 1994; van
de Kragt, Orbell, & Dawes, 1983), (2) establishing
long-term goals, or “extending the shadow of the
future” (Axelrod, 1984; Axelrod & Dion, 1988), and
(3) informing partners about the negative consequences of defective actions (Alock & Mansell, 1977;
Caldwell, 1976; Edney & Harper, 1978b).
The fundamental difference between these two
types of solutions lies in the degree to which a
solution is associated with actual, tangible changes in
a partner’s payoff. With structural solutions, on the
one hand, any changes in the parameters of the
dilemma structure will lead to a change in a
partner’s payoff for cooperation; therefore,
cooperation induced by structural changes will have
“instrumental” value. For example, partners will be
willing to contribute
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more to the alliance when the payoff for cooperation
is enlarged. On the other hand, motivational
solutions are not directly related to any tangible
changes in one’s payoff. For example, a partner that
feels its contribution to be crucial to the alliance will
be more willing to contribute, even though doing so
will not necessarily enlarge its own material payoff.
In applying the solutions derived from the social
dilemma research, much of which is conducted at the
individual level, to interorganiza-tional relationships,
we see a levels issue arise (Klein, Dansereau, & Hall,
1994). In this article we treat each alliance partner as
an “individual” player in a social dilemma. That is,
even though each partner is composed of numerous
members, we assume that all members are sufficiently similar with respect to the constructs we
consider that they can be characterized as a whole
(Klein et al., 1994). According to Schneider’s (1987)
Attraction-Selection-Attrition (ASA) framework,
people who “fit in” the organizational environment
are more likely to remain a member, whereas people
who do not “fit in” are more likely to depart from
the organization. The developing literature on shared
mental models (e.g., Mathieu, Heffner, Goodwin,
Salas, & Cannon-Bowers, 2000) and on transactive
memory in groups (e.g., Liang, Moreland, & Argote,
1995) also suggests that members of groups or organizations indeed develop shared images. For example,
the degree of organizational identification may vary
among employees within the same organization, but
such variance will be smaller than that among
employees in different organizations. Research has
demonstrated that constructs such as trust, learning,
justice, and identity are all meaningful at the
organizational level (Gulati, 1995; Naumann &
Bennett, 2000; Ring & Van de Ven, 1994; Senge,
1990).
Moreover, because the key issue addressed in
social dilemma research (i.e., the tension between
cooperation and competition) is rather general, and
because the analytic tools used are often abstract,
there has been a long history of applying the social
dilemma framework to multiple levels. For example,
this framework has been used in studying the arms
race between countries (Osgood, 1962; Pilisuk, 1984;
Pilisuk, Potter, Rapoport, & Winter, 1965; Pilisuk &
Skolnick, 1968; Rapoport, 1960, 1964), international
conflicts (e.g., Brams & Kilgour, 1988), negotiation
between groups (McCallum et al.,
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1985), governmental decisions regarding federal
intervention into the marketplace (Inman, 1987), and
provision of financial welfare systems (Buchanan,
1975; Kotlikoff, 1987). More recently, Cable and
Shane (1997) used this framework to analyze the
relationship between entrepreneurs and venture
capital firms. In this article we are consistent with
previous work in applying the conceptual framework
derived from the social dilemma literature to alliance
contexts.
PROPOSITIONS
Accumulated research in social dilemma theory
indicates that the most robust solution under the
structural approach is changing the payoff matrix,
whereas the most robust solutions under the
motivational approach are enhancing communication and establishing long-term goals among
partners (for a review, see Kollock, 1998; Komorita
& Parks, 1995; Ledyard, 1995; and Mes-sick &
Brewer, 1983). In this article we focus on these
solutions in making our propositions. Figure 1
summarizes the social dilemma theoretical
framework and the various propositions derived
from this framework.
Structural Solution: Changing the
Payoff Matrix
The payoff matrix of a social dilemma can be
changed in many ways, while still maintaining its
structure under the constraints of a dilemma
(Dawes, 1980). One of the most robust indices of a
payoff matrix is the K'-index (Komorita, 1976). This
K'-index for an n-person social dilemma can be
calculated by the following formula:
K' = (Cn — D0)/(Dn _ 1 — C1)
where Cn denotes the payoff when all partners
cooperate, D0 denotes the payoff when no one
cooperates, Dn _ 1 denotes the payoff for a competitive choice when n — 1 other partners cooperate,
and C1 denotes the payoff for a cooperative choice
when all other partners defect.
Therefore, in the continuous public goods payoff
matrix presented in Table 1, K' = (20 — 10)/ (26 —
4) = 0.45. According to Komorita (1976), for any
given n-person social dilemma, the value of K'
ranges from 0 to 1.0, and the incentive to cooperate
increases directly with the magnitude of K'.
Therefore, people will be more willing to
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cooperate in high K' games than in low K' games. In
extreme cases there is no incentive to cooperate when
K' = 0 and no incentive to defect when K' = 1.0. This
index has received strong empirical support
(Komorita et al., 1993; Ko-morita, Sweeney, &
Kravitz, 1980).
The K'-index suggests that changing the payoff
matrix to increase the value of K' will make alliance
partners more willing to cooperate. From the
formula above, there are at least four relevant
payoffs: for (1) universal cooperation (Cn), (2)
universal defection (D0), (3) single defection (Dn _ 1),
and (4) single cooperation (C1). Keeping everything
else constant, the value of K' will be increased if Cn
or C1 is increased, or if D0 or Dn _ 1 is decreased. To
apply these notions in the alliance context, we can see
that if all partners can gain a bigger benefit when
they pool their resources than when they are on their
own (i.e., if Cn — D0 is larger), they will be more
likely to cooperate. In other words, if the potential
gains from joining forces are larger, such as when
partners have different but complementary contributions to an alliance, there is a stronger “pull”
for partners to cooperate (Doz & Hamel, 1998;
Geringer, 1989; Harrigan, 1985; Lyles, 1994; Park &
Russo, 1996; Saxton, 1997). Based on this reasoning,
we offer our first proposition.
Proposition 1: The larger the difference
between the payoff for universal
cooperation and the payoff for universal
defection, the more likely alliance partners
will cooperate with each other.
Moreover, deriving from the formula, if little
benefit is associated with the single defection
behavior (Dn _ 1) and little risk is involved in the
single cooperation situation (C1), partners will be
more willing to cooperate. Borrowing Coombs’
(1973) terminology and Rapoport’s (1967) paradigm,
reducing the value of Dn _ 1 (e.g., reducing the extra
payoff for keeping one’s own resource) is a way to
reduce one’s “greed”—a concept referring to one’s
motive to exploit by not contributing when the
majority of the others do. And an increase in C1 (e.g.,
reducing the loss of one’s contribution when the public good is not provided) is a way to reduce one’s
“fear”—fear of being exploited or having one’s
resources or capabilities wasted when one contributes but the majority of others do not. In the
social dilemma literature, the effects of greed
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and fear have been studied extensively, and there is a
strong consensus that people are more willing to
contribute when greed or fear is minimized (Dawes
et al., 1986; Komorita et al., 1980; Rapoport &
Eshed-Levy, 1989; Yamagishi & Sato, 1986).
In the alliance context, partner greed is a major
concern when hold-up is a serious problem. Partners
who invest in alliance-specific assets are afraid that
their partners may become greedy and take
advantage of their vulnerable position because of
their sunken investment in the alliance. Fear is also a
serious concern when the leakage problem is a real
threat. Partners often become overprotective of their
contributions to the alliance for fear of those
contributions being stolen by other partners to use
against them outside the alliance.
An important mechanism for minimizing greed is
creating universal hostages by forcing partners to
make significant investments specific to the alliance
(Holm, Eriksson, & Johanson, 1999; Koss & Curtis,
1997). Such hostages can “tie their hands to each
other” (Schelling, 1960) and “equilibrate the
opportunistic hazards” (Shuen, 1994). The
mechanisms to minimize fear can range from
choosing noncompetitors as partners to isolating
alliance activities from other competing businesses to
consolidating related businesses of partners into the
alliance (Doz, 1996; Kale, Singh, & Perlmutter, 2000;
Khanna, 1998; Makhija & Ganesh, 1997). For
example, Shin Caterpillar Mitsubishi, the joint
venture between Caterpillar and Mitsubishi,
experienced serious difficulties in its initial stage,
because both parties had independent hydraulic
excavator businesses that competed against one
another. Cooperation took off after the partners
combined their hydraulic excavator businesses
within the joint venture, which became responsible
for the design, production, and marketing of
hydraulic excavators for both partners (Nonaka &
Takeu-chi, 1995: 212–215).
Another important mechanism for increasing
cooperation is using the so-called black box approach, in which intermediate products incorporating partners’ contributions are transferred to
each other without revealing the underlying knowhow. This approach has been found to significantly
mitigate the risk of leakage (Baughn, Denekamp,
Stevens, & Osborn, 1997; Lorange & Roos, 1992;
Scarbrough, 1995). In fact, this was an important
design principle for one of the most
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successful alliances, GE-SNECMA, a joint venture
between GE and SNECMA that has become a
dominant player in aircraft engine production (Doz,
1996; Dussauge & Garrette, 1999). While GE
contributes its expertise in designing and manufacturing the engine core and the combustion
chamber, SNECMA is responsible for the lowpressure turbine, the fan, and the lubrication and
fuel systems. The interface is set up in a way that
does not reveal the underlying competences of either
partner. For example, to protect GE’s sensitive
technology, the engine core manufactured by GE is
sealed before being shipped to SNECMA for
assembly (Doz, 1996; Dussauge & Garrette, 1999).
Controlling greed and fear is thus crucial for
promoting cooperation among partners.
Proposition 2: The lower the threat of
greed or fear, the more likely alliance
partners will cooperate with each other.
Motivational Solution I: Improving
Communication Among Partners
While structural solutions can be effective in
solving the alliance dilemma, they involve high costs.
For example, a separate monitoring or surveillance
system may be needed to create universal hostages
within the alliance. The consolidation of partners’
related businesses into the alliance also requires
extra monitoring and coordinating. Motivationbased methods, however, can potentially offer more
cost-effective solutions to improve cooperation.
Enhancing communication among partners is one
such example of a cost-effective solution (e.g., Bouas
& Komorita, 1996; Chen, 1996; Dawes et al., 1977;
Kerr & Kaufman-Gilliland, 1994; van de Kragt et
al., 1983). Social dilemma research has consistently
shown that allowing communication (mainly face-toface discussion) increases cooperation dramatically.
For example, in Dawes et al.’s (1977) study of the
effects of discussion, the researchers found a 70
percent cooperation rate in groups with discussion
but only a 30 percent cooperation rate in nodiscussion groups.
Other researchers have obtained similar results
regarding the effects of face-to-face communication
(Bouas & Komorita, 1996; Chen, 1996; van de Kragt
et al., 1983). Moreover, studies of
the effect of other forms of communication—for
example, written message only or computermediated communication only (e.g., Chen & Komorita, 1994; Pilisuk & Skolnick, 1968)—also
showed significantly increased cooperation. A direct
implication of this effect for alliance management is
to improve communication among partners.
Proposition 3: The higher the level of
communication among them, the more
likely alliance partners will cooperate with
each other.
The communication effect is well accepted in the
alliance literature (Doz, 1996; Kanter, 1994), but we
know much less about the underlying mechanisms
that account for such behavioral changes. The social
dilemma literature has offered many explanations
for the communication effect.
One such explanation is that group discussion of
the dilemma helps people understand the nature of
the dilemma better so that all realize the negative
consequences associated with universal defection and
the positive outcomes of universal cooperation
(Dawes, 1980). Another explanation is the normative
influence (Deutsch & Gerard, 1955) generated
through dis-cussion—that is, discussing the dilemma
provides information on what choices others in the
group say they are willing to make, thus establishing
group norms and introducing conformity pressures
in favor of collective choices. A third explanation is
the trust developed through discussion and
interaction. Talking about decisions may cause group
members to believe that others are committed to
making cooperative choices, and enhanced trust, in
turn, reduces the perceived risk involved in making
cooperative choices oneself (Messick & Brewer,
1983). The fourth explanation is the group identity
hypothesis (Dawes, van de Kragt, & Orbell, 1988),
which states that group discussion induces positive
attitudes toward the group (group identity) and
creates a sense of cohesion that increases the
probability group members will take group interest
into account when making their own decisions. And
the fifth explanation is related to the perceived impact
(or perceived criticality, sense of efficacy) of one’s
contribution in establishing and maintaining the
public good or in influencing other members’
behavior (Chen, Au,
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Academy of Management Review
& Komorita, 1996; Kerr, 1989, 1992; Sweeney, 1973;
van de Kragt et al., 1983).
While it may be the case that all of these
mechanisms take effect at the same time during
group discussion of the dilemma, it is conceivable
that each of the mechanisms may, on its own, induce
cooperation.4 In studies testing these hypotheses
through means other than face-to-face discussion,
directly or indirectly, researchers found the
following results.
First, regarding the “normative influence” hypothesis, research indicates that while a competitive
norm is likely to increase members’ defecting choices
(Jerdee & Rosen, 1974; Pillutla & Chen, 1999), a
cooperative norm does not always increase
cooperation. Instead, whether it will increase
cooperative or defecting choices depends on how
much a member identifies with the group (Chen,
1997) or what cultural context the member lives in
(Chen, Wasti, & Triandis, 2003).
Second, studies of the “group identity” hypothesis
show mixed results. Although researchers found that
members who highly identified with their group
tended to contribute more, the high contribution was
often the result of the interaction between high group
identity and some other factor, such as perceived
group consensus or self-efficacy (Bouas & Komorita,
1996; Chen, 1996; Kerr & Kaufman-Gilliland, 1994),
suggesting that group identity may not be sufficient
but is necessary in inducing cooperation in social
dilemmas.
Third, the “perceived impact” hypothesis, unlike
the other two, has received significant support from
empirical research. For instance, Kerr (1992) found
that the perceived impact induced by allocating more
weight to a particular member’s input increased this
individual’s contribution. Chen et al. (1996) also
found that perceived criticality mediated the
relationship between objective criticality and
cooperation.
There are many ways to promote a cooperative
norm, to build high group identification within the
alliance, or to increase the perceived impact of each
partner’s contribution. For example, partners can
choose to make their promises (cooperative ones)
public so as to induce the
Because the “understand the nature of the dilemma”
hypothesis and the “trust” hypothesis are discussed later in the
paper, we focus on the other three hypotheses in this section.
4
October
perception of a cooperative group norm (for details,
see Orbell, van de Kragt, & Dawes, 1988). They also
can make a unilateral commitment to signal their
willingness to cooperate (Gulati, Khanna, & Nohria,
1994). For instance, in an R&D alliance, one partner
gave its counterpart the re´sume´s of all fifty of its
development engineers and then let its partner select
ten engineers that it considered best suited for the
alliance and decide how to deploy them (Gulati et al.,
1994: 65). When the majority of the partners do this,
a cooperative norm will be established within the
alliance.
One effective way to build identity with the
alliance is to make all partners aware of interalliance competition (Bornstein, 1992; Tajfel &
Turner, 1979)—for example, several other alliances
with similar products are competing for market
share—so as to create the feeling that all partners
within the alliance share a common fate. It has been
shown that partners facing the same enemies are
more likely to cooperate (Gomes-Casseres, 1996;
Hamel, 1991).
Furthermore, to increase the level of perceived
impact, an alliance should keep alliance size
relatively small by accepting only highly qualified
partners or by dividing into many small suballiances
to make decisions (Kerr, 1989). One reason for the
demise of Iridium, Motorola’s ambitious project for
mobile satellite communication, had to do with the
difficulties Motorola encountered in trying to gain
support from many partners who did not feel that
their contributions could make a difference to the
alliance (Finkel-stein & Sanford, 2000).
These arguments can be summarized in the
following propositions.
Proposition 4a: Alliance partners will be
less likely to cooperate with each other
when they perceive a competitive rather
than a cooperative norm within the
alliance.
Proposition 4b: Alliance partners will be
less likely to cooperate with each other
when they have a low rather than a high
level of identification with the alliance.
Proposition 4c: Alliance partners will be
more likely to cooperate with each other
when they perceive a high
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Zeng and Chen
rather than a low impact of their contribution on alliance success.
Motivational Solution II: Establishing LongTerm Goals Among Partners
Axelrod (1984) proposed increasing cooperation
among partners by extending “the shadow of the
future” after he conducted and analyzed a computer
tournament in the two-person prisoners’ dilemma. In
other studies scholars have also shown that when the
time frame is short— for example, when people play
a one-trial game—they are more likely to defect than
when they play a multitrial game (a longer time
frame). Moreover, people tend to defect more when
they know that it is the last trial of the game than
when they have no such knowledge (Andreoni &
Miller, 1993; Luce & Raiffa, 1957).
Why might a longer time horizon be effective in
enhancing cooperation among partners? First,
according to the goal/expectation theory proposed by
Pruitt and Kimmel, cooperation often results from
long-term thinking that aims “to achieve the goal of
establishing
and/or
maintaining
continued
cooperation” (1977: 375). As suggested by repeated
research findings, cooperation generally increases
after an initial decline, and the shift from short-term
thinking to long-term thinking usually occurs when
partners realize the importance of cooperation
through the experience of the undesirable consequences of defection (getting to an understanding
of the advantages and disadvantages associated with
cooperation and defection). In other words, it takes
time for all partners to fully understand the nature of
the game.
Second, in a long-term relationship, partners are
more likely to have opportunities to reciprocate other
partners’ behavior. For example, partners can
retaliate against defection behaviors in order to
make others realize that exploitative behavior cannot
continue forever, because other partners will not
unilaterally cooperate for a long time. They also can
encourage others to cooperate by cooperating first or
reacting with immediate cooperation when others are
doing so.
Third, a longer time horizon provides more
opportunities to develop trust among alliance
partners. As pointed out by Boyle and Bonacich
(1970), trust in dilemma situations develops from a
sequence of interactions that reveals or
discloses the motives and intentions of other players.
Finally, a longer time horizon imposes more
intangible costs related to noncooperative behaviors,
such as reputation loss, future partnership loss, and
so on. Hence, establishing a longer time horizon for
alliances promotes cooperation between partners.
For example, Heide and Miner (1992) surveyed a
sample of 155 purchasing agents and 60 suppliers
and found that extending the anticipated
interactions, increasing the frequency of contact, and
making one’s behavior more transparent could all
effectively extend the “shadow of the future” and
promote buyer-seller cooperation. Parkhe (1993) also
found, in a survey of senior executives involved in
joint ventures, that long time horizons and frequent
interactions reduced opportunistic behaviors among
partners and improved joint venture performance.
Proposition 5: Alliance partners will be
more likely to cooperate with each other
when they perceive a long-term rather than
a short-term goal within the alliance.
The reasoning above indicates two common
hypotheses
introduced
earlier—namely,
the
“understand the nature of the dilemma” and the
“trust” hypotheses. Understanding the dilemma
nature of an alliance is important in evoking
partners’ cooperation, because alliance partners
might not realize that they are in a dilemma
situation. They may be equipped with the “cooperating” spirit when joining the alliance and later
get frustrated when observing others’ shirking
behavior, or they may enter alliances prepared to see
self-protecting behavior from other partners and,
thus, may be unwilling to make significant
contributions to the alliance (i.e., the racing view).
Becoming informed about the complex dilemma
nature of the alliance can (1) get every partner’s
understanding along the same line, (2) help partners
see the whole picture (both advantages and
disadvantages) of cooperation and competition, and
(3) reinforce the desirable outcome of universal
cooperation (i.e., alliance success) and the
undesirable outcome of universal competition (i.e.,
alliance failure).
Dilemma research has shown that informing
people about the negative consequences of defective
actions or helping them focus on the positive
outcomes of cooperative actions increases
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Academy of Management Review
cooperation (Alock & Mansell, 1977; Caldwell, 1976;
Edney & Harper, 1978b). Partners having more
experience with alliances tend to understand the
dilemma nature of alliances better, and they do
better promoting cooperation among partners.
Corning Inc. has been exemplary in this regard,
successfully managing dozens of alliances over a long
time period. Companies entering alliances with the
mindset of “creating a win-win situation” rather
than “winning the learning race” have a higher
chance of success (Arino & de la Torre, 1998; Doz &
Hamel, 1998).
Proposition 6: The better they understand
the social dilemma nature of the alliance,
the more likely alliance partners will
cooperate with each other.
Despite the intuitive appeal of the trust hypothesis,
studies testing it have shown mixed results. On the
one hand, researchers have found that people who
have high levels of trust toward others are more
likely to cooperate (Bates, 1979; Caldwell, 1976;
Messick et al., 1983). On the other hand, researchers
have also found that unconditional trust—“no matter
what others do, I cooperate”—exhibited by one
member generated less cooperation than conditional
trust—“I cooperate if you do, or I cooperate first,
then cooperate only when you do so” (Axelrod, 1984;
Messick, 1994). These results seem to suggest that the
usual belief that “trust breeds trust” or “trust breeds
cooperation” is probably inadequate in capturing the
complexity of the social dilemma situation (Lewicki,
McAllister, & Bies, 1998). High levels of trust
demonstrated through unconditional cooperation in
a social dilemma can generate two types of
attributions: trustworthiness or irresponsiveness (or
stupidity). If this trust generates the former,
cooperation will likely follow; if it generates the
latter, then this trust is more likely to be taken
advantage of. Trust demonstrated through
conditional cooperation leaves room for only one
attribution—that is, trustworthiness (“this partner
can be counted on if I choose to cooperate”). This is
likely to be the case when partners behave according
to the reciprocity principle (Gouldner, 1960; Kogut,
1989)—that is, they cooperate first and then are
responsive to other partners’ behavior so as to
“reward” cooperation by cooperation and “punish”
defection by defection.
October
A typical example of the reciprocity princi-ple—
the tit-for-tat (TFT) strategy in a two-person
dilemma—has been demonstrated as the most
effective in inducing cooperation among numerous
competing strategies, including “cooperating all the
time” or “defecting all the time” (Ax-elrod, 1984;
Axelrod & Dion, 1988). Although in a multipartner
alliance it becomes harder to figure out the strategy
of any one partner, or to detect who is cheating or
distinguish cheating from honest mistakes,
researchers (e.g., Ko-morita, Parks, & Hulbert, 1992)
have shown that the larger the proportion of group
members who use a reciprocal strategy, the greater
the likelihood other members will cooperate.
Proposition 7: Alliance partners will be
more likely to cooperate with each other
when more partners in the alliance use the
reciprocity principle in interaction with
other partners.
So far, we have discussed the main structural and
motivational solutions for increasing cooperation in
multipartner alliances. However, structural and
motivational solutions complement each other, and
the mechanisms discussed above sometimes interact
with one another. As we discussed earlier, for
example, trust may be developed when partners
frequently communicate as well as when they
establish a long-term goal for the alliance. In turn,
trust building may also reduce partners’ “greed” and
“fear” in cooperating.
Moreover, enlarging the difference between the
payoff for universal cooperation and universal
defection may increase the trust level, because the
advantage of cooperation is made so salient. This is
consistent with Das and Teng’s view (2000) that trust
and control are both important in inducing
cooperation among alliance partners. Yamagishi
(1986b) once proposed a structural goal/expectation
theory to promote the simultaneous use of structural
and motivational approaches. Chen (1999) also
advocated a combined approach to social
dilemmas—that is, starting from structural changes
to understand motivational changes or starting from
motivational solutions to find effective structural
changes.
It is important to note that the propositions
developed in this article should apply equally to
multipartner and dyadic alliances. However, because
of the three major differences be-
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Zeng and Chen
tween these two types of alliances, as discussed
earlier—namely, more diffused harm, higher
anonymity of individual action, and the lack of
controllability of others’ behavior in the multipartner situation—it is generally more difficult to
induce cooperation from partners in the multi-player
than in the two-party situation. Moreover, norms
and identities are likely to exert more substantial
effects on partner behavior in the multipartner
situation than in the two-party situation. For
example, in the two-party situation, it is the other
party’s behavior that determines the focal party’s
perception and behavior, which do not involve norms
or identities. In the multi-partner situation, however,
the focal party’s perception is not likely to be
determined by one particular party’s behavior;
rather, the focal party forms its perception based on
the majority or a few partners’ past behavior and
then behaves according to its general perceptions of
the norm within the alliance, the cohesiveness of the
alliance, or its own potential influence on other
partners’ behaviors. We summarize these insights in
our final proposition.
Proposition 8: Establishing a cooperative
norm, creating high identification with the
alliance, increasing the level of individual
partner’s perceived impact, developing
optimal trust, and making each partner’s
action identifiable will be more important
in promoting cooperation in multipartner
than in two-partner alliances.
DISCUSSION AND CONCLUSIONS
In this article we make three major contributions
to the alliance literature. First, unlike in most of the
previous alliance research investigating why
organizations form partnerships and how partners
choose among different governance forms (such as
equity versus nonequity alliances), we focus on the
crucial yet long overlooked question of how partners
achieve and sustain cooperation after an alliance is
established (Doz, 1996; Koza & Lewin, 1998; Osborn
& Hagedoorn, 1997). In addition, we explore this
issue in the context of multiparty alliances—a form
of alliance that is growing both in number and in
importance but that has received limited theoretical
and empirical treatment.
Second, we provide a conceptual framework that is
particularly suited to studying this fun-
599
damental cooperation dilemma facing alliance
partners. Although the current dominant theories on
alliances, such as transaction cost economics,
organizational learning, and resource dependence
theories, have greatly enhanced our understanding of
the alliance phenomenon, they lack a comprehensive
grasp of the complex interdependence between
cooperation and competition among alliance
partners. The social dilemma literature, however,
has been developed to understand why and how
cooperation can emerge among self-interest–
pursuing social actors.
In Table 2 we compare the social dilemma
approach with some dominant theories in alliance
research on four aspects: key ideas, analytical unit,
research methodology, and disciplinary foundations.
The
transaction
cost
economics
literature
investigates when an alliance is an appropriate
governance form to organize interorganizational
relationships. Organizational learning theory focuses
on how organizations can use alliances to reduce the
uncertainties and resource dependencies they are
facing. The strategic management literature
emphasizes how parent organizations can use
alliances to gain market power or competitive
advantages. We can see, from this comparison, that
only the social dilemma approach focuses explicitly
on the dynamic interactions among alliance partners.
The social dilemma approach, however, is
consistent with other theoretical perspectives on
alliances. For example, some of the structural
solutions we have proposed in this paper, such as
using a universal hostage to minimize greed, are
consistent with a transaction cost reasoning
(Williamson, 1985), while the motivational solutions
seem to echo the recent relational view of alliances
(Dyer & Singh, 1998; Kale et al., 2000). Therefore,
the social dilemma approach provides a platform for
constructive dialogues among proponents of different
theoretical perspectives on alliances and helps to
pave the way for a truly multitheory and multilevel
understanding of alliances (Inkpen, 1995; Koza &
Lewin, 1998; Osborn & Hagedoorn, 1997).
Third, the social dilemma approach not only
provides theoretical underpinnings for some familiar
yet underdeveloped concepts in the alliance literature
but also offers fresh insights on partnership
management in alliances. For example, better
communication has long been rec-
600
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Academy of Management Review
TABLE 2 Comparison of Major Theoretical Approaches to
Alliancesa
Organizational
Comparison Categories
Transaction Cost
Economics
Learning/Resource
Dependence
Strategic
Management
Social Dilemma
Major contributors
Williamson (1985),
Pfeffer & Salancik
Killing (1983),
No explicit
application to
alliance yet
Inducing
cooperation
among selfinterest–
pursuing
partners
Multipartner
Modeling,
experiment, case,
large sample
study
Social
psychology
Hennart (1988)
(1978), Hamel (1991)
Key ideas
Choosing the right
governance mode
to minimize
transaction costs
Developing
capabilities,
reducing risk and
dependence
Kogut (1988),
Harrigan (1988)
Enhancing market
power and
competitive
advantage
Analytic unit
Methodology
Dyad
Large sample study
Focal firm
Case, large sample
study
Focal firm
Case, large
sample study
Disciplinary foundation
Economics
Sociology/OB
Strategy
(economics and
sociology)
a
We make the distinction between social dilemma theory and game theory despite the fact that public goods dilemma is sometimes
categorized as one type of game theory. Game theory is the term used by economists, who often assume that people are rational and thus
focus on developing strategies to win the game and structural solutions to the problem. Social dilemma, however, is a term proposed by
social psychologists, who assume that people are not always rational and that psychological factors play an important role in determining
behavior. Therefore, they emphasize both motivational and structural solutions.
ognized as one of the most important factors for
alliance success (Kanter, 1994), but researchers knew
little about why and how communication works. The
social dilemma literature helps us to understand how
better communication can lead to a higher perceived
impact of one’s contribution to an alliance, to a
stronger group identity with the alliance, and to a
better understanding of the nature of the dilemma,
all of which, in turn, promote cooperation among
partners. Meanwhile, the discussion on how partners
can enhance cooperation by minimizing the threat of
fear and greed provides fresh insights on partnership
management.
Limitations of the Social Dilemma Approach and
Directions for Future Research
The limitations of the social dilemma approach
stem from the assumptions underlying the public
goods paradigm used in this paper. First, there is the
assumption that every partner holds an equal
amount of resource to be contributed to the alliance
and that all are free to choose any amount for
contribution, both of
which lead to the second assumption, which is that
every partner shares an equal power in determining
and influencing the alliance outcome. Third is the
assumption that there is a symmetrical payoff for
every partner under the condition of cooperation or
defection, and, fourth, that all partners make
decisions simultaneously. Last, there is the
assumption that values accrued in the alliance are
equally shared by all partners, regardless of their
respective input.
Obviously, these assumptions make the public
goods paradigm an abstract and simplified form of
the dilemma, which may not fit the characteristics of
various alliances. For example, alliances often
involve a core member (or leading partner) who
contributes more, takes more responsibility in
establishing the alliance, and is entitled to benefit
more from the alliance. In this case, the leading
partner undoubtedly has more power than others in
influencing the alliance outcome and likely gains
more than other partners from the alliance. The
payoff matrix we describe in Table 1, thus, will not
apply in this
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Zeng and Chen
case, because it violates several assumptions
discussed above.
Nevertheless, even in such cases, the fundamental
tension between cooperation and defection (or
competition) exists. The leading partner still relies on
other partners’ contributions to make the alliance
work. If other partners contribute inadequately, the
alliance may fail, and the leading partner’s
investment will be wasted. The research findings on
the impact of control structures on performance by
Bleeke and Ernst (1993) seem to support this
assertion. They found that alliances with one
dominant company had a lower success rate (31
percent) than those with even split ownership (60
percent), because, in the latter cases, partners were
more likely to have a cooperative mindset.
In any event, we use the public goods paradigm as
a starting point to simplify the modeling. Other
research paradigms with more relaxed assumptions
(e.g., social dilemmas with an asymmetrical payoff
matrix or sequential social dilemmas; see Chen et al.,
1996, and Erev & Rapoport, 1990) can also be
extended to the alliance contexts accordingly.
Implications for Research
These analyses have shown the power of the social
dilemma approach in solving the cooperation
dilemma in multipartner alliances. Much more work,
nevertheless, is warranted before we fully
understand the dynamics of partner cooperation in
alliances. In addition to testing the propositions made
in this paper, future research is needed to
understand the boundary conditions under which a
particular mechanism would be effective in
promoting cooperation among partners. Also needed
is a better understanding of how structural solutions
interact with motivational solutions (e.g., how trust
can be built both through economic incentives and
social and psychological interactions; see Koza &
Lewin, 1998) in inducing cooperation over time in
alliances (Doz, 1996; Ring, 2000). Moreover, with
more and more organizations increasingly involved
in intricate webs of alliances (Doz & Hamel, 1998:
221–251; Gomes-Casseres, 1996; Powell, 1998), it is
crucial to understand how cooperation evolves in
networks of alliances.
Fully exploring the potential of applying a social
dilemma approach to alliances requires different
methodologies. One can adopt the sim-
ulation and modeling approach to test the propositions in the alliance context, as exemplified by the
recent work of Khanna and his colleagues (1998).
One can also adopt the in-depth case study approach
to understand how the constructs identified in this
paper manifest themselves and influence partner
cooperation. The work of Inkpen (1995), Doz (1996),
and Arino and de la Torre (1998) has made
important progress in this direction. Another
approach is to develop empirical operationalizations
of the key constructs identified in our propositions
and test them with large sample datasets (Khanna,
Gu-lati, & Nohria, 2000). Recent debate between
Ink-pen (2000) and Khanna et al. (2000) highlights
the need to adopt a multidiscipline and multi-method
approach to studying alliances.
There is a growing recognition of the need for the
alliance literature to move beyond treating alliances
as transitory mechanisms between market and
hierarchy, and beyond treating cooperation and
competition as two extremes of a single continuum
(e.g., Doz, 1996; Dyer & Singh, 1998; Inkpen, 2000;
Koza & Lewin, 1998). Drawing from social dilemma
theory, we have proposed various structural and
motivational mechanisms that can be utilized to
enhance cooperation among partners, in the presence
of continuous threat of competition. There exists a
vast number of papers in which researchers have
deployed the transaction cost, organizational
learning, and resource dependence theories, but the
potential of using a social dilemma approach to
understand partner interactions in alliances remains
unexploited.
This
article
has,
hopefully,
demonstrated the power of cross-fertilization
between alliance research and the social dilemma
literature and paved the way for future research in
this direction.
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Ming Zeng is an assistant professor of Asian business at INSEAD, Singapore, and a visiting
professor at Cheung Kong Graduate School of Business, Beijing, China. He received his Ph.D.
from the University of Illinois at Urbana-Champaign. He has done extensive research on
foreign market entry strategy, strategic alliances, and the competition and cooperation
between local and multinational firms in China.
Xiao-Ping Chen is an associate professor in the Department of Management and Organization
at the University of Washington. She received her Ph.D. from the University of Illinois at
Urbana-Champaign. Her current research interests include social dilemmas, group dynamics,
organizational citizenship behavior, and cross-cultural management.
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