Martin Carlsson-Wall

This paper addresses the governance of trust repair in strategic alliances. Based on a longitudinal case study of three consecutive R&D alliances between two firms, we conduct an in-depth analysis of trust dynamics with particular focus on the trust repair process and its anatomy. Our study offers important implications both for the relational view of alliance governance and for the literature on organizational trust. Whereas relational governance scholars have pointed to the shadow of the future and top management involvement as stimulating positive trust dynamics, we find strong evidence that these strategies might actually hamper the mitigation of negative trust dynamics. Instead, our study points to temporal isolation, spatial separation and temporal demarcation as important strategies to cool-down and reboot inter-firm relationships after a trust breakdown has occurred. Our multi-level data also provide unique insights into the specific stages of trust repair in inter-firm relationships. Furthermore, we find competence trust to be more fragile than goodwill trust and therefore easier to break, but also easier to repair. Thus, trust repair in alliances is likely to originate from the gradual restoration of competence trust on the operational level and evolve to encompass goodwill trust as well and diffuse across levels.