Evolution of cooperation and dynamics of expectations – implications for strategic alliances

Abstract

This study investigates the impact of reputation on alliance creation and the influence of expectations of partner behaviour on alliance failure and longevity. An experimental study with 120 chemical manufacturing project managers picks up on current perceptions of reputation of each manager and pre-existing relationships within the industry in the Asia Pacific Region. The researchers identified the formation of over 500 alliances and investigated the conditional effects of 'expectation matching' and 'expectation mismatching' on alliance duration. It was hypothesised that reputation and expectations would predict alliances success rates. Results suggest that alliance duration was significantly associated with expectation matching behaviour of both partners whereas expectation mismatching was associated with the cessation of alliance behaviours, particularly where the partner was perceived to behave with a selfish orientation. Interestingly, it was found that expectation matching behaviours were more likely between partners with similar reputation than being associated with high reputation.