Strategic Partnerships:

Building Trust

Building Trust Between Organizations

The Core Element of Partnership in Today's Rapidly Changing Knowledge Economy

Trust Between Organizations Defined

Mutual trust is a shared belief that you can depend on each other to achieve a common purpose. In a strategic partnership or a strategic alliance, "where your purpose is to get results that exceed what a transaction can do, mutual trust also means you can depend on each other to adapt as necessary. That involves more than keeping promises, because it entails changes that can't be planned in advance."¹

Enhanced Emphasis on Trust in the New Economy

Trust – both between individuals and organizations – is at the core of and delivers significant benefits in today's complex and rapidly changing knowledge economy.

It is one of the most efficient mechanisms for governing innovative business partnerships. With trust as a foundation, the companies – or teams within a company – can share their know-how to achieve synergy – results that exceed the sum or the parts.

"When both parties are known to be trustworthy, an expectation of loyal behavior exist for the parties as a cooperative arrangement is formed. Because of this expectation, firms are able to allocate fewer resources to monitor and control the alliance. In contrast, greater amounts of resources are required to monitor and control an alliance formed with a firm whose previous behavior suggests it can't be trusted."³

Trust as Competitive Advantage

Trustworthy firms have competitive advantage when it comes to forming and using cooperative strategies.

"One reason for this is that it is impossible to specify all operational aspects of a cooperative arrangement in a formal contract. Confidence that its partner can be trusted reduces the firm's concern about the inability to control or influence each operational aspect of an alliance through a contractual agreement."³

All-Encompassing Effort

Trust is not a matter of blind faith. Your must construct it – step by step.

Further, building trust between organizations is all-encompassing. It involves your people, corporate culture, politics, practices, priorities, and structures.