Chapter 7: Partner-Specific Routines, Trust, and the Quality of Strategic Decision Making: How Prior Ties Bias Management Decisions in Partner Acquisitions

This chapter conceptualizes a potential risk related to prior ties in the context of strategic tasks. It does so by focusing on the impact prior ties may have on the quality of decision making. The chapter theorizes how a firm’s alliance history can introduce biases into decision making and thus have a potentially detrimental impact on performance. Taking the example of a partner acquisition, it contends that interpartner routines and trust stemming from prior ties between partners can lead to cognitive biases in decision making, potentially producing suboptimal decisions that could adversely affect performance. By theorizing on the cognitive biases that partner-specific routines and trust might create, the chapter draws a more nuanced picture of trust and routines in economic exchange and elaborates on the conditions under which they can have potentially harmful impacts in organizations. It also contributes to the recent discussions and debates on experience spillovers in external corporate development activities.