Chapter 4: Balancing Trust and Distrust in Strategic Alliances

Strategic alliances are unstable, and answers have been sought as to why they fail and how to successfully manage them. Inherent tension between contradictory forces, such as simultaneous cooperation and competition, can be a source of instability, yet can also be an important part of what makes the alliance beneficial. To cope with tensions and risks trust has been argued as a way to reduce perceived uncertainty, but too much trust can pose a risk in itself. While trust has been acknowledged as an important aspect of managing strategic alliances, less attention has been paid to the importance of distrust and the dynamics of how trust and distrust interrelate. We argue that trust and distrust are distinct phenomena, each with distinct benefits and potential drawbacks. This chapter aims to advance understanding of the potential synergies of trust and distrust in strategic alliances and to provide an explanation why pursuing a balance between trust and distrust is desirable. We suggest that by pursuing a balance of trust and distrust, a firm can experience the benefits of what we call watchful blindness, which describes a practice of a firm accommodating and deriving the dual benefits of trust and distrust. Thereby firms can cope with uncertainty as their ability to foresee future developments is strengthened, which facilitates alignment of the firms’ frames of reference.