International joint ventures Evaluating Trustworthiness of a Potential Partner

Name

Institution/Affiliation

Date

1.0 Introduction

To accurately assess the trustworthiness of a business partner is not easy. This exercise is often biased as it is in most cases one-sided. For example, a company will evaluate the trustworthiness of the company it plans to invest into without appreciating the company’s insight of its own trustworthiness. Companies look for partnerships both internally and externally so that to access added value concerning expertise, products and complementary services. Madueno and Garcia (2015, p. 27) found out that the present-day business environment is dependent on the ability to quickly establish and build trust this is because of an increase in strategic alliances and partnerships in business. Before any ratification of formal partnership deals, companies tend to strategically focus more on the partners' core competence level and high-value activities. Successful business collaborations are dependent on the ability of business partners to build trust; however, it takes time to develop.

2.0 Collaboration success

Types of trust in business collaboration

In the case that a business has multiple partners trust is very popular in determining the structure of ownership and business operation. For instance, where a business possesses various tangible assets characterized by the going concern of trading business. The popularity of trust among business partners relates to the benefits associated with income distribution and assets protection, among other factors. Two kinds of trust determine business collaboration: personal and procedural trust.

Personal trust

            Personal trust can be termed as the kind of trust that defines an interpersonal relationship between two individuals. Therefore, this is the willingness of a company’s owner to trust another owner so that they can form business collaboration. This kind of trust takes a significant amount of time to come into existence. An owner of company assesses the integrity and honesty levels of another owner through close monitoring of specific aspects of a company’s business operations and organizations. This provides a platform with which the intentions and the willingness to do business if entirely determined. According to Hurwitz and Hurwitz (2015, p. 147) from these particular expectations, the desire of a business owner to get into a collaboration with a company either grows or erodes. The relationship between collaborating company owners is built on trust and the willingness of one to fight for the greater common good. However, personal trust cannot be built proactively; it cannot just happen because certain business owners want it. In most case, personal trust evolves slowly and situational, but most business today do not have the patience to allow that to happen at a leisurely pace.

Procedural trust

The second kind of trust is very crucial in the initial stages of business collaboration between companies. Procedural trust can be built quickly and proactively; thus it is easy for companies that want to form a partnership to build a foundation of sustainable trust. This kind of trust involves the process where consenting companies agree to trust each other by placing their trust in a transparent procedure that they execute together or a conventional structure (Madeuno & Garcia, 2015, p. 30).  Typically, is the ability to collaborate companies to establish precise, reliable, and provable steps and procedures characterized by checks and balances, this enables the interested parties to create a long-term and fulfilling relationship. This kind of business collaboration is founded upon organizational trust, and subsequently, personal trust can also be built between company owners.  

The concept of procedural trust has been built from a wide range of project management disciplines, human resource practices, and societal structures. The method of procedural justice can be credited to result in procedural trust as it involved a situation where a defendant stood before a judge where facts and stores were heard. According to Morley (2016, p. 2149), the idea of procedural trust is grounded in the beliefs that companies can define the process in which they first agree to trust in the verifiable steps. Procedural trust forms the precedence upon which personal trust between company owners is established; as such the process ensures that trust is developed so that a business partnership can be sustained into the future. The critical advantage of procedural trust over personal trust is that it can be built proactively, with a plan developed by and agreed on by both business partners.

Steps for building trust

            Hurwitz and Hurwitz (2015, p. 147) assert that the process where companies want to establish or repair the business collaboration should be guided by a transparent process. This practice should be ascertained by the interested parties so that the objectives of the partnership can be aligned. Besides, through such a process of building a long-term relationship, risks and challenges will also be identified and so on. The method of establishing trust between business partners ready to collaborate follows the followings steps:

i.        Placement of interests and objectives

This step involves the process were consenting companies come together and agree on the specific goals that will determine the business collaboration. It is a process that is...