Chapter 16
Governing Opportunism in International Armaments Collaboration: The Role of Trust
16.1 Introduction
International joint ventures suffer high failure rates, and academic research has placed much of the blame on ungovernable problems of opportunism (Oxley, 1999). Not only do partners sometimes shirk their responsibilities and hold up a given venture—for example, by failing to deliver quality products on time and within budget—but they also engage in “technology poaching” or illicit efforts to procure proprietary knowledge from the other firm(s) (Clemons & Hitt, 2004). Although these problems are difficult enough to manage within a purely domestic setting, they become much more intractable when it comes to operating across borders, where laws and cultural norms may differ between the partner companies, often rendering contracts inefficient.
Central to a successful cross-border alliance (in particular, one that operates in countries where legal regimes are weak or where violations of intellectual property arrangements are difficult to prosecute in court, which is the case with many “secret” defense technologies), is the establishment of trust among the partners. But how can trust be “engineered” into complex systems like international, high-technology alliances? This chapter examines that question, drawing insights primarily from the field of behavioral economics.
We should note at the outset that it is not our contention that trust is the only or even ...
