Relationship Bonding, Trust and Cultural Distance in Strategic International Public-Private Partnerships in Africa

Abstract

Strategic international public-private partnerships (SIPPPs) involve private multinational and public domestic sector parties. SIPPPs are a more complex but less studied form of international strategic alliance (ISA) and increasingly important in the development of emerging economies. A growing body of ISA research has suggested the importance of cultural differences in the often-reported failure of such cross-cultural relationships, but their exact nature remains unknown. This study examines the effects of both national and organisational cultural value systems on trust-building in SIPPPs. It uniquely also tests whether the two types of cultural values are accorded differently by the two types of partner, private and public. The complex relationship building processes were studied through the combined lenses of social-exchange and cultural-exchange theories, providing a rich perspective on the phenomenon under study. The sample, based on purposive sampling, consisted of successful and unsuccessful SIPPS of various sizes, from different industries, operating in a number of African countries. Africa, with its challenging environment and increasing focus on SIPPPs, represented an "extreme context" within which hypotheses could be rigorously tested. The relationships were tested empirically using structural equation modelling. The study confirmed a strong relationship between partners’ economic and collaborative interdependency on the one hand, and mutual trust-levels on the other. Cultural difference was shown to have both a negative direct effect as well as a positive moderating effect on trust building, providing support for the notion of a “cultural paradox”. Strong evidence was provided that partners from opposite sides of the dyad, informed by their respective cultural backgrounds, have different perceptions of the relative importance of these relationships in building trust. The findings have theoretical and practical significance, suggesting that SIPPP partners can improve trust levels and sustain their relationship by building ties of economic interdependence and engaging in collaborative actions to build their collaborative interdependence. The importance of partners being sensitive to each other’s needs and perceptions, and of engaging in reciprocity to build mutual confidence and trust seems critical. The findings have important implications for SIPPP design and needed management skills, as well as for future cross-cultural dyadic research.