TOPIC : Trust is an important factor in relation to any decision on whether a manufacturing firm / service provider enters a strategic alliance. How can a manufacturer/service provider build up the trust before entering a new product commercialisation alliance?
To increase sales and generate more revenue, firm usually use a new product development strategy. However, nearly half of the new products that were introduced into the market fail because innovation is risky and expensive its cause financial loss and embarrassment to their promoters (Zirger & Maidique 1990 in Sicadas & Dwyer 200). To overcome the risk from new product development, many firm decided to entering to business alliance for better manage of innovation process. The number of firms which has begun to be a partner with other firm for the purpose of new product development are increasingly (Millson, Raj & Wilemon 1996 in Carlson, Frankwick & Cumiskey 2011) Mendleson and Polonsky (1995 in Carlson, Frankwick & Cumiskey 2011) defined strategic alliances as relationships where partners with complementary skills or resources join forces with the expectation of both parties profiting from the other’s experience. Trust is an important factor in building strategic alliance for new product development because its reduce the risk and cost during new product development. Trust exist at multiple level of corporation such as between individuals, groups, and organization (Brattström & Richtnér 2013). Some researchers distinguishes between goodwill trust and competence trust (Brattström & Richtnér 2013). This essay will focus on development of both competence trust and goodwill trust in new product development under strategic alliance between coordinating firms. This essay argues that there are many ways to generate trust between partners in strategic alliance for new product development.
In general trust, prior literature found that another ways to building trust is communication behaviour. Two way...