It is important to note that since the purpose of a trust is to let everyone know what is expected and what is considered right. By focusing on rates of return on investment, adjusted for inherent risks, strategic alliances may develop an economic overview of those options likely to produce the best returns for them. Risks are obviously greatest the more resources are committed to a venture, although also included in the consid eration are such issues as political uncertainty, economic fluctuations and uncertainty over the performance potential of third parties. Arin et al (2005) points out that trade-off risk against greater control over operations and the potential for higher returns.
For example, wholly-owned foreign direct investment options afford one of the partners total control over activities and potentially higher returns than other strategies but at the expense of greater risk. Lane and Bachmann (1998) discuss that as the control over activities is high the risk is minimized as well as of the importance of trust. Lane and Bachmann (1998) underline the idea that trust should exist in this case, but it is role becomes less important because of control activities.
Conversely, strategic alliances involving in indirect exporting options have minimal risk but offer little to no control over activities and potentially low returns. The researchers (Lane and Bachmann 1998) underline that in this case, the importance of trust is crucial because a greater part of the activities depends upon trust and straight dealing of the parties. Like other forms of market servicing strategy, then, strategic alliances are part of a dynamic process. It is therefore unlikely that many strategic alliances initiated at the outset of the Single Market will be sustained in the future.
Conflicts concerning trust arising out of poor com munication and understanding (particularly of a cultural nature) will either result in the partners undertaking a complete review of strategic alliances or searching for alternative strategies.
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