Working Paper Series U.S./MEXICAN BUSINESS ALLIANCE NEGOTIATIONS: IMPACT OF CULTURE ON AUTHORITY, TRUST AND PERFORMANCE

In this paper, we highlight the impact of culture on relationships of authority, trust and performance in U.S. -Mexican business alliance negotiations. Using a sample of fifty-five Mexican firms with experience in alliances with U.S. counterparts, we propose cultural foundations to explain the outcomes of these negotiations in terms of governance structure (authority) and relationships (trust) in the alliance, and link these negotiation outcomes to Mexican partner perceptions of alliance performance. We find that Mexican managers view authority balance as a positive contributor to alliance performance, while authority advantage--even when to the benefit of the Mexican partner at the expense of the U.S. partner-is viewed as having a negative impact on performance. Trust also plays an important role in alliance performance. We highlight several examples of alliance negotiations between U.S. and Mexican corporations to illustrate these findings and other challenges and opportunities in cross-cultural negotiations. We draw implications of our research for managers engaged in similar cross-cultural negotiations.