| Summary: | Much has been made in recent times about the increase in the use of strategic alliances as a means of improving business effectiveness, efficiency and responsiveness. Indeed, the role played by strategic alliances within contemporary business management research can be argued to have supplanted the flrm as the dominant area ofresearch for academicians. The prevailing paradigm for analysis of the shifting boundaries between flrms and markets has been that of economic rationality, where efficiency is the guiding principle. Within the formalisation of Transaction Cost Economics under Williamson (1975), inter-flrm collaboration has been viewed as an intermediate organisational form that in certain circumstances can be superior to either internal governance or market transactions. However an alternative approach; that of Social Exchange Theory, builds upon foundations of reciprocity and trust and in so doing, shines an alternative light upon the exchange process. It is the purpose of this research to bring together the theories of Transaction Cost Economics and Social Exchange Theory in a discussion of strategic alliance performance. This research suggests that it is the presence of a social contract and the development of trust between alliance partners that will lead to the enhancement of alliance performance. This research also builds upon the knowledge-based view of the frrm and seeks to provide a bifurcation of the constituent elements of knowledge within alliances. Adopting structural equation modelling as the means of analysis, this research fmds evidence for the positive role played by the relational elements of a social contract and trust upon alliance performance, whilst fInding support for the hypothesis that certain structural elements of knowledge have a retarding effect on said performance. Interestingly, knowledge integration is found to have no signiflcant relationship with alliance performance. The implications of these flndings are discussed and future research directions are considered
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