Trust and conflict within virtual inter-organizational alliances: a framework for facilitating knowledge sharing Niki Panteli a, * , Siva Sockalingam b a School of Management, University of Bath, BA2 7AY, Bath, England, UK b Division of Business Information Management, Caledonian Business School, Glasgow Caledonian University, Cowcaddens Road, Glasgow Caledonian University, Glasgow, G4 0BA, UK Available online 18 May 2004 Abstract Trust and conflict are inherent issues of any organizational arrangement and central for knowledge sharing; yet they have received limited attention in the literature. In this paper, we undertake an investigation of both phenomena within the context of virtual alliances. A generic framework for understanding the dynamics of trust and conflict within the context of virtual inter- organizational arrangements is presented, followed by an examination of three distinct structural forms of virtual alliances, and strategies for generating trust and minimizing dysfunctional conflict. The paper concludes with an identification of avenues for further research. D 2004 Elsevier B.V. All rights reserved. Keywords: Conflict; Knowledge sharing; Trust; Virtual alliances 1. Introduction Today’s complex, competitive and dynamic busi- ness environment necessitates adaptive, flexible and responsive organizations. Accordingly, organizations are often compelled to form alliances with other organizations to survive and prosper. An expectation of such inter-organizational arrangements is the in- creased access to a wider pool of resources, in particular that of knowledge. While these knowl- edge-based inter-organizational arrangements have received an overwhelming attention in recent man- agement and organizational literature, often over- looked is the fact that this fertile mechanism for nurturing knowledge sharing and knowledge creation can become sterile and even pathological when trust between partners is lacking and conflict is poorly managed. While trust and conflict are fundamental considerations for effective knowledge-based inter- organizational arrangements, in particular those of a virtual nature, both bodies of literature have largely evolved independently of each other. This paper addresses this gap focusing on three different forms of virtual inter-organizational arrange- ments. It commences by presenting the case for the consideration of both trust and conflict within the context of virtual inter-organizational arrangements. The paper then reviews the literature on trust and conflict and explores their dialectical nature and the compounded implications for knowledge sharing. 0167-9236/$ - see front matter D 2004 Elsevier B.V. All rights reserved. doi:10.1016/j.dss.2004.03.003 * Corresponding author. Tel.: +44-1225-383319; fax: +44- 1225-386473. E-mail address: mnsap@bath.ac.uk (N. Panteli). www.elsevier.com/locate/dsw Decision Support Systems 39 (2005) 599 – 617