Explicit contracts and legal sanction

One way to prevent cheating in strategic alliances is the presence of an explicit contract that determines the legal liability if a fraud occurs.

Equity investments

Effectiveness of the contract can be improved by having a partner in the alliance and mutual investment with each other.

Firm reputations

A third limitation of stimulant fraud in a strategic alliance that is the effect that the reputation of fraud will result in a company’s future opportunities. Even so, it is relatively difficult to anticipate all the differences between the alliance partners who might commit fraud. Fraud in an alliance can close the opportunity or the opportunity to develop the partnership. For this reason, the company may decide not to commit fraud in their community today.

Reputation for fraud control in strategic alliances has several limitations.

• Fraud difficult to be separated in strategic alliances and relatively less impact on the reputation of the company or the company’s ability to establish alliances in the future.
• Even if one partner in a partnership may betray the relationship openly, one or two companies may not be simply connected to a network with other companies to make information public.
• Finally, the effect of a reputation of being eliminated, as long as fraud in an alliance is blatant and known to the public, may be able to close the opportunity or chance company in the future, but it’s only a small fraction showing the losses at this time by the company who cheated.