Strategic alliances are assuming an increasingly prominent role in the strategy of leading firms, large and small. Such cooperative relationships can help firms gain new competencies, conserve resources and share risks, move more quickly into new markets, and create attractive options for future investments.1 Yet, despite their promise, many alliances fail to meet expectations because little attention is given to nurturing the close working relationships and interpersonal connections that unite the partnering organizations. While these personal relationships between “boundary spanning” members, who work closely together, serve to shape and modify the evolving partnership, economic theories of exchange virtually ignore the role of people and their importance in the management of interorganizational relations.2 Surprisingly, “human or people factors appear to have remained unconsidered or, at worst, dismissed” in the alliance research tradition.3

Communication and the proactive exchange of information can strengthen cooperative relationships in several ways. First, effective collaboration requires connections at three levels across partnering organizations, represented by continuing contact among (1) top management to develop broad goals and monitor progress, (2) middle managers to develop plans for joint activities, and (3) operational personnel, who carry out the day-to-day work of the alliance.4

Second, “trust plays an important (often dominant) role in successful alliances,”5 and communication and information processing are instrumental to building trust between partners.6 We define trust as “a psychological state comprising the intention to accept vulnerability based upon positive expectations of the intentions or behavior (of a partner).”7 A defining characteristic of trusting relationships is open and prompt communication among partnering firms.8 Likewise, frequent interactions, the timely exchange of information, and accurate feedback on each partner’s actions will minimize misperceptions and strengthen cooperation in the alliance.9

Third, communication among boundary-spanning personnel produces a shared interpretation of goals and common agreement on norms, work roles, and the nature of social relationships.10 In turn, as a strategic alliance evolves, “(1) personal relationships increasingly supplement formal role relationships and (2) informal psychological contracts increasingly substitute for formal legal contracts.”11

We studied a strategic alliance between two Fortune 500 firms (referred to as Alpha Communications and Omega Financial Services) that developed a cobranded product for the business market. This case study provides the rare opportunity to explore the