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..To function effectively in both the near and distant future, leaders in global organizations must understand, develop and exercise trust and social capital. The competitive landscape in the new millennium necessitates that firms develop strategic flexibility. To do so, they must continuously renew their knowledge stock and produce innovations. To implement these strategies, leaders must build effective relationships among members and units in the organization. This is often accomplished through strategic alliances. Similarly, leaders must build mutual trust among alliance partners that over time leads to the development of external social capital. When employees trust leaders, they are more likely to be committed to the organization s goals, willing to develop firm-specific knowledge and likely to exercise creativity. Likewise, partners in trusting alliances are more likely to transfer knowledge, and contribute to a firm s innovation.