Abstract: This study elaborates a conceptual model of partners’ assessment of the performance of their co-partners in a collaborative business relationship. The model’s usefulness has been illustrated through a study of 12 collaborative arrangements between Australian and Malaysian firms. The results show differences or gaps in partners’ expectations and perceived performance of their co-partners. The perceptual gaps have been explained with reference to differences in motives of collaboration, intensity of interaction, cultural differences, as well as the active involvement of a catalyst in the development of the relationship. The study also, draws attention to the policy and strategy implications of the empirical evidence.