Trust In Market Relationships

Trust in Market Relationships To my loving family Trust in Market Relationships Sandro Castaldo Full Professor of Ma...

Author: Sandro Castaldo

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Trust in Market Relationships

To my loving family

Trust in Market Relationships Sandro Castaldo Full Professor of Marketing at Bocconi University, Italy

Edward Elgar Cheltenham, UK • Northampton, MA, USA

© Sandro Castaldo 2007 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher. Published by Edward Elgar Publishing Limited Glensanda House Montpellier Parade Cheltenham Glos GL50 1UA UK Edward Elgar Publishing, Inc. William Pratt House 9 Dewey Court Northampton Massachusetts 01060 USA

A catalogue record for this book is available from the British Library Library of Congress Cataloguing in Publication Data Castaldo, Sandro, 1965– Trust in market relationships / Sandro Castaldo ; translated by Maria Rosaria Buri and Jacopo Madaro Moro p. cm. Includes bibliographical references and index. 1. Marketing—Psychological aspects. 2. Markets—Psychological aspects. 3. Trust. I. Title. HF5415.C28813 2007 381.01´9—dc22 2007017111

ISBN 978 1 84542 761 0 Printed and bound in Great Britain by MPG Books Ltd, Bodmin, Cornwall

Contents vii

Preface PART ONE 1. 2.

CONCEPTUAL ASSUMPTIONS OF TRUST

Relationship- and network-based approaches: the emergence of trust demand The value of trust

3 27

PART TWO THE CONTRIBUTION OF THE DIFFERENT DISCIPLINARY CONTEXTS 3. 4.

Multidisciplinary studies on trust Trust in marketing

49 83

PART THREE THE TRUST CONSTRUCT’S ANALYTICAL BOUNDARIES 5. 6.

Trust definition: a content meta-analysis Trust in market relationships: the main analytical dimensions

PART FOUR 7. 8.

121 141

TRUST DEVELOPMENT

A trust growth model The evolutionary and interactive dynamics of trust

185 216 245 251 262 301

Appendix A: Trust definitions Appendix B: Trust scales References Index

v

Preface Until the beginning of the 1990s, the concept of trust appeared in the literature as an expression of two often contrasting attitudes. On one hand, trust was considered a fundamental ingredient of market relations, so important that is was almost a given fact, not deserving further analytical inquiry. On the other hand, the construct was regarded as fully irrelevant, as if it were a social convention of limited utility that did not explain the true essence of relational phenomena. At a symposium, a fellow who presented a paper on the theme of market relationships confessed to me that he was so certain of the theoretical inutility of the concept that he had decided to eliminate it from all of his works. In a word, some thought that the concept was so relevant and omni-comprehensive that any interpretation was to preclude analytical relevance. Others have reached the same conclusion, but starting from the opposite position: the only relevance of trust is practical. It simplifies the attempts to explain social relationships’ functioning, but has no theoretical value, because it can be substituted by constructs that are much more apt to be analytically expressed, such as power, risk, collaborative behaviours and so on. These opposite attitudes, both linked to a limited analytical examination, have triggered my curiosity, prodding me along a path that led me to this work. In particular, being initially focused on channel marketing, I had to conclude that trust is critical, at both the theoretical and empirical levels. Thus the construct emerged as the fundamental antecedent of the cooperative dimension within manufacturer–distributor relationships. Subsequently, in dealing with the market relationships and customer-based intangibles, I furthered my studies on concepts such as brand image, satisfaction and customer loyalty, all of which are currently strongly rooted in trust. Within that scenario, I have systematically explored the concept. This book is an attempt to deal with the significant analytical complexity and the extreme variety of perspectives characterizing the construct’s research. Weary of undue simplifications, it proposes some initial guidelines for developing a trust interpretation model that defines the conceptual basis of any trust management strategy. The work is divided into four parts, each two chapters long. Chapter 1 delves into trust’s essential conceptual requirements, namely the emergence of a new economy based on relationships and, more specifically, on vii

viii

Preface

networked and interconnected economic structures. Chapter 2 explores the construct’s role in supplying intangible assets and creating value for the firm, and thus its relevance in business relations. Part Two analyses the multidisciplinary nature of the construct, synthesizing contributions offered by some of the main social sciences that have analytically dealt with the concept. Chapter 3 is dedicated to the studies of psychology, sociology and organization that capture trust in its social dimension. Also discussed are the contributions from economy and transactional cost theory, focused on understanding the construct’s economicrational nature. Finally, it is the turn of strategic management, and the attempts of what can be called the first true synthesis of the social and economic dimensions of trust. A similar path is followed in marketing, as described in Chapter 4, which discusses both the construct’s conceptual nature and its managerial implications in some high trust intensity relational contexts: industrial goods markets, services, channel relations, buyer–seller relationships, virtual environments and customer-based resources (in particular, brand equity and loyalty). Part Three establishes the concept’s nature, its main definitions and analytical boundaries. To this effect, content and cluster analyses were conducted on a definition set derived from the literature. The outcome of that research is applied to the interpretation of the various meanings attached to trust, and that is presented in Chapter 5. The following chapter starts describing the epistemological nature of the construct, its basic factors, essentially risk and vulnerability, its various constituting dimensions and its different typologies, looking at the adjacent concepts which sometimes appear to be erroneously assimilated to trust. The last part analyses trust building strategies, indicating the concept’s cognitive and affective determinants, its consequences and its evolutionary processes. In particular, Chapter 7 focuses on the analysis of trust’s antecedents and consequences. A first interpretative framework and an example of a measuring process based on an experimental cross-sectional research are proposed. Finally, Chapter 8 further studies the dynamic and interactive nature of trust, and underscores the radical transformation exhibited by the construct according to the relationship’s different stages, thus highlighting the criticality of longitudinal research. On this matter, further evidenced is the reciprocity of the concept, the importance of jointly analysing the various perspectives of the relationship, and the need to avoid unilateral visions. A few notes on trust management conclude the work, indicating some vectors for future research.

Preface

ix

ACKNOWLEDGEMENTS This work represents the consolidation of several years of research and thus many are those who have directly or indirectly contributed to its realization. Since my studies on trust within channel relationship started in 1993, when I visited the Marketing Department at the University of Florida, until the most recent meetings and workshop organized by the FINT (First International Network on Trust), many are the colleagues who have helped me to develop the ideas presented here. Thus the pleasure of writing acknowledgements, coinciding with the conclusion of one’s effort, becomes a difficult reconstruction and listing of events and contributors. I well know that the final result cannot but be incomplete. Still, I wish to express my gratitude to all friends and colleagues who have fostered the evolutionary creation process that has transformed an initial idea of this book into paper and ink. In this process, some have left a particular mark, because of their contribution to this work, and the trust they bestowed on me, allowing me to reach this milestone. My particular gratitude goes to all my colleagues within the Marketing Department of SDA Bocconi and the Institute of Corporate Economics and Management ‘G. Pivato’ at Bocconi University. The ideas that emerged from our meetings, brown bags and common research projects have vastly contributed to the finalization of this work. My heartfelt thanks to all the participants in FINT and in particular to Katinka Bijlsma-Frankema, Kirsimarja Blomqvist, Don Ferrin, Nicole Gillespie, Guido Moellering, Frédérique Six, Denise Skinner and Antoinette Weibel. The exchange of ideas and viewpoints offered by this network has represented an important source of inspiration for some of the models developed in this work and a unique opportunity for personal enrichment. Thanks to the Research committee at Bocconi University and to its president, Professor Lorenzo Peccati, Pro-Rector for Research and Human Resources Management, who funded the translation of the book. Monica Grosso shared with me the text refining process and the realization of two sections on e-trust. Maria Rosa Buri and Jacopo Madaro have been in charge of the not easy task of translating the book. The reader will understand the many difficulties they faced in expressing the ideas and concepts of this book in the English language. This text received extraordinary professional support from Edward Elgar management staff: Francine O’Sullivan and Jo Betteridge fuelled my original idea, and David Fairclough supported me in the whole editing process.

x

Preface

Finally I must extend my loving thanks to my family members, whom I have quite neglected while focusing my energies on this book: their unconditional trust in me is their most sincere act of love. S.C.

PART ONE

Conceptual assumptions of trust

1. Relationship- and network-based approaches: the emergence of trust demand 1.

INTRODUCTION

One of the phenomena that characterize markets today is the exponential development of their complexity, which determines major consequences on the behaviour of economic actors. Firms are incapable of autonomously managing the increasing level of environmental complexity and, therefore, require a specialization in the production of knowledge as well as in the development of trust relationships with their markets. Hence, the need to connect in networks and integrate complementary competencies and expertise emerges, in order to face the new competitive contexts. This represents a first, knowledge-based (or science-push) factor, which is crucial to the constitution of networks of subjects with complementary cognitive resources (for example, Arora and Gambardella 1994). On the other hand, the firm–market relationship is subject to a radical change, in order to satisfy the complexity of customer needs, which appear with increased frequency as bunches. Unilateral and instantaneous exchanges will have to become long-term bilateral relationships, in which the demand will actively interact with the firms’ network, thus contributing to the knowledge development. This leads to a second, customer-based (or demand-pull) vector, which contributes to the tendency towards interorganizational network creation. This not only expands the relational bandwidth that connects the set of firms seeking to satisfy a common bunch of needs, but also reduces the cognitive distance between companies and their customers. In turn, clients become co-producers of the reticular knowledge base. This seems to be the case with the so-called lead users (von Hippel 1988) directly committed to the new product development process. Evidences drawn from virtual economy clearly indicate the development of such a trend, which induces companies, customers and consumers’ communities to cooperate in the generation of innovation (for example, Iacobucci 1998; Achrol and Kotler 1999; Sawhney and Prandelli 2000). 3

4


In such a context, the capability of connecting with customers – as well as with all economic players contributing to build the resource basis required by efficient value generation processes – is fundamental to a firm’s survival and development (for example, Dyer and Singh 1998; Morgan and Hunt 1999). To reach this goal trust plays a fundamental role. Actually, in the net-economy, the environmental and scientific complexity is transformed into a relational density that requires new resources – trust in primis – useful in managing this new dimension of complexity. Therefore trust becomes a true resource for the network and its members. It represents a factor enabling the ‘governance’ of the growing ‘relational complexity’ shown by the competitive arena. The goal of this chapter is to comprehend the major analytical factors at the basis of the trend which is leading to new relational patterns in an economy characterized by a significant cognitive complexity. To understand the crucial features of the concept of trust in the net-economy, it is necessary to investigate the discontinuity in the organization of economic systems, which are shifting from the Smithian matrix of exchanges to new post-Fordist reticular architectures (for example, Rullani and Romano 1998). The following sections will be devoted to an analysis of the reasons for such a shift in the organization of economic value production.

2. THE ONSET OF THE RELATIONAL PERSPECTIVE The concepts of exchange and relationship have been the subject of many marketing studies. The major reason for the interest aroused by such topics is closely related to the definition of marketing itself, which has led scholars in this area of studies to focus mainly on the activities promoting exchange and, more recently, the establishment of long-term relationships between firm and demand.1 One of the earliest official definitions given by the American Marketing Association establishes that marketing expresses the set of business activities necessary to transfer products and services from the producer to the consumer and/or user. This definition highlights the relationship as unilateral (assuming an active manufacturer and a passive customer), discrete (only transfer as an exchange is considered) and mono-dimensional (reference is made mainly to the physical and economic content of exchange, without considering other social, psychological and emotional dimensions). Further chapters will show how advances in research have led to the enhancement of the firm/customer relational interface, thus significantly upgrading the definition mentioned above.

Relationship- and network-based approaches

5

Marketing is not the only field in which the concepts of exchange and relation have been investigated. Actually, they have been the subject of considerable research in economics, strategic management, organizational studies, sociology, psychology and other social sciences focused on individual and inter-organizational interaction mechanisms. The outcomes of these studies and the concepts they proposed have conditioned the evolution of marketing studies, thus contributing to the generation of new interpretation models which denote new analytical dimensions of exchange and market relations. The concept of exchange that marketing resorted to, especially in the 1950s and 1960s – decades in which efforts were made to re-conceptualize marketing as a discipline – derives from the very nature of its definition provided by the neoclassical economy. The latter, in fact, refers to exchange from a utilitarian perspective, as the value/utility the parties involved can draw from the object of the transaction. Economics was concerned with formulating theoretical models aimed at defining balanced situations in the various market contexts. Hence, it had to connote exchange as a discrete event, without temporal references and with no links to companies involved in the passage of goods and/or services ownership (Carman 1980; Hunt 1983, 1991). The economic notion of exchange is compatible with the analysis of atomistic competitive systems, in which the parties have no identity and there is no long-term inter-organizational connection. This notion, however, is weak if applied to ‘peculiar’ situations such as oligopolies, where no balanced solution is actually achieved. In such cases, an appropriate interpretation has to consider the relational superstructure in which individual exchanges take place and become ‘sticky’. It is, therefore, fundamental to study the history and the future prospects of relationships between parties, implicit or explicit agreements, as well as the rules and norms regulating such relationships. This highlights the importance of the social dimension in which the economic exchange is embedded (for example, Granovetter 1985). Some marketing studies and socio-organizational theories seek to examine more exhaustively – albeit along different paths – inter-organizational relationships, thus trying to bridge this interpretative gap.

3. HIGH RELATIONSHIP-INTENSIVE MARKET CONTEXTS Marketing, as a discipline, has defined its research area referring to the very concept of exchange (between the firm and the customer), aiming at the study of activities accomplished by firms seeking to perform demand-related

6


transactions. Alderson was one of the first authors to introduce the concept of exchange as one of the pillars of marketing, proposing the well-known law of exchange, which establishes the (economic) conditions that make exchanges possible.2 Compared with the traditional contributions given by economics, the innovative contribution of marketing in this first stage of its evolution lays in the fact that, far from being exclusively limited to the transfer of goods, it encompassed all of the so-called marketing flows, further enriching the exchange concept contents.3 By ascribing priority to the economic dimension of exchange, one might be induced to neglect other important aspects of market relationships. As a matter of fact, the relationships between the firm and the market do not involve a mere transfer of the ownership of a commodity, and the exchange of information and financial resources, as assumed by the theory in its initial stage. Aware of the above-mentioned constraint, Bagozzi (1974, 1975) was led to explicitly consider the social and psychological contents of exchanges. He introduced the concept of exchange system, defined as the ‘set of social actors, their relationships to each other, and the endogenous and exogenous variables affecting the behaviour of the social actors in those relationships’ (Bagozzi 1974: 78). Following his contribution, marketing scholars started to become aware that individual exchanges are part of more complex superstructures and assume an analytical perspective, referring to a ‘broadening of the horizon’, in order to take into account both the history and the future advances impacting the dynamics of single exchanges. At a later stage, they started to take into account relational dimensions, thus highlighting that the psycho-social content of relationships and the identity of the actors involved have a substantial influence on the terms in which the ‘economic’ exchange develops (‘broadening of the spectrum’). Thus the concept of exchange started to evolve into that of relationship. This progress was based on the effort of those scholars who faced the inadequacy of the original concept of exchange while attempting to contextualize the traditional interpretation models proposed by marketing into situations other than those peculiar to traditional markets.4 Consequently, the need has emerged to define new theoretical constructs capable of taking into account the peculiarities of market relations, especially with regard to manufacturing, distributive and services sectors. This produced the socalled relational, reticular or interactive approach (for example, Grönroos 1991, 1995; Ferrero 1992, 2000; Grandinetti 1993; Snehota and Tunisini 1993; Iacobucci 1996, 1998), which led to the definition of marketing mainly as an activity aiming at ‘establishing, maintaining and enhancing . . . relationships with customers and other partners, at a profit, so that the objectives of the parties involved are met’ (Grönroos 1994a: 355). The purposes


7

underlying such evolution may better be understood by analysing the peculiar dyadic contexts mentioned above. The initial difficulty in applying the traditional marketing models typical of the transactional logic to such contexts has, in fact, determined the genesis of the relational perspective. 3.1

The Industrial Goods Markets

The major features of industrial markets consist of the individualization and interactivity of relationships, which determine an evolution of marketing policies towards a ‘relational’ approach. Such markets are usually characterized by highly complex products, which often require customization and, consequently, the participation of the customer in the design phase. Firms are therefore required to develop an expertise in extracting and managing the knowledge owned by the client, as well as the capability of enhancing it, in order to trigger self-specification processes of the customer’s requirements.5 Moreover, the industrial product is associated with numerous services. The importance of such an element in the value generation process makes the buyers’ process of selection even more uncertain, because they cannot verify the supply quality before the purchase. The economic lifespan of these goods implies that some services (such as assistance and maintenance) are offered for a prolonged period of time, thus increasing the ‘perceived risk’ and determining the need to establish long-term relationships. The relevance of the immaterial component of the supply, the complexity of the product system, and the need for customization associated with the variety of demand requirements – which implies intensive co-designing activities – increase the level of complexity and uncertainty related to the purchase. The rationale of instantaneous exchange cannot, therefore, be applied to industrial markets; consequently a long-term relationship between supply and demand is called for. The Industrial Marketing Purchasing (IMP) Group – aware of the peculiarities of the industrial goods market – has set out on a systematic research activity aiming to investigate the relationships between industrial manufacturers and customers. The Group started analysing individual relationships, developing the so-called interaction approach, which considers industrial markets made up of dyads of buyers and sellers interacting within a relational framework developed through time.6 More recently, the Group has shifted the focus of its scientific research from dyadic relations to the study of networks, within which interactions between individuals take place. This has given rise to the so-called industrial network approach. The need to shift from the content analysis of a single relationship to the study of firm networks was felt after observing that other relations involving the parties condition the

8


morphology and the evolution of the individual buyer–seller dyads. This has many relevant implications, as it can be asserted that the trustworthiness of a firm is determined also by its network and set of relationships. 3.2

The Distribution Channels

As occurs in industrial markets, the rationale underlying the concept of exchange appears to be somewhat reductionist when interpreting relationships between industrial and commercial firms. In fact, long-term relationships characterized by stability, analogous to – if not greater than – what takes place in industrial markets, link manufacturers and distribution, inducing some authors to conceptualize the channel as an inter-organizational system.7 The relationship in channels is denoted, in the first place, as individual. Namely, the client size, the reduced number of customers (increased after the retail industry’s concentration process), the need to provide ad hoc services and marketing assistance, together with the growing requirement to offer customized products, services and even brands, are all elements that induce an individual-based relationship management. Relations are also interactive. In fact, distribution not only receives products, services and information from suppliers but, owing to its proximity to end markets, can also develop its own customer knowledge, which – once accessible to manufacturers – will improve the supply and enhance the value of the demand. The intermediary appears not only as the ‘channel’ which transfers downstream the innovative values developed by manufacturers, but also as a co-designer of the industrial supply, appealing to its specific customer knowledge. Interactivity also plays a role at another level, that is, in the relationship with the final markets. The intermediary has the power of conditioning the demand and, therefore, may influence customers’ preference system as well as their purchasing behaviours. Within the framework of such an evolution, the manufacturer ‘depends’ on the collaboration of the distributor as well as on the trust that the latter has developed in markets downstream. Besides being individual and interactive, the manufacturer–distribution relationship is characterized by a long-term perspective. In fact, when the product enters into the distribution assortments and obtains satisfactory results (having, thus, obtained the retailer’s trust) it is very likely that it will be repurchased, hence reiterating the relation. These elements have led scholars to consider explicitly the relational dimension of the manufacturer–distribution relationship. Therefore they partially set aside the epistemological principles and the normative approach that initially characterized the ‘economic’ tradition of studies on channels, and focused instead on the socio-political dimension, and on the


9

opportunities of establishing distribution partnerships aimed at the value co-generation (for example, Anderson and Narus 1984, 1990; Anderson and Weitz 1989, 1992; Ganesan 1994; Heide 1994; Jap 1999, 2001b). In order to grasp such opportunities, the parties are asked to seek the development of new forms of activities coordination not easily achievable by means of free market solutions. Shifting from the conflicting aspects of exchange (related mainly to margin sharing and functions allocation) to the collaborative ones (referring to the opportunity of a joint value creation), both the need to consider channel relationships in a relational perspective and the centrality of non-formal coordination mechanisms, especially those based on trust, have emerged. 3.3

The Services Sector

In the case of transactions regarding services, as in the previous ones, it is often difficult to apply the concept of exchange that inspire marketing in mass markets.8 The immaterial nature of services is at the very basis of the uncertainty that permeates the buyer’s selection process. In fact, before purchasing the customer does not have access to reliable information on the qualitative aspect of the offer, as the service is provided at the very moment of the purchase and consumption.9 In order to reduce the risk associated with a decision-making process characterized by a significantly high level of uncertainty (for example, Murray and Schlacter 1990), the consumer is induced to select those alternatives offered by a supplier with whom she has established a consolidated relationship and developed a trustworthy relationship (for example, Crosby et al. 1990; Garbarino and Johnson 1999; Sirdeshmukh et al. 2002). This determines a drop in transaction costs, while triggering significant opportunities for the achievement of synergies in complementary activities (Arndt 1979).10 The concept of long-term relationship becomes an essential construct in service industries, as well in industrial markets and in manufacturer– distribution relations (for example, Crosby et al. 1990; Pritchard et al. 1999). This proves that there is a sort of convergence of principles related to the various contextualization of marketing (Grandinetti 1993: 126 ff.). The concept of relationship acquires a greater interpretative value in light of the ongoing evolution from the Fordist paradigm to the neo-industrial one, characterized by the convergence between manufacturing and service businesses. 3.4

The Relational Orientation in Marketing Studies

The analysis of marketing applications to the industrial goods sector, distribution channel relations and services shows that the concept of exchange

10


is inadequate to embrace the full range of transaction phenomena. Innovative theoretical constructs are therefore called for in interpreting the peculiarities of buyer–seller relations such as those mentioned above. As will be shown in Chapter 4, it is not by chance that the first contributions of marketing studies on trust appeared in those three contexts. Today, the progress in information and communication technology (ITC) has expanded that approach beyond the boundaries of the above-said relational contexts, ‘contaminating’ most of the contexts that in the past were based mainly on mass marketing principles. Customer relationship management, interactive marketing, reverse marketing, loyalty management and, in more general terms, all management systems inspired by the relational perspective spread across consumer goods markets, proving that this perspective cannot be considered an absolute prerogative of a few industry contexts (for example, Sheth and Parvatiyar 1995; Iacobucci 1996; Achrol and Kotler 1999; Gummesson 1999). Once the relationship concept was accepted, the marketing discipline began to establish a ‘dialogue’ with the socio-organizational studies converging into the theory of inter-organizational relations. The major contribution of such studies stems from the consideration that the central analytical construct is not just the exchange, as suggested by the economic tradition, but the relationship. The analytical object becomes, in fact, the dyadic relationship between firms or, in more general terms, the inter-organizational network to which an organization belongs.11 Studies devoted to the analysis of a more general relationship between the firm and the environment have also played a considerable role in interpreting the relational dimension of the economic organization. This may be clearly seen observing that the environment is made up of stakeholders with whom the firm is in contact. We refer mainly to the theory of structural contingencies (Pugh and Payne 1977; Emery and Trist 1965; Lawrence and Lorsch 1967), the conceptual model of ‘resources dependence’ (Aldrich and Pfeffer 1976; Pfeffer and Salancik 1978), organizational evolutionism (Aldrich 1979; Nelson and Winter 1982, 1985), and organizational cognitivism (Weick 1979a). Briefly, a new way of considering relations between economic subjects has emerged. The discrete perspective of exchange, abstracted from time and space dimensions and external to the organizations, is giving way to a continuous vision, anchored to specific space and time and embedded in an ongoing relational context. In the end, the traditional concept of exchange has been considered inadequate to interpret market relations, forcing the research horizon to expand to the concept of relationship. This evolution does, however, call for caution. A closer consideration of the social dimension of market relations cannot foster disregard for their economic contents. The introduction of the relationship concept leads to a broader analysis of


11

elements, such as bilateral collaboration and coordination among parties, but cannot obscure the competitive dimension of all negotiations entailing economic variables.12 Thus, the concept of relationship conjugates both analytical dimensions. This would undoubtedly be more difficult than analysing only exchange per se, without considering that it is embedded in relations made up of both economic and social values, competitive as well as collaborative elements, triggering the well-known phenomenon of co-opetition (for example, Hamel et al. 1989; Brandenburger and Nalebuff 1996). This work is designed to examine in depth the concept of trust. This decision stems from a deliberate intention to isolate one specific variable that plays a critical role in understanding market relationships. Although such ‘isolation’ may be justified for analytical purposes, it should not be assumed that this is the only dimension relevant to the study of business interdependencies. From an interpretative point of view, there are equally relevant constructs (for example, the concept of market power), which will only briefly be noted in this study.

4.

RELATIONAL MORPHOLOGY

According to some scholars, the relational approach configures a general approach applicable without discrimination to any type of market relationship. Others have identified some relational categories to which this approach may be more easily applied, giving rise to various taxonomies. Such taxonomies have a special analytical importance in our study, for three reasons. Firstly, they clarify the concept of relationship (integrating the contents of previous paragraphs) and, above all, its different declinations. Secondly, they will enable a more exhaustive interpretation of the different meanings associated with the concept of trust. In fact, quite often different relational typologies have been associated with different needs in terms of governance mechanisms and trust, determining different trustrelated types, which will be reviewed in Chapter 6 (section 6). Thirdly, relevant management implications have been derived from the classifications found in the literature, leading to the definition of a differentiated management approach to each relational type.13 In order to define the diverse relational typologies, three fundamental categories of criteria have been used: mono-dimensional, multidimensional, which classify relations contemplating several elements simultaneously, and dynamic approach, which differentiates relations according to their evolutionary stage. The first category of criteria (mono-dimensional) is inflected in diverse ways, according to the different aspects of a relationship. The most frequently

12


taken into account are structural criteria (the first three listed below) and the socio-political variables (the last three of those items), namely: 1. 2. 3. 4. 5. 6.

the numerousness of subjects involved in the relation and the adopted analytical perspective; the identity of the subjects involved in the dyadic report; the relationship content; the parties’ orientation and the intensity of their involvement; social variables, such as commitment level, and power and dependency relations between the parties; the tie intensity which characterizes the relation.

We will analyse briefly each of these criteria and their main contributions to the relationship classification framework. 1.

The first criterion has outlined the boundaries of the object under study, identifying the set of actors involved in the relationship, and qualifying it initially by their multiplicity. In marketing the most frequently researched area is undoubtedly represented by the buyer–seller dyad. More recently some authors have expressed the need to study dyadic relations within more articulated sets, underlining the limited interpretative relevance of analysing a relationship without referring to its milieu. It has, in fact, been pointed out that the structure and type of relations influence significantly the focal dyad evolution and its analytical structure (Iacobucci and Hopkins 1992; Anderson et al. 1994). This is the reason why the set of the analysis has been expanded, taking into account a higher number of actors, that is, triads, or, in more general terms, networks of interrelated subjects (for example, Iacobucci 1996, 1998). To this effect, in researching relationships, great relevance is given to the analysis perspective. As will be mentioned later, this element is quite critical to the measurement of trust and related constructs, especially in the case of the so-called two-way relationships.14 Often relationships have been studied considering the perspective of only one of the parties (that is, trust measurements privileging the buyer’s viewpoint). More recently some attempts have been made to focus on both viewpoints of the dyad members, thus obtaining a bilateral perspective. The dynamics and the relational structure of trust, as will be examined in depth in the last chapter, are based on the interaction between the counterpart’s representations made by a subject and the relational context as a whole. Hence, limiting the analysis to the perspective of only one party is an evident source of reductionism. Therefore, in order to interpret relations exhaustively, it does


13

not suffice to expand the number of subjects to be examined, but analytical approaches capable of contemplating a plurality of perspectives are required.15 2. The classification criteria most widely used in management refer to the identity of the involved subjects. Such identity depends on the type of industry the actor belongs to or, even more frequently, the position s/he holds in the supply chain. Thus, distinctions were made between business-to-business and business-to-consumer relations. In some cases, a need was felt to further structure such classification, for example differentiating within the first type between distributive relationships and relations between industrial firms, due to the peculiarities defining the analysis of the manufacturer–distributor dyad compared with the traditional industrial supply relationships. Among several suggested classifications, Morgan and Hunt’s (1994) defined the diverse relation types according to the ‘position’ in the value system held by the actor with whom the focal firm establishes an exchange relationship. Thus, they identified four categories of relations: supply, buyer, lateral, and internal – which, in turn, include several relation typologies, as illustrated in Figure 1.1.16 3. The third criterion, in part related to the next one, refers to the relationship contents, that is, its strategic content and the object operational level (for example, Parvatiyar and Sheth 1997). These contents are defined along a continuum that ranges from strategic alliances – envisaging broad partnership programs between a buyer and a seller involved in initiatives crucial to the firm’s future survival – to the socalled tactic collaborations, referring to isolated promotional operations or integrated marketing initiatives (co-promotions, shared communication, and so on). 4. Behavioural elements are often classified according to the orientation of the interested parties. This criterion forms a continuum modulated between two extremes: the so-called transactional and relational orientations. The former is represented by the typical instantaneous exchange, where the parties are interested exclusively in the conclusion of a single transaction and apply the typical approach of the zero-sum instantaneous games (without subsequent events). The second is a longer term approach based on collaboration, in which subjects are interested in developing more intensive interdependencies for both social and information exchanges, leading to a strong commitment and to long-term mutual benefits (Anderson and Narus 1990; Grönroos 1994a; Brodie et al. 1997; Guenzi 2002a, 2002b).17 5. Some criteria closely related to those previously mentioned have been suggested by scholars who focus on prevalently behavioural variables,

14

Conceptual assumptions of trust Supplier partnerships Goods suppliers

Service suppliers 1

Business units

2 Competitors 3

10

Employees

9

4

Focal firm

Internal partnerships

Non-profit organizations

5

8 Functional departments

Lateral partnerships

7

Intermediate customers

6

Government

Ultimate customers Buyer partnerships

Source: Morgan and Hunt (1994: 21)

Figure 1.1

The nature of marketing relationships

namely commitment, power and dependency. Regarding the commitment level, Dwyer et al. (1987) suggested a classification paradigm based on social exchange theory principles.18 Their scheme adopts as a fundamental criterion the intensity of the motivational investment of each party (favouring the bilateral perspective) and isolates three major categories of relations, each requiring different managerial and interpretative tools. These categories are the following: bilateral relationships, entailing a considerable motivational investment by both parties; unilateral relationships sustained by the seller or the buyer, according to each party’s motivational investment; and discrete exchanges (spot contracts) characterized by the parties’ very moderate motivational investments. This classification allows one to correlate the relationship’s contents and critical features with the parties’ perceptions and attitudes, rather than with external aspects. In fact, the relationship depends not so much on objective factors as on elements reflecting the individual efforts made by the parties and their respective level of commitment. Regarding the other behavioural variables under consideration, especially power and dependence, various types


15

of classifications have been proposed, based on the balancing of power and dependence between the parties. This has led to the differentiation between asymmetrical relationships, where one of the parties clearly prevails in terms of power, and balanced or bilateral relationships, where there is a level of reciprocal dependence between the parties. 6. One final, and quite useful to our goals, type of classification refers to the strength of the links characterizing the relation. A differentiation has been made between strong and weak ties (for example, Granovetter 1973). The former present a high level of closeness, reciprocity and trust, while weak ties are characterized by a greater distance between the parties, which have fewer opportunities to contact each other. Currently, an interesting debate is developing on the consequences and advantages of these two relational typologies in terms of both collaboration and information sharing. It has been verified, however, that subjects linked by strong ties have greater possibilities of exchanging confidential and sensitive information. Weak links, instead, owing to the subjects’ greater distance, give access to new knowledge bases and a greater variety of information. Actually, less intimacy between subjects leads to totally independent planning and implementation of one’s own vector of knowledge development. Thus, the subjects set off on divergent paths, acquiring diverse relational and knowledge assets.19 Hence, in order to access truly innovative contents, it might be important to avoid the so-called strong ties (friends) and activate ties generally defined as weak (mere acquaintances). Although the classification models analysed thus far refer mainly to a single relational dimension, some studies have suggested more articulated – multidimensional – classification paradigms, taking into account, at the same time, some of the dimensions analysed above. Parvatiyar and Sheth (1997: 241), for example, simultaneously examine criteria based on: ● ● ●

the nature of the actors involved in the relation, be they customers, suppliers or competitors; the relational objective, which can be configured either as strategic or tactical/operational; the orientation of the firm, which is defined as either relational or transactional.

Crossing the first two analytical dimensions the following types of relational orientation – the ones most relevant to this work – emerge:

16

1.

2.

3.


collaborative marketing, in the case of strategic relations with customers, which will become initiatives of cooperative marketing in the case of tactical/operational relational objectives; supplier partnerships, whenever strategic relations with suppliers are implied, which may be turned into simpler supply special agreements whenever operational objectives are involved; strategic alliances, in the case of strategic relations with competitors, which may become cartels whenever they are referred to as tactical objectives.

A similar attempt, although referring to a different context, was implemented by Sheppard and Sherman (1998). The authors, aiming at pinpointing the different trust requirements in the various relational contexts, differentiated inter-organizational relations on the basis of more abstract dimensions than those mentioned above: the different relational intensity and the level of interdependence established between the parties. Considering these two dimensions, four different typologies have been defined and reported in Figure 1.2, namely authority relationships, market relationships, and bilateral relationships either loosely or tightly coupled.20 More recently, another approach has been developed to differentiate among the various types of relationships, referring to the developmental phase of their evolutionary cycle. Referring to product’s life cycle models, some studies have considered explicitly the time spent and the intensity of relational experiences existing between the two parties as a major criterion RELATIONAL DEPTH

Dependence

Shallow

Deep

Market relationships

Authority relationships

Bilateral relationships, loosely coupled

Bilateral relationships, tightly coupled

FORM OF DEPENDENCE Interdependence

Source: adapted from Sheppard and Sherman (1998: 426)

Figure 1.2 Various relational forms defined according to relationship intensity and dependency typologies


17

to classify relations. The relevance of this criterion is highlighted by the management implications it raises. In fact, the different stages of the relation envisage the need to manage the relationship resorting to diverse management approaches and marketing tools (Iacobucci and Zerrillo 1997; Costabile 2001). Ford (1980), a scholar belonging to the IMP Group, was among the first to suggest such a model applied mainly to business to business relationships. His model may be broken down into five stages:21 1. 2.

3.

4.

5.

pre-relationship, including everything that may induce a buyer to evaluate a potential new supplier; early stage, including the first contacts with the potential supplier, when the distance between the parties is still significant and there is a limited mutual experience and relational commitment; development stage, referring to the evolutionary stage of the relation, characterized by increasing purchasing and by a major uncertainty and risk, thus triggering the need for trust, owing to the higher values at stake; long-term stage, in which a mutual awareness of the importance of the relationship is achieved, together with a decreased relational uncertainty, owing to greater trust between the parties; final stage, which leads to a sort of institutionalization of the partnership where the conduct of business is based on industries’ codes of practice.

Dwyer et al. (1987) suggest structuring the interdependence evolutionary process in five stages: (1) full mutual awareness; (2) exploration, a phase in which the buyer tests the seller; (3) expansion, during which contacts, interdependence level and opportunities of expanding the relation are more frequent; (4) commitment, characterized by high mutual satisfaction, trust and (implicit and explicit) commitment to maintain the relationship; (5) dissolution of the relationship, determining the end of the relational experience, often caused by unilateral behaviours. Grönroos (1994b), like Ford (1980) but unlike the model just analysed above, does not consider partnership dissolution as the final stage, but proposes a very linear, three-stage process: initial stage, purchasing stage, and the use of the product. In this last stage, the supplier has to pay great attention to monitoring the customer’s satisfaction and the buyer’s trust. Grönroos’ interest in the marketing relational approach leads to his referencing of these three different stages to show how their contents change considerably, passing from a traditional marketing approach to an interactive and relational one. Wilson (1995) has introduced a model that is

18


particularly relevant to this work’s purposes, because it demonstrates the evolution of the role of a series of relational variables, such as trust, satisfaction, commitment and reciprocity, during the various stages of the relationship.22 Thus, while studying relational constructs, relationship evolutionary models have highlighted the need to take into account the relationship stage, defining – in a cross-sectional perspective – the existence of different types of customers for each stage. Within this framework, Blattberg et al. (2001) highlight five fundamental stages of relational dynamics, which correspond to just as many clusters of customers: prospects or potential clients at their first approach; first-time buyers or potential future consumers; early repeat buyers or buyers still seeking a confirmation (hence trust) of the offer value; core customers, who are convinced of the offer quality and trust the firm and hence are less prone to competitors’ stimuli; and core defectors, who have decided to switch to alternative offers.23 Such segments require ad hoc relational approaches, in view of their characterization by different levels of relational constructs. Attempting to summarize the major contributions provided by the above-mentioned ‘dynamic’ models, four major relational stages can be identified, together with their prevailing relational constructs corresponding to different categories of customers: 1.

2.

3.

4.

First contacts, when expectations consistent with the firm’s capabilities should be generated in the counterpart, in order to lay the basis for the first satisfactory events. At this stage, the customer needs to make a relational comparison between the value expectations generated by the offer and his/her assessment after the purchase, which determines the relationship’s continuing convenience. Consolidation and mutual learning stage, when the parties develop a sort of predictive trust, based on the acknowledgement of the supplier’s capabilities to meet the customer’s specific needs, thus inducing stabilization and a recurrent interdependence between the parties. Expansion stage, in which the increasing mutual commitment, the value consonance permeating the parties, together with the increased level of trust determine the possibility to free the relationship from both traditional contents and recursive performances, thus opening the possibility to pursue new joint projects, with a consequent enhancement of the relational bandwidth. Decline stage, foreseen by some models only, in which lack of satisfaction and betrayal are expressed, forcing the supplier to implement preventive actions of relationship rebuilding.


19

A synthesis of the criteria of the classification of relationships suggested in this section, with some examples drawn from the above-mentioned studies, is shown in Table 1.1. Table 1.1

Summary of the main criteria adopted to classify relationships

Typologies

Specific criteria

Examples of relational typologies

UNIDIMENSIONAL CRITERIA Numerousness and Number identity of the involved Sector subjects and observation perspective Position within the supply chain

Relationship observation perspective Relationship object

Parties’ orientation and behavioural variables

Content strategic value Functional specificity

Temporal level Commitment level Power/dependency Tie strength

Relationship dynamics

Relational stage

Dyad, triad, network Business-to-business, business-to-consumer, consumer-to-consumer Distributive, consumption, supply Supplier, lateral, buyer, internal Focal firm vs. multiple observation points (dyadic, triadic) Strategic vs. tactic Marketing, distribution (channels), technological (R&D), productive (supply), financial Long, mid, short term High motivational intensity, low commitment intensity Balanced or unbalanced (with a recognized leader) Weak or strong ties / tightly or loosely coupled (a) (1) Awareness (2) Exploration (3) Expansion (4) Commitment (5) Dissolution (b) (1) Pre-relationship (2) Early stage (3) Development (4) Long term (5) Final stage

20

Table 1.1


(continued)

Typologies

Specific criteria

Customer loyalty stage

Customer typologies

Examples of relational typologies (c) (1) Partner selection, (2) Goal definition, (3) Relational boundaries determination (4) Relational value creation (5) Relationships maintenance (d) (1) Satisfaction and trust accumulation (2) Behavioural loyalty (3) Mental loyalty (4) Loyalty (e) (1) Prospects (2) First-time buyers (3) Early repeat buyers (4) Core customers (5) Core defectors

MULTIDIMENSIONAL CRITERIA Multidimensional criteria

Firm relational goal (strategic vs. tactic/ operational) and orientation (relational vs. transactional) Relationship intensity and forms of dependency

Collaborative marketing, cooperative marketing, supplier partnership, special supply agreements, strategic alliances, cartels Market relationships, authority relationships, bilateral relationships.

5. INTER-ORGANIZATIONAL NETWORKS: THE NEED FOR NEW COORDINATION MECHANISMS In order to understand the structural features and the dynamics of a relationship, the environment in which it takes place has to be considered. It has actually been demonstrated that a relationship’s structure and


21

dynamics depend not only on the behaviour of the single dyadic actors, but also on the other relations in which they are directly or indirectly involved (for example, Anderson et al. 1994). Trust itself follows evolutionary paths that are conditioned by the development of the structure in which the relationship has developed, thus proving that a dyad cannot be considered isolated from the relational network to which it belongs (for example, Iacobucci and Hopkins 1992). This determines an exponential increase in analytical complexity. We are convinced that the environmental complexity which characterizes the actual economy should not be simplified, but rather understood and enhanced by means of appropriate analytical models. Hence, it seems appropriate to take this further analytical step, pointing out the most adequate mechanisms to meet the highest coordination requirements generated by a network economy.24 Indeed, if the coordination mechanism between firm and markets is essentially represented by price in the Smithian firm, and by the plan in the Fordist firm (Di Bernardo 1991), in the ‘network-based firm’ trust becomes the main link. The plan is based on the power code, and depends on the capability of the Fordist firm to compress the external variety, taking advantage of its ability to shape external subjects (consumers, distributors, media). In the network-based firm – which has to cope with an environment characterized by a level of complexity that is neither possible nor convenient to compress – it is necessary to use a code enabling the system to self-regulate, thus giving access to different solutions in order to implement network projects that can assume forms that were not foreseeable ex ante. Hence, a new code has to be developed which – differently from the plan – may allow the utmost design flexibility. Trust, besides contributing decisively to the governance of the complexity level, is useful for expanding the variety of alternatives pursuable by the parties forming the network.25 Actually, it absorbs the risk and the possible decision-making impasse that take place whenever the firm is incapable of foreseeing actions and reactions of the other subjects within the network;26 it acts as an adhesive (maintaining cohesion) and as a lubricant (enabling the operability) of networks. These networks are obliged to cope with levels of increasing complexity, and transfer more and more intangible and abstract resources that always require different behaviours, whose consequences are not easily foreseeable a priori. Furthermore, once the prerequisites to trust-intensive relational contexts are met, the connection potential further increases, broadening the relational boundaries and fostering the exploration of new horizons and the implementation of co-evolutionary development patterns (March 1991; Huemer 2000). The relevance of the network concept in studies on trust is not exhausted by the role this resource may play as a support to the network coordination mechanisms. Actually the network not only requires trust

22


Network participation

Figure 1.3

TRUST

Collaboration and network coordination

The network role in trust production and use processes

to be coordinated and run efficiently (thus playing the role of absorber of trust-related resources) but is also capable of conditioning trust generation processes, thus becoming a trust generator. In fact, the environmental context and the inter-organizational network significantly condition the evolution and the development of trust (for example, Anderson et al. 1994; Burt and Knez 1996: 68; Kramer 1996; Iacobucci 1998).27 Therefore, the inter-firm network becomes analytically relevant to trust as its antecedent – where the fact of pertaining to the network can generate trust resources to be applied to third parties – and, at the same time, as its outcome – improving the coordination mechanisms and the collaboration opportunities among subjects belonging to the network (Figure 1.3).

6. CONCLUSIONS: COMPETING FOR COORDINATION BY MEANS OF TRUST The evolution of inter-organizational relations has critically reduced the ‘distance’ among firms, making it increasingly difficult to define their boundaries. The passage from the atomistic economy of discrete exchanges to the concept of relationship, heralding the convergence between firms, and finally to the establishment of inter-organizational networks, has been determined by the need to manage increasingly complex phenomena requiring highly specialized cognitive work. This leads to an evolution in the organization of economic systems, which transforms the cognitive complexity (of the new knowledge generating process) into relational complexity (due to the establishment of networks made up of subjects specialized in the production of knowledge).28 A connection economy such as the one outlined thus far has important implications for the understanding of the changes that take place within the operative mechanisms of competitive interdependencies. Firstly, the relational, reticular trend examined above produces inter-industries convergences, determining a radical redefinition of set-ups, domains and the competitive dimension, which, inevitably, becomes relationship- and trustbased.


23

Secondly, whenever the competitive and collaborative dimensions coexist, the interdependencies begin to be more frequent, feeding upon each other and making the analysis of inter-organizational relations much more complex. The well-known phenomenon of co-opetition highlights how it is possible to manage competitive interdependencies with competitors, activating diverse types of collaboration with them (for example, Hamel et al. 1989; Brandenburger and Nalebuff 1996). Finally, new kinds of competition emerge, having the function of coordination (action which is prevalently trust-based) as their object, such as those shown in the following example: ●

●

●

An individual firm, not linked to pre-existent networks, finds it fundamental to enter a network or set up one. A competition aiming at obtaining the trust of actors who already belong to interorganizational systems with a high competitive potential is thus formed. This type of competition is focused on entering the networks that are most functional to the firm’s objectives and obtaining the collaboration of the actor clusters that are most functional to the achievement of the competitive advantage. An inter-network competition takes place at a second level, that is, among inter-organizational systems or between individual firms belonging to different systems. Also within networks, there could be competition (intra-network) to acquire a more central position in the coordination processes, allowing the appropriation of larger portions of the network’s relational rent. Within the current connection paradigm, the more central firms, capable of performing the coordination and filling gaps associated with structural holes (Burt 1992, 2005), are those which have a very ‘valuable’ function, and a value generation potential that can be far superior to the one generated by traditional economic activities. Consequently, these opportunities trigger a competition to coordinate, aimed at obtaining trust from the firms belonging to the network. This produces semi-monopolistic positions as system coordinators (channels, districts, consortia, communities loyalty card holders, and so on), thus opening a new intra-network competition for the coordination functions, which did not exist in a recent past, when competition took place at an atomistic level.

The trust-based convergence which takes place as a consequence of the relational paradigm, the coexistence of the competitive and the collaborative elements, together with the new above-mentioned dimensions of the competition for coordination, represent phenomena that require an

24


evolution of the competitive analysis (for example, Golfetto 2000: 199 ff.; Podestà and Golfetto 2000). To understand the new dimension of competition for collaboration, an analytical examination of the concept of trust is needed, and this will be offered in the following chapters. Many scholars consider it to be the major cognitive antecedent and the very essence of some of the major coordination processes emerging from the new network economy.

NOTES 1.

2.

3.

4. 5. 6. 7.

8.

9.

The concept of demand should be intended in a broad sense. It may refer to firms using the product, distributors, consumers, buyers, but also opinion leaders, trendsetters and other subjects involved in the purchasing process. As will be shown in Chapter 6, trust may also refer to different subjects, thus having different configurations. The concept of trust, as introduced in this work, will be kept at a level of abstraction sufficient to make a generic reference to various kinds of relations between firms and markets. However, some sections of the text, to underline the situation-specificity of the construct, will highlight the elements that differentiate the relations established between the firm and the various categories of counterparts (that is, end users, industrial users, distributors, buyers, and so on). As seen further on, the type of relationship quite often influences trust typologies and its antecedents. For this purpose the author (1965: 84) underlines the utilitarian view of his analytical approach as follows: ‘Given that x is an element of the assortment A1, and y is an element of the assortment A2, x is exchangeable for y if, and only if, these three conditions hold: (a) x is different from y; (b) the potency of the assortment A1 is increased by dropping x and adding y; (c) the potency of the assortment A2 is increased by adding x and dropping y.’ Vaile et al. (1952: 121) classified marketing flows into three categories as a function of their direction: forward (flows of physical possession, ownership, and negotiation), backward (flows of ordering and payment) and either direction (flows of information, financing and risking). On this matter, Heide (1994: 71) claims that ‘as the shifts towards non market forms of governance have become more apparent, the limitations of the established research paradigms in marketing have become equally evident’. For insights on the methodologies to enhance marketing knowledge, see Troilo (2006, Ch. 4). Originally, the research focus of the IMP Group was placed on the buyer–supplier dyad, paying special attention to international markets. The Group’s major research goal is the identification of the variables that most influence market relationships. At first, Alderson (1957) suggested a definition of distribution channel as an organized social system, identifying three possible models for the coordination of the marketing functions within the channel. On one extreme there is the ‘atomistic system’, on the other end the ‘mechanistic’ one, and between the two, the ‘ecological’ one. Subsequently, Beier and Stern (1969) clarified and expounded the notion of channel as a social system. Berry and Parasuraman (1993: 50) in an essay reviewing the evolution of service marketing, assert: ‘Service marketing developed academically because it filled a need in the world of marketing practice; its development was “market driven”. Packaged goods marketing frameworks and constructs did not fit the reality of services. As many service companies sought to become more competitive, the need for fresh marketing answers became more pressing.’ To further study the peculiarities of marketing applied to service firms see also Normann (1984, especially Ch. 8), Eiglier and Langeard (1987, Part II) and Grönroos (1994b).

Relationship- and network-based approaches 10.

11.

12. 13.

14.

15.

16.

17.

18. 19.

20.

25

Another aspect making the traditional rationale of unilateral exchange inappropriate to interpret service transactions is related to the awareness that the buyer can influence the role of the supplier. An interactive approach to the interpretation of the buyer–seller relationship allows to better capture the reality of services (Eiglier and Langeard 1987: 251). While expanding the concept of relationship, the socio-organizational tradition has not suggested a univocal definition and vision, showing significant differences among the research streams that have mostly influenced the interpretation of inter-organizational relationships, such as: the economic-political paradigm (for example, Zald 1970; Benson 1975; Arndt 1983), the theory of transactional costs (Williamson 1975, 1979, 1985), the social exchange theory (Thibaut and Kelley 1959; Kelley and Thibaut 1978), and their most recent conceptualizations. Aldrich and Whetten (1981: 401) advise not to follow the example of those organizational theories focusing on the study of the inter-organizational relations, which exclusively favour the collaborative dimension. On the basis of the classifications we will discuss later, different interpretative methods have been suggested to analyse the ‘relationship portfolio’ for management purposes (for example, Fiocca 1982; Olsen and Ellram 1997; Dyer et al. 1998). They have allowed the isolation of relationships’ clusters requiring different marketing and relational approaches in order to improve management effectiveness and efficiency. As will be detailed in Chapter 6 (section 6.1), it is possible to differentiate the so-called two-way relationships – which take place whenever two subjects can reciprocate trust – from the one-way relationships occurring whenever a subject relies on another party although the latter cannot ‘return’ it. Such analytical passages suffer from an exponential complexity growth, especially in regard to empirical measurement, when the object studied is not a simple dyad, but rather broader networks of subjects. In this case the ‘subjective’ boundaries of the relational set could be difficult to define. The relational typologies can be classified as follows: supplier partnerships, represented by the relationships established with product suppliers (number 1 in Figure 1.1) and service suppliers alike (2); lateral partnerships, or the alliances established with competitors (3), non-profit organizations (for public purposes) (4) and governmental bodies (5); buyer relationships, which embrace long-term exchanges with end customers (6) and partnerships with business intermediaries (7); internal partnerships, including relationships among functional organizational units (8), relationships between firms and their collaborators (9) and the relational exchanges between division-type organizational or business units (10). Other conceptually similar classifications have been suggested by Iacobucci and Ostrom (1996), and Achrol and Kotler (1999). At times, intermediate categories have been suggested, such as the so-called value-added exchanges proposed by Day (2000), identifying the relational typologies which are particularly interesting to a firm wishing to develop a long-term relationship with its market by means of customer care actions and product customization. For an insight into the principles of this interesting field of study, see Thibaut and Kelley (1959) and Chapter 4 (section 3.1) in this volume. The relevance and ‘strength’ of weak ties was first demonstrated by Granovetter (1973), who proved, in one of his empirical studies, that information regarding job opportunities is more likely to be obtained from acquaintances (weak ties) than from close friends (strong ties). On the strength of ties in trust relationships between subjects involved in new product development, see Rindfleisch and Moorman (2001). For details about the difference between tight and loose coupling in organizational systems, see Aldrich (1977) and Weick (1979a: 110–12). A similar classification is suggested by Ring and Van de Ven (1992), who differentiate relationships according to the possibility of relying on the trust among partners and the risk implied by the relationship itself. Four main mechanisms of relationship management may be defined according to the above criteria, namely: the market, where both risk and trust are limited; the hierarchy, where there is high risk and limited trust; the recurring contracts, typical of

26

21. 22.

23.

24. 25.

26.

27.

28.

Conceptual assumptions of trust limited risk situations with a high level of trust; and the relational contracts, quite relevant to the current purposes because consistent with situations where both risk and trust have reached significant levels. A model more recently suggested by Ford (1998) takes into account four basic stages: pre-relationship stage, exploratory stage, developing stage and stable stage. In line with the models analysed above, some authors have recently pointed out the metamorphosis of some relational constructs, such as brand loyalty (for example, Oliver 1999) and trust (for example, Lewicki and Bunker 1995, 1996; Jones and George 1998), which takes place during the dyadic relationship evolution. Chapter 4 (section 5) will present some of these models, examining the main customer-based resources, while Chapter 8 (section 2) will discuss trust’s longitudinal dimension. A recent study in the retail banking sector delves into the differences among three groups of customers within the so-called defectors: the dissatisfied switchers, the satisfied switchers and the stayers. Empirical research shows significant differences of involvement, satisfaction and behavioural loyalty among these categories of customers (Ganesh et al. 2000). For a synthesis of the evolution of the studies on company networks see, among others, Lomi (1991, 1997), Grandori and Soda (1995), Jones et al. (1998) and Oliver and Ebers (1998). In particular, the critical role of trust in networks has been highlighted by Creed and Miles (1996: 30) who assert: ‘in the network form, efforts to apply traditional control mechanisms are generally ineffective. . . . there is a broad agreement that trust requirements are high for networks to perform effectively and impact of trust failures . . . are clear and calculable. Indeed, it is our view that both across the firm within a network and within the various network firms, there is little choice but to consider trust building and maintenance to be essential as control.’ Owing to the critical role trust plays within networks, trust management in these organizational typologies is seen as an essential aspect (for example, Miles and Snow 1992). For a further discussion of the role of trust in inter- and intra-organization networks, see, among others, Burt and Knez (1996), Sheppard and Tuchinsky (1996) and Meyerson et al. (1996). Powell (1996: 53–5) refers explicitly to trust-based forms of governance in industrial districts. Kramer (1996: 237–8) states that ‘to a large extent, social psychological theory on trust and distrust over the past 40 years has remained surprisingly acontextual. . . . Although it has undertaken the important task of explicating the cognitive processes that influence people’s judgments about trust and distrust, research in this tradition has remained largely “inside the head” of the social perceiver. . . . In short, although there is often much that is psychological in these studies, there is often remarkably little that is social.’ The diffusion of digital networks constitutes quite a relevant discontinuity in the evolutionary trajectory synthesized in this chapter. In fact, the digital network determines a connection potential (Evans and Wurster 1999a, 1999b) that is no longer guided by firms only, but emerges following ‘spontaneous’ patterns. This makes self-organization phenomena (that is, communities) possible within trust-intensive virtual environments. Therefore, trust building strategies become the major element enabling virtual relationships. See also Camp (2000), Urban et al. (2000), Castelfranchi and Tan (2001) and Chapter 4 (section 6) in this volume.

2. 1.

The value of trust INTRODUCTION

The previous chapter highlighted the critical role of relationships and networks in enabling firms to cope with increasing environmental complexities and achieve a sustainable competitive advantage. Yet, in order to define the actual scope of the reticular or relational approach, it is useful to assess its impact on the capability of gaining a competitive advantage and generating economic value. Such an approach will prove to be sustainable whenever the firm is capable, by means of an innovative managerial strategy, of producing value – be it considered as an accumulation of intangibles or as an effect generated at the economic level. This chapter aims at demonstrating, synthetically, how firms, by gaining trust, can succeed in expanding and enhancing both their immaterial assets and economic value. Thus, according to the recent evolution of the resource-based view, this chapter will initially examine the impact of firm relationships – and in particular trust – on intangible assets (section 2). Some typologies of trust-based relational resources will be highlighted, to the extent to which they integrate and strengthen the traditional interpretative apparatus of intangible resources based on the firm’s internal competencies (section 3). Subsequently, the impact trust has on the firm’s management processes (section 4) and its economic performance (section 5) will be briefly analysed. The latter effect lends itself to a twofold interpretation. Firstly, trust can be seen as a vector capable of stabilizing relations with the demand and, consequently, increasing the firm’s customer portfolio value (section 5.1). Secondly, on a more general level, trust can have a positive impact on the current and prospective value of economic capital (section 5.2).

2. THE RELATIONSHIP-BASED COMPETITIVE ADVANTAGE As already mentioned, relationships and networks can play an important role in gaining a competitive advantage. Traditionally, the resource-based perspective has linked the competitive advantage of a firm to its internal 27

28


resources. Unlike structuralist theories that mainly ascribe the competition differential to the characteristics of the industry the firm belongs to, the resource-based view relates firms’ differential performances to the resources’ heterogeneous profile rather than to the mere commonalities shared within the same sector. The subjects capable of acquiring a distinctive set of immaterial resources will perform better than the competitors who do not exhibit the same resource set. In such a perspective, the unit of analysis is mainly the firm and its capability of acquiring specific resources. In order to gain a competitive advantage, these resources have to be highly valuable and difficult to replace (Rumelt 1984; Teece 1987; Itami 1987).1 The resource-based view initially focused on resources and capabilities that are directly controlled and internalized by a single firm.2 In general, external resources were instead considered as inputs devoid of the above-mentioned features and, therefore, available to all firms at a price close to the economic value they can generate. Hence the resourcebased view – consistently with the prevalently economic background of its first advocates – implicitly assumes the ‘relational autonomy’ of the firm in gaining its competitive advantage, hypothesizing that the latter operates within an atomistic-like environment, entertaining relationships with its supplier and customers based exclusively on ‘economic’ exchange. Recently, some scholars have partially revised that approach, in the attempt to explicitly examine the differential value generated by external resources and, in particular, the relationships that the company can establish with external subjects. Nevertheless, this goal was only ‘apparently’ pursued by scholars. In fact, they once again referred that value to an internal resource, namely the firm’s capability of ‘internalizing’, ‘metabolizing’ and ‘recombining’ the resources of external subjects. Reference has been made to the absorptive capacity (Cohen and Levinthal 1990) and the recombination capacity of external resources deriving from the architectural competencies (Henderson and Clark 1990). Thus, the differential capability of a firm does not lie so much in the relationships it establishes with external subjects as in its ability to manage a set of external resources, absorbing and recombining them with its internal resources following original patterns, thus generating new value. Vicari (1991, 1995) suggests a different approach when studying the firm’s ‘external’ resources. His approach contextualizes the company as an autopoietic cognitive system and considers relationships established with external subjects as one of the main sources of immaterial resources. These resources are particularly important as they represent the fundamental element capable of triggering the firm’s operational mechanisms. In fact, the firm’s behaviours derive from the resources available and, in turn,

The value of trust

29

produce new resources, determining a recursive generation process of intangibles,3 namely competence and trust-related resources.4 The former appear as capabilities based on cognitive paradigms residing within the firm. The latter are configured on cognitive patterns pertaining to single subjects, internal or external to the firm. Hence, trust and competence resources differ from each other merely in that the former are generated by communication processes whereas the latter stem from firms’ internal knowledge (Vicari 1991: 85). For the purposes of this study, a further subdivision of trust resources is important. Trust resources can indeed be differentiated according to the subjects they refer to, that is resources relevant to internal or to external relationships. The former consist mainly in the values and norms that pervade any organization, while the latter are embedded in subjects external to the firm, determining the richness of its relations. External resources assume particular importance, not so much in sporadic transactions or exchanges, but each time stable bonds are established (ibid.: 78). In the resource-based management perspective (Vicari 1995), increased trust determines an accumulation of immaterial resources by means of a two-step approach. On one hand, the development of trust directly increases trust resources, and, on the other, it creates the conditions for improving the competence resources. With reference to the first point, immaterial resources increase because the firm succeeds in making its relationship with its customers ‘exclusive’. By trusting the firm, customers are induced to perpetuate their choice, reinforcing their belief in the firm’s reliability and making less and less likely an alternative relationship with other suppliers. In other words, customer trust determines a corresponding increase in the ‘distance’ that separates, within the individual cognitive system, the trustworthy firm from its competitors (who, therefore, suffer a trust gap). Hence, trust in buyer–seller relationships represents an effective cognitive type of entry barrier against new competitors. The greater the level of trust the firm has succeeded in gaining with its customers, the less will the possibilities be for other subjects to enter the relationship. Hence, the firm, in addition to isolating itself from competitors, will manage to stabilize its relationships with the other parties involved in its network.5 Focusing on the second point, trust can generate value for the firm indirectly as well, by exerting a positive effect on the competence resources. Consolidated trust relations make the transfer of knowledge from external sources easier and less subject to uncertainties, due to relational and cooperation learning mechanisms based, among other things, on joint experimentation. For example, in order to sustain a product innovation process, the firm is induced to develop stable relations with subjects specialized in the development and accumulation of specific knowledge (for

30


example, Sivadas and Dwyer 2000). The possibility for the company to access such know-how, acquire it, and make it interact actively and creatively with its own knowledge base in search of innovative competencies primarily depends on its relational capabilities and, more specifically, on the trust relationship established with external subjects (as will be shown in Chapter 4, section 2). Only later will the (internal) absorption and integration competencies be involved. Therefore, trust appears as the element capable of conditioning the qualitative level of connections that make know-how transfer possible, thus indirectly influencing the firm’s competence resource patrimony.6 Hence competence and trust resources appear to be mutually interrelated: ‘the growth of knowledge requires the existence of trust, and trust, in turn, is fostered by knowledge’ (Vicari 1992). Besides providing an original classification of intangible resources, the resource-based management approach contributes to the understanding of the development processes of resources and, especially, trust. Such processes rely on, among other factors, the capability of both the firm and ‘its’ network to effectively act and interact, producing knowledge and trust. This is possible only if substantial trust relations are established both within the firm and between the firm and its knowledge sources. In fact, trust represents a fundamental resource to govern the self-organized co-evolutionary process7 triggered both within the firm and between the firm and its partners. The level of trust permeating the network, together with the knowledge level and the cognitive relationships established between the two, constitute the basic resources to be monitored in order to manage interorganizational processes. In fact, these are the resources that a firm should increase, adopting incremental resource-based behaviours.

3. RELATIONAL RESOURCES: RECENT DEVELOPMENTS The trust resource concept and the resource-based management model have pushed the envelope of intangible-based theory, highlighting the role of trust-based relationships in gaining a truly competitive advantage. In fact, only recently the resource-based view has acknowledged the capability of the ‘outside’, especially the relations established with other subjects (networks of firms), to generate a sustainable competitive advantage. Badaracco (1991), Pisano (1994), Shan et al. (1994), Powell et al. (1996) have underlined how the innovative capability is essentially determined by a cognitive network of many economic subjects, rather than the capabilities of a single firm.8 Literature on social capital (for example, Nahapiet and Ghoshal 1998; Lin et al. 2001) has fully

The value of trust

31

acknowledged the value the firm should attribute to its capability of developing relationships and network-specific intangibles. Therefore, especially in highly complex and competitive conditions, the competitive advantage is based on both in-house and network-generated resources. Consequently, the network itself is considered as a relational resource. On this point, Dyer and Singh (1998), inspired by the resource-based view principles, have introduced what they define as the relational view. Shortly thereafter, Morgan and Hunt (1999) also suggested the concept of relationship-based competitive advantage. McEvily and Zaheer (1999) have verified empirically how the firm’s capability of being embedded in a relational network (bridging ties) represents an important source of competitive capabilities. All these perspectives, (together with those previously proposed by Håkansson 1987b, 1989; Håkansson and Snehota 1989; and Iacobucci 1996) highlight how the firm’s competitive advantage depends not only on its internal resources, even those ‘borderline’ (like the absorption capability), but above all on the relations the company has managed to develop (by means of its own external trust resources). In more general terms, it depends on the capabilities and resources of the network to which the firm belongs. The autonomous and atomistic firm perspective, originally advocated by the economically inspired resource-based view (which saw competitive advantage exclusively as a firm’s internal product), has proven insufficient to explain the different performances among firms. In fact, these differences also depend on the relational capabilities and the network in which the firm is embedded, enabling it to access new resources, information and knowledge, with a significant impact on the competitive advantage (McEvily and Zaheer 1999: 1152). This is the reason why such a perspective is developed mainly by scholars with organizational, marketing and strategic management backgrounds. In particular, Dyer and Singh (1998) point out how competitive advantage resources depend mainly on the firms’ relation-specific investments, the regular sharing of knowledge developed at an inter-organizational level, the definition of complementary resources and, above all, the efficiency of governance mechanisms.9 Specifically, they favour the self-enforcement governance mechanisms over systems based on the presence of third parties (for example, legal contracts), focusing their attention on informal mechanisms – that is, those based on trust, reputation and embeddedness – rather than formal ones, such as the equity-based systems and other ‘financial hostages’ typologies. Therefore it clearly appears that trust may play a major role in the establishment of relational rent, impacting on both the transactional costs level and partner’s orientation to enter into joint value-generating initiatives (Dyer and Singh 1998: 670). Once the firm

32


detects the sources of relational rent, it must define the modes that allow the defence of the relation-based competitive advantage, which, residing outside its boundaries and direct control, might be considered more evanescent than the one derived from in-house resources. The mechanisms of ‘relational’ resources isolation are thus defined. They are capable of preserving the yield generated by collaborative resources, avoiding (or, at least, minimizing) the possibility of being imitated by third parties. Such mechanisms are partially related to those proposed by the resource-based view (already briefly mentioned at the beginning of this section) such as the ones referring to the causal ambiguity and the diseconomies induced by time compression. The first mechanism explains why the development of trust (especially trust founded on goodwill) represents a particularly difficult relational resource to imitate. In fact, trust is characterized by a significant causal ambiguity level, as it represents the result of processes that are quite intricate to manage, owing to their situation-specific connotation. Also, diseconomies deriving from time compression can explain why trust represents a true relational resource. It cannot be developed on a short-term basis, nor is it instantly found on the market. More specific to this peculiar resource type, the following mechanisms characterize the relational resources and safeguard their rent (Dyer and Singh 1998): 1. 2. 3. 4.

inter-organizational assets interconnectedness partner scarcity (rareness) resource indivisibility (determined by the joint development of capabilities) complexity of the institutional environment.

The inter-organizational assets interconnectedness (point 1) has a cumulative outcome (the ‘snowball effect’) and, consequently, the relation-specific investments made at a given time are determined by (or interconnected with) the previous relational investments. For example, if a manufacturer and a distributor are induced by their mutual trust to enter into joint category management projects that in turn imply significant relational investments, their trust is certainly the product of previous satisfactory experiences with shared initiatives, perhaps less strategically significant but equally based on relation-specific investments. The second element (2) refers to the lack of partners with complementary strategic resources and relational capability. Once a subject is acquired from a relational point of view, it becomes very difficult, if not impossible, for latecomers to find partners characterized by specific competencies ready to enter into new collaborations. Such a phenomenon is what makes

The value of trust

33

it difficult for new players – at least in trust-based sectors – to interact with customers, suppliers and partners already in contact with competitors which have been able to develop trust relationships. The resource indivisibility (3) is based on the fact that two actors may combine their mutual resources or develop joint capabilities, making the resulting resources both idiosyncratic to the relationship and indivisible. Trust developed through time between two subjects is typically characterized by this trait, and will dissolve the moment the partnership is terminated. Finally, the institutional environment where the relation develops (4) may also play an important role in generating rent. For instance, it could encourage the establishment of trust relations among subjects belonging to diverse sectors or social contexts. In such cases, it may be advantageous for the firm to localize its activities in favourable, non-replicable environments having formal regulations (legal mechanisms) or informal rules (social control or trust) that favour collaboration and reduce opportunistic behaviours. It is worth mentioning trust mechanisms developing within districts that Powell (1990) defines as networks of place. It follows that the generation of relational rent is not conditioned by the mere relational capability of a firm, but rather by the output of such a capability, that is the set of trust relations and their relevant resources. Hunt and Morgan (1995) and Morgan and Hunt (1999) adopt a rationale which differs from the one suggested by Dyer and Singh (1998), although they reach partly converging conclusions. Initially interested in comprehending how firms can benefit from relational marketing approaches, the authors inductively prove the sustainability of the competitive advantage obtainable with those approaches and assess its impact on immaterial resources supply.10 In fact relational marketing enables the firms to effectively access a higher level of immaterial assets.11 With the aim of assessing the extent of this relationship-based competitive advantage, Hunt and Morgan establish the criteria defining its actual sustainability, once again referring to the principles suggested by the resource-based view. These criteria can be summarized as follows: (Morgan and Hunt 1999: 285); effectiveness (Hunt and Morgan 1995); heterogeneity (Dierickx and Cool 1989; Peteraf 1993; Hunt and Morgan 1995); imperfect imitability (Dierickx and Cool 1989; Barney 1991; Peteraf 1993); imperfect replaceability (Dierickx and Cool 1989; Barney 1991; Peteraf 1993); imperfect mobility and transferability (Dierickx and Cool 1989; Peteraf 1993). By applying such criteria the authors demonstrate that organizational, information and relational resources are crucial to acquiring an effective relationship-based competitive advantage. Such a critical role is mostly the product of the ambiguity and time dependency of some relational resources (such as those linked to a distributor’s capability of gaining customers’

34


loyalty, becoming a potentially favoured partner for manufacturers, looking for adequate outlets for their products) or the complexity of the resource mix required to establish an appropriate information stock – exemplified by projects like ECR, which requires the participation of manufacturers, retailers and logistics partners, as well as consulting and IT firms. The above-mentioned contributions highlight the need to examine the relationship-derived competitive advantage as separate from, yet complementary to, the traditional firm-based advantage. In fact, it is essential to distinguish the firm’s typical capabilities from the advantage that can be drawn from a single relationship, which is relation-specific.12 According to the relational perspective, value is ‘jointly’ generated and owned by the partner firms, meaning that the relational yield ‘belongs’ to the dyad or the network (Dyer and Singh 1998: 675).13 Thus, resources are analysed under a new light. They are now considered ‘sticky’ in regard not only to the firm, but also the single dyadic relationship or, in more general terms, the firm’s network. Therefore, relational (or trust) resources can be analysed on two different levels: ● ●

a general and firm-specific level, referring, for instance, to the firm’s relational propensity or its market reputation; a more relation-specific level, based on the capability of absorbing knowledge from one specific partner and gaining its trust.

The latter capability requires not only a general propensity to knowledge absorption but also a more accurate or detailed knowledge of the single partner, its communication codes, organizational mechanisms and internal processes of knowledge production. Without this idiosyncratic type of knowledge, the potentialities related to the firm’s absorption capability are naturally reduced. It is one thing to consider the general firm-specific capability to develop relationships with third parties, and an altogether different thing is the ability to establish a relationship with a single partner, a condition implying relation-specific elements. Unlike firm-specific assets, relational resources are directly linked to the relationship determining, at the same time, its reproduction mechanisms and existence. In fact, the end of a relationship leads to their uselessness in terms of value production, and the interruption of their recurrent generation processes. In fact, when a relationship is interrupted the relation-specific absorption capability no longer produces value, suspending the learning processes and causing the relationship consequent natural depauperation. This certainly does not imply any loss of the absorption meta-capability (the stock resource) that the relation-specific intangible has generated through time, stratifying the most abstract knowledge. Such competency (stock) is undoubtedly most useful in supporting the firm in its future relational processes with new

The value of trust

35

subjects. Relation-specific and firm-specific resources trigger mutually supplying processes (stock and dynamic ones) constituting the foundation of capabilities and relational resources and, consequently, of the firm’s relationship-based competitive advantage. Vicari (1991) suggests another differentiation useful to clarify the firm’s relational resources, based on the location of such resources, which can be either internal to the firm’s boundaries or external (referring to the relationship). In the former case, to better represent such a phenomenon, it might be useful to differentiate the in-house relational resources generating new knowledge (this first type is classed as internal interface resources) from those which enable the development of external trust resources (classed as external interface resources). The internal relational resources will thus be differentiated by the output they produce. Alternatively, relational resources may reside within external subjects (classed as external relational resources). A synthetic representation of these three categories of resources is shown in Figure 2.1. Within the framework of internal relational resources, the scheme highlights the difference between knowledge-generating resources – which

FIRM

Internal interface resources (e.g. absorption capability)

External interface resources (e.g. key accounting)

External relational resources (e.g. trust) OTHER SUBJECTS

Figure 2.1

Relational resources

36

Table 2.1


Relational resources: a scheme and some examples Internal Relational Resources

External Relational Resources

Resources for the production of internal knowledge (e.g. absorption)

Resources for the production of external relationships resources (e.g. key accounting)

Relational resources located outside the firm (trust)

General and firm-specific level

General capability of knowledge absorption

General sales management and key accounting competencies

Firm’s image and reputation

Situationand relationspecific level

Comprehension of a specific partnercustomer’s routine knowledge production

Capability of managing the relationship with a specific customer

Trust in a single partner

mostly absorb and organize knowledge coming from outside – and external interface resources, finalized to relationship management and third parties’ trust development. By crossing the two above-mentioned types, it is possible to establish a set of ‘structural’ resources organized as follows (Table 2.1): the resources referring to the firm-specific level – belonging to the first two classes (exclusively differentiated by the type of expected output) – or the resources embedded in other subjects (here defined as firm-specific external relational resources). The same kind of classification applies to the relationspecific resources.

4. THE EFFECT OF TRUST ON RELATIONAL PROCESSES We have shown that trust is a firm’s basic resource since it enables the competitive advantage that has been defined as relationship-based. In order to understand how trust actually translates into an economic value for the company, the terms in which trust might affect costs and revenue flows should be examined. As will be detailed in the next section, in order to achieve this objective it is necessary to comprehend the possible consequences of accrued trust on organizational processes and value generation.

The value of trust

37

These roles are carried out within the company and refer to the management of external relations. An extreme synthesis of the major advantages of trust for its targets found in the literature includes the following: (a) intra-organizational relationships (b) inter-organizational relationships (c) relationships developed with the firm’s customers. On this matter, it might be useful to summarize some of the major effects commonly associated with trust with reference to each of the abovementioned relational dimensions. As to the intra-organizational relations (a), it has been widely proven that trust may: ● ● ● ● ● ●

facilitate management coordination among different organizational units (for example, McAllister 1995; Doney et al. 1998); improve the organizational climate, by reducing the level of interfunctional conflicts (for example, Das and Teng 1998); enable more effective and efficient inter-function teamwork (for example, Meyerson et al. 1996; Doney et al. 1998); contribute to an effective implementation of strategies, supporting the plan implementation phase (for example, Doney et al. 1998); determine organizational citizenship and extra role behaviours (for example, McAllister 1995; Perrone and Chiacchierini 1999); reduce control-based monitoring and defensive behaviour (for example, McAllister 1995; Das and Teng 1998, 2001).

These effects make the organized activities more effective and, at the same time, improve the efficiency, because in a climate based on trust relations control costs are lower and conflicts find quicker solutions. As to inter-organizational relations (b), the development of an appropriate set of trust resources contributes to:14 ●

●

●

limit transaction costs, especially in organizational situations whenever there is a high level of uncertainty (for example, Dore 1983; Doney et al. 1998); facilitate long-term relationships, reducing conflicts that are nonfunctional to the partnership goals (for example, Ring and Van de Ven 1992; Ganesan 1994; Doney et al. 1998); stimulate collaboration among firms (Anderson and Narus 1990; Ganesan 1994; Morgan and Hunt 1994; Jap 1999, 2001a), significantly contributing to the success of strategic alliances (Gulati 1995);

38

Conceptual assumptions of trust ● ●

simplify knowledge transfer and joint learning (for example, Moorman et al. 1992; Moorman et al. 1993; Troilo 2006); enable the firm, as mentioned in the previous section, to obtain a sustainable long-term competitive advantage (Barney and Hansen 1994; Dyer and Singh 1998; Morgan and Hunt 1999).

This makes the relational activity more effective and less expensive, with positive implications in terms of opportunities for both economic value generation and cost containment in the case of inter-organizational collaboration initiatives. In relation to demand (c), by enhancing customers’ loyalty, trust generates important consequences for the firm (Anderson and Sullivan 1993; Johnson et al. 1995; Srivastava et al. 1998; Costabile 2001), namely: ● ● ● ● ● ● ● ●

an increased differentiation potential, thus obtaining a premium price; a more reduced price sensitivity; a higher propensity to consumption; a favourable word-of-mouth, spreading positive information on the company, partially replacing marketing investments; trading up propensity, that is, purchasing higher quality goods within the same product line; cross-buying propensity, that is, purchasing other goods/services offered by the same firm; reduction of sales and customer care costs; knowledge sharing propensity, that is, activating co-evolutionary processes between demand and supply, based on knowledge exchange and integration.

As it may be easily inferred, such effects can enhance the value generated by the firm, either by increasing effectiveness, for example reducing customer management costs and replacing other communication investments thanks to a positive word-of-mouth, or increasing the revenue sources owing to, for example, other cross-buying opportunities and lower price sensitivity.

5.

TRUST AND FIRM’S VALUE

To understand how trust can be effectively translated into an economic value for the firm, one must first examine the effect it has on the structure and value of the firm’s relation portfolio (section 5.1), and, secondly, assess

The value of trust

39

trust impact on the current and prospective value of the economic capital (the latter point will be examined in depth in section 5.2). 5.1

Demand-driven Increase of Relationship Value

In order to better comprehend the effect of trust on the relation portfolio value, it is necessary to further study the impact it can have as a consequence of: ● ●

the consolidation and possible extension of on-going relationships with customers the expansion of the relation portfolio as a consequence of new contacts.

Although the latter – which is a direct effect of intensified contacts and the network expansion induced by firm reputation – is intuitively understood, the former effect needs to be further clarified. In fact, customers characterized by a strong trust relationship with a firm are usually willing to: ● ● ●

increase the value of each purchase, as seen in the previous section; stabilize the series of purchases through time, hence minimizing the possibilities of switching to competitors; prolong the relationship, increasing the time horizon in which purchasing opportunities of trusted products/services may occur, and thus reducing the customer turnover in time.

The quantitative effect generated by such phenomena has been traditionally examined by studies assessing customer loyalty, with special reference to its behavioural dimension (for example, Jacoby and Chestnut 1978). The first effect is assessed, for example, according to the share of the total expense budget allocated to a given brand in a specific shopping expedition.15 The second phenomenon (purchase stability through time) may be quantified according to the purchasing sequence index. Based upon the structure of purchases series in a given period, this index enables to detect specific purchasing patterns such as those related to ‘shared loyalty’ toward two or more brands or those characterized by ‘unstable loyalty’.16 The effect of relationship duration on the value of the customer portfolio may be easily derived by measuring the impact of duration on the customer retention rate (CRR).17 Loyalty consolidation, stabilizing the relations with the clients, positively affects the CRR, increasing the customers’ prospective average age.18 Since CRR growth determines more than proportional increases in relationship duration, it is possible to explain the very

40


significant impact that albeit small CRR increases can have on the relation portfolio value. The lifetime value (LTV) is a synthetic indicator of both the size of a periodic purchase made by each customer and the stability and duration of the series of shopping expeditions made to the preferred supplier.19 The LTV measures the value, generically expressed as revenue, of a firm’s single customer throughout the relationship’s life cycle. In a simplified format, it is formulated as the product of the duration of the relationship’s average lifetime (usually expressed in years), times the purchasing frequency in that period, and the purchase average value. In quantitative terms, this index is expressed as follows: LTV V* F* P

(5.1)

where: Vaverage value of a single transaction; F average frequency of the transaction over the period (for example, a year); Pnumber of periods (for example, years) considered in the life cycle of the relationship. It is quite straightforward to establish how the increased trust/loyalty of a customer toward a company can potentially determine an increase in all LTV computational factors: the average value of each transaction (for example, owing to cross-buying phenomena); the purchasing frequency for the same offer; and the relationship time-frame (duration).20 As a summary of the relationship value, it can be useful to examine the effects of trust/loyalty on the customer equity value, that is, the value generated by a single customer (or even a specific segment of the demand), calculated according to the net cash flows s/he can guarantee throughout the lifetime of his/her relationship with the firm. Such value is given by the difference between the margins generated by a single customer and the activation, development and maintenance costs s/he determines (Wayland and Cole 1997: 101; Costabile 2001: 152 ff.): CE

n

t1

Pt (QtMt ) dt

n

(S F ) d A t

t

t

t

(5.2)

t1

where: P probability of purchase by the customer in the ith period; Q expected purchasing volume throughout the relationship cycle; M unit margins after taxes; t period (year) of the relationship;

The value of trust

n S F A d

41

total number of the relationship’s periods; customer development cost; customer retention cost; customer activation cost (connection phase); discount rate [1/(1k)].

A trust increase can positively affect every element of the above-mentioned value. Upon increasing the trust level of its customer base, a firm enjoys an increase in the likelihood of purchases by its customers (P); the expected quantity of purchases over the whole relationship (Q), for example, owing to cross-buying phenomena; unit margins (M), owing to reduced price sensitivity; and the overall relationship duration (n). At the same time, customer development costs (S) are bound to drop: a customer can be easily induced to broaden both the scope of the relationship and the range of products and services purchased from the single supplier. It also costs less to activate customers (A) and gain their loyalty (F), taking advantage of the positive word-of-mouth and the new customers’ greater positive disposition induced by the firm’s market reputation. Finally, as mentioned earlier (note 20), the discount rate (represented by d1/(1k)) drops as well.21 5.2

Trust’s Impact on the Economic Capital Value of the Firm

Having established trust’s impact on the economics of each relationship and to better understand the advantages of establishing trust relations with customers, it is useful to analyse the value of trust in the more general perspective of the firm. Such analysis has been performed adopting the analytical perspective of the value creation theory (Guatri 1991, 1996), from the point of view of one of the firm’s main stakeholders, the capital investor. This economic subject is interested in maximizing the flow of expected dividends, together with the growth in capital value, all expressed in current values.22 (Guatri 1991: 19). Trust, as inferred from the above remarks, contributes to create value in terms of economic capital, affecting the value of both its current level (W) and its growth opportunities (W).23 Such a statement will appear more comprehensible once the elements determining each of the two above-mentioned values are detected. The current value of the economic capital depends on the capitalization rate, on the normal expected income and on its duration. A positive impact on these determinants is conditioned by the capability of establishing strong external trust relations with customers, suppliers, partners, and so on, thus inhibiting access to competitors. Trust relations, in fact, reduce firm-specific risks (i), increase profitability and, as

42


(–)

Relationship stability

Expected normal income (+)

(+)

Profit rate

(+)

(+)

Present value of economic capital

Lifetime of the expected normal income

(+)

Potential development rate

Profit duration (+)

(+)

(+)

(+)

Reproducibility of relationships

(+)

Capitalization rate

(+)

Value of economic capital growth opportunities

(+)

(+)

Potential value of economic capital

Source: translated from Busacca (2000: 30)

Figure 2.2

Impact of trust on economic value determinants

mentioned earlier, enhance the potential duration of income flows (Figure 2.2). The value of economic capital growth opportunities (W) depends on the profit rate, the duration of profit and the potential growth rate. The increase in trust affects not only the profit rate and its duration, but also the growth potential (Busacca 1994; Mazzei 1999; Costabile 2001). In fact, especially when characterized by a high level of abstraction, trust is one of the resources that can be easily transferred. Such a quality of trust finds multiple uses, as will be explained in Chapter 8 (section 3). Therefore, trust contributes to expanding the redundancy potential accessed by the firm in order to undertake innovative development projects. For example, a firm that has gained the trust of intermediaries and has been capable of offering successful innovative products can take full advantage of this potential and contribute with other new products to the distributor’s assortment. Conversely, firms that have not proven to be as reliable find it much more difficult and more expensive (if not completely impossible) to gain such access, thus curtailing all effects on the firm’s potential development rate and, consequently, the potential value of its economic capital. The same effect can be achieved exploiting the extension potential associated with the trust dimension of the brand (Busacca and Troilo 1992; Mazzei 1999; Busacca 2000).

The value of trust

43

The impact of trust on intangible resources (as previously expressed), the value of its customer portfolio and, in more general terms, of its economic capital, proves that an in-depth understanding of the construct is needed in order to usefully support managers in designing targeted behaviours and implementing resource-enhancing strategies. The following chapters seek to meet this requirement, starting with an analysis of the construct within the main disciplines of interest (Part Two), providing definitions and establishing boundaries and contents (Part Three) and, finally, exploring determinants and analytical consequences, together with the possible developmental strategies within a relationship’s dynamic evolution (fourth part). In particular, by detecting the cognitive antecedents of trust and its fundamental growth mechanisms, this work aims at highlighting the elements that may have a positive impact on the intangible assets and, consequently, on the value of trust’s economic capital.

NOTES 1.

2.

3. 4. 5.

6.

7.

8. 9.

This is due to the fact that these resources are tacit (tacitness), that it is hard to identify any cause/effect relation between them and firm performances (causal ambiguity), and that they are difficult to reconstruct and rare (firm-specific) (for example, Wernerfelt 1984; Dierickx and Cool 1989; Reed and DeFilippi 1990; Barney 1991). Reviewing the concept of competence, Reed and DeFilippi (1990: 89) affirmed that, generally: (1) the source of a competency always resides within the firm; (2) competency is the result of the modes by which the firm uses and combines skills and in-house resources vs. its competitors. For an in-depth examination of the general evolution of the resourcebased view and its major conceptual models, see De Leo (1995) and Verona (1999, 2000), who contextualize this approach with specific reference to the issue of innovation. In fact, Vicari (1991: 108) stated that value generation within the firm occurs through the production of resources that have their own economic value. On this matter, Vicari (ibid.: 85) underlines that the difference does not lie in the nature of resources as much as in their description by an external observer, who sees them as a product of the firm’s knowledge or communication processes. From the firm’s standpoint, value is ascribed not only to trust gained from external subjects but, as will be explained in Chapter 6 (section 6.4), also to trust bestowed on others by the firm. In particular, from the firm’s perspective, trusting or ‘distrusting’ potential interlocutors makes it possible to manage the growing relational complexity. Thus, the firm can order and simplify the structuring of both its own ‘cognitive’ network and decision-making processes. On this matter, Troilo (2006) has found that trust in the data provider and trust in the technological infrastructures are two fundamental factors influencing how a firm utilizes its marketing knowledge. On this topic see also the empirical research studies by Moorman et al. (1992, 1993). ‘Self-organization is a behavioural and organizational mechanism based on the subjects’ capabilities of organizing effective responses without delegating them to market or hierarchical macro mechanisms. Therefore, a complex process emerges, without an external actor to define it’ (Vicari 1996: 79–80). In particular, this thesis has been verified with regard to the biotech industry. The authors suggest hypotheses on each competitive advantage determinant, and structure them in sub-processes facilitating the production of what they call ‘relational rent’.

44 10.

Conceptual assumptions of trust The relational approach may determine, according to Morgan and Hunt (1999): the acquisition and development of resources that may improve the firm’s efficiency; ● the combination of resource-bases with the purpose of creating more complex sets of resources; ● the exploitation of the resource-related advantage in competitive situations, especially when the competitive differential is associated with the functioning of interorganizational relations; ● the maintenance and protection over time of immaterial assets, to be continuously replenished, thus guaranteeing constant access to the resources generated by the partners. Such resources are classified as: financial, legal, physical, human, organizational, relational and information resources. Hunt and Morgan (1995) assert that these are the main types of resources to be acquired activating a relationship. To this effect, Dyer and Singh (1998: 674) maintain ‘although an individual firm’s ability to work effectively with other firms may be classified as a firm-specific capability (which may generate relational rents), there is value in distinguishing a relational view, which offers a distinct, but complementary view on how firms generate rents’. Thus, the division of jointly produced rent becomes an issue as well as a topic deserving further analysis. It has been recently studied by Golfetto (2000, esp. Ch. 9); Durisin (2001); and Jap (2001a), who refers explicitly to ‘pie sharing strategies’. Such effects will be further examined in Chapter 7 (section 3), where the consequences of trust will be detailed. In reality, it would also be useful to consider the trust’s effect on the purchase absolute value, keeping in mind the trustee’s greater availability to bear price increases and expand the overall expense budget (thus conditioning also the ‘share of valley’ ratio denominator), envisaging new product categories (cross-buying). Shared behavioural loyalty means a reiterated purchasing behaviour of two or more brands with a sequence such as ABABABABAB, where A and B indicate that the consumer has selected for his/her purchases brand A and brand B, respectively. Unstable behavioural loyalty means instead a reiterated purchasing behaviour characterized by an AAAABBBB sequence. Referring to a given year, this may be calculated as follows: Instantaneous CRR (number of customers at year’s end already existing at the year’s beginning / number of customers at the year’s beginning) * 100. This same value may be calculated within a broader time frame averaging the CRRs of several periods. Valdani (2000: 125) points out the usefulness of the value-calculated CRR. In fact, this indicator establishes the firm’s capability to retain the revenue generated by each customer, ranking the different relationships according to their produced value. The average duration of a relationship is defined as the mean prospective age, and calculated according to the following ratio: 1/(1CRR). This formula establishes, for instance, that a 90 per cent customer retention rate corresponds to an average relationship length of 10 years (1/(10.9)), whereas a 95 per cent CRR is associated with an average prospective age of 20 years (1/(10.95)). Besides lifetime value, the literature offers numerous synthetic behavioural indexes, obtained by combining measurement methods, included in the above-mentioned categories. Among them is Carman’s entropy measurement (1970), which defined loyalty as the negative value of pi summation times pi log, where pi is the purchase share of a given brand/sign. Another synthetic indicator, proposed to determine store loyalty level, is the loyalty index suggested by Burford et al. (1971). An alternative formula to LTV requests the determination of the current value of expected revenue flows: ●

11. 12.

13. 14. 15.

16.

17.

18.

19.

20.

LTV

V (1 k) n

where: Vestimated revenues for the relationship period at time t;

The value of trust

45

kdiscount rate; nnumber of periods (for example, years) considered in the relationship life cycle.

21.

22.

23.

According to this formula, besides the effects already mentioned in the text, it is quite useful to consider the effect of trust on discount rate. This is calculated according to the zero-risk activity interest rate, plus a factor accounting for the risk level presented by industry, firm and, in this case, single relationships. Trust’s growth makes it less likely for the customer to drop the relationship, fosters a greater certainty in future revenue flows, and reduces the actualization rate, with the net result of increasing lifetime value. The evaluation of the nexus between trust growth – in all of its components and typologies, which will be examined in Chapter 8 – and the variation of customer equity single components could be an interesting subject of empirical analysis. A revamping of the above-mentioned formula has been recently suggested by Costabile (2001: 154 ff.) who underlines the appropriateness of differentiating between the so-called ‘current’ customer equity, calculated according to the already described modalities, and the so-called ‘potential’ customer equity. The latter also includes the options of broadening the relationship scope, derived from the development of trust (and trust abstraction policies). The result that the shareholder tends to maximize can be synthetically expressed as follows: R1 DW1 d1 – DC, where DW1 represents the periodical variation of the economic capital between time t0 and t1, d1 expresses the dividends distributed over that time period and DC any newly invested capital (Guatri 1991: 19). Such analysis was developed originally by Busacca (1994: 59 ff.) and Mazzei (1999) and more recently by Costabile (2001).

PART TWO

The contribution of the different disciplinary contexts

3. 1.

Multidisciplinary studies on trust INTRODUCTION

Trust has been examined, at various analytical levels, by diverse disciplines. In fact, the degree of construct abstraction has enabled its contextualization in several relational contexts. Trust that develops among individuals in relationships with kin and friends has been analysed by psychology and sociology. When the interacting parties belong to the same organizational structure or to the same workteam, their interaction becomes the focus of organization studies. Their aim is to understand how social mechanisms facilitate collaboration among individuals committed to the same task, achieving greater effectiveness with less control. By the same token, two individuals interacting while playing interfacing roles in different structures, as buyer and seller, establish an exchange relationship which represents the focus of relational marketing scholars and, in particular, of those specialized in sales management. The latter are particularly interested in understanding whether trust plays a positive role in a negotiation’s successful conclusion and, if that role is confirmed, the modes that can increase the seller’s perceived reliability. The generalization level characterizing the construct makes it applicable not only to interpersonal relationships but also to interactions between different organizational structures. Even at that level, the concept may be applied to different relational contexts: alliances and joint ventures among firms with complementary competences and resources; partnerships among firms at various levels of the supply chain; inter-organizational relations in industrial districts; supply and channel relations and – in more general terms – all inter-organizational relations involving interactions between a buyer and a seller firm. In such contexts, there are many disciplines investigating the role of trust, its effects, diverse configurations and relevant growth mechanisms. For instance, economics mostly focuses on transaction and exchange governance systems; management theories and, more generally, strategic studies and organization theories are mainly interested in the functioning and governance of alliances, joint ventures and partnerships among firms; while marketing is concerned with the study of relations among firms in industrial goods markets and distribution channels.1 49

50


The interest of scholars is not limited to the study of the role of trust and of its growth mechanisms at the inter-personal and inter-organizational levels. Recently, greater attention has been paid to the links between the two analytical levels. In other words, the goal is to understand how trust developed at an interpersonal level among the so-called boundary spanners impacts the inter-organizational trust dynamics (and vice versa). This determines the need to integrate the interpersonal relationship models (a subject of sociology, psychology and inter-organizational theories) with inter-organizational relations (developed by organization, marketing and strategic management studies), requiring a multidisciplinary approach to the study of trust. Recently, following the development of the new information and communication technologies and the establishment of digital networks, it has become necessary to include interaction, exchange and relationship mechanisms among subjects which can even be represented by virtual agents. Hence the need to consider new types and levels of interaction involving (virtual) communication interfaces which are considerably different from the traditional ones. This paves the way for a novel and interesting convergence between the above-mentioned disciplines and information and knowledge sciences (for example, Castelfranchi and Tan 2001). Finally, further analytical levels – which we will later define as systemic and institutional – to which the construct examined in this study can be applied should not be neglected. This is the case, for instance, for trust in public institutions, governments, national economies, banking systems, societies and, in more general terms, according to sociologists, in other human beings. It can be easily inferred that trust developed at this level will condition all inter-organizational and interpersonal relations. It should suffice to think about the difficulties in developing collaborative interactions and initiatives among firms within a somewhat unfavourable social context, when the parties show a generalized diffidence; or about less developed economic systems, lacking an adequate level of reliance on economic, political and legal institutions. The above issues are mostly analytically explored by political scientists and sociologists. This overview shows how the construct here examined has attracted the attention of numerous disciplines, which, over time and thanks to a natural convergence process, have defined the study of trust as multidisciplinary. This conclusion is based on two major assumptions. Firstly, the construct abstraction level allows the transfer of the more general conceptual paradigms among various disciplinary domains, thus triggering the cross-fertilization of their studies examining each relational dimension. Secondly, now it clearly appears that, in order to fully comprehend the relational phenomena, the different analytical levels must be considered jointly. In fact, relationships

Multidisciplinary studies on trust

51

imply the coexistence of multi-layer levels such as interpersonal, interorganizational, systemic, institutional, and so on. This explains, in part, the progressive convergence that has taken place in trust studies, making it difficult to position each contribution in a specific disciplinary domain, owing to the tendency to overlap shown by both its inspiring conceptual models and analysed objects. To better appreciate the growing multidisciplinarity of trust studies on market relations, it appears useful to perform a synthetic review of the literature on the subject, examining the main contributions made by various disciplines with an approach that emphasizes the scope rather than the depth of analysis. Such a review should highlight two major elements: on one hand, the conceptual matrix of the main studies and their analytical goals, and, on the other, the contribution these studies provide to the interpretation of market relations. Our analysis will start by focusing on the trust socio-psychological dimension. In order to elucidate the genesis of the construct, this review starts with the contributions of psychology (section 2) and sociology (section 3), and then covers more recent advances in organizational studies (section 4). Subsequently, the interest will shift to the construct’s economic dimension, focusing on the rational choices theory (section 5) and transaction cost analysis (TCA) (section 6). Section 7 analyses the rationale underlying some of the main integration attempts (mostly carried out by strategic management scholars) between the economic and the social dimensions of relationships in general and of trust ones in particular. Figure 3.1 illustrates the evolutionary synthesis of these studies and this chapter structure. The next chapter reviews trust studies in marketing literature – the main focus of this book. That is the ideal context to understand these issues as well as the possible integration of economic models – more concerned with the rational and calculative dimension of trust – and socio-organizational models – more sensitive to trust’s ‘soft’ aspects.

2. IN THE BEGINNING: THE CONTRIBUTION OF PSYCHOLOGY Psychological and sociological studies are unquestionably the disciplines which have started to investigate the concept of trust. At first they studied it accidentally, as a constituent of broader conceptual models. Later, researches acknowledged trust’s central role in interpreting human behaviour and social relations. Psychology has, at first, examined trust from two main analytical perspectives (Lewis and Weigert 1985):

52


Psychology (section 2)

SOCIO-PSYCHOLOGICAL

Organization (OB) (section 4)

DIMENSION

Sociology (section 3) Strategic management (section 7) TCA (section 6)

ECONOMIC DIMENSION Eonomics (section 5)

Figure 3.1 A synthesis of studies evolution: trust’s socio-psychological and economic dimensions (1) within the framework of behavioural psychology as a fundamental antecedent explaining individual behaviour, especially collaborative behaviour; (2) within personality psychology studies as a descriptive element of individual personality. These two approaches are concisely discussed below, without entering into their respective merit. The first area of inquiry especially concerns the comprehension of the elements leading individuals towards collaborative behaviours. The main methodology, consistently with the principles of behaviourism, is the experiment based on models inspired by the prisoner’s dilemma.2 The goal of such experiments consists in understanding the elements – referring mainly to situational factors – inducing either collaboration or competition between individuals, making the two behaviours coincide explicitly with trust and distrust respectively. The identification of trust with collaboration (and, in particular, distrust with competitive attitudes) was subsequently refuted, pointing out how collaborative attitudes are not always a direct consequence of trusting the counterpart. In fact, the choice of the cooperative option could simply come from an evaluation of economic convenience, generating an output similar to the one generated by trust but which cannot absolutely be assimilated to the latter. As will be shown later, this


53

element is of crucial importance in the critique of the above-mentioned studies. Deutsch is one of the major proponents of this research stream. He has conducted numerous experiments in order to demonstrate the mechanisms underlying collaborative dynamics among individuals. His initial assumption was that the development of collaborative relations among individuals does not necessarily require a personal predisposition (trusting personality) but comes from situational elements (Deutsch 1962: 303). In order for trust to be relevant, from an interpretative viewpoint, the following are required: a subject finds him/herself in a decision-making situation with an ambiguous alternative tree that may lead to a positively perceived event (VA) or an event that is perceived as detrimental (VA); (b) s/he should perceive that the occurrence of either event (VA or VA) is determined by the behaviour of another individual; (c) s/he should be aware that the potential harm (VA) is greater than the benefits (VA). (a)

When an individual decides to make an ambiguous choice characterized by the above-mentioned properties, s/he expresses trust. At the opposite extreme, when the individual chooses to avoid such an alternative, the option is that of distrusting or, rather, as Deutsch maintains, of being ‘suspicious’.3 Trust and suspicion are the two extremes of a continuum that, according to behavioural psychology, is constantly characterized by risk. Several experiments have investigated the situational elements that make trust behaviours more likely. For instance, some studies have highlighted the relationship between communication intensity and trust, verifying the existence of a positive correlation between the involved parties’ mutual communication of expectations and propensity to trust (or, in the words of the prisoner’s dilemma, to cooperate). Loomis (1959) also suggested a number of experimental assessments founded on the social dilemma, demonstrating the direct correlation between the communication level among individuals, trust and collaborative behaviours. Actually, these empirical studies analyse the interaction between unknown individuals, characterized by their own identity, but lacking the substratum produced by previous social interactions. Hence, they do not examine trust in depth as much as the modes in which individuals predict others’ behaviours and decide – according to such predictions – their propensity to cooperate and the actions to carry out (Lewis and Weigert 1985). Furthermore, these researches are abstracted from their relational context, and therefore do not take into account the variability of trust among individuals. Thus, it is

54


assumed that whoever faces a dilemma characterized by a given set of situational variables will have exactly the same behaviour. In order to fill this cognitive gap and explicitly take into account the impact of each variable, a second area of analysis was developed, envisaging trust as a distinctive trait of each personality’s profile (point 2). Now trust can be present in individuals with different levels of intensity, depending on personal experience and the social groups to which they belong. Rotter is undeniably the most significant representative of this stream of research. He assumed that the entire network of social and economic relations is founded on the concept of trust and that almost all individual decisions are determined by the assumption that everyone has to trust someone else. This aspect becomes ever more evident as the social structure complexity increases (Rotter 1971: 443). The author applied to trust the social learning theory perspective, which links the personal propensity to trust to what is learned by interacting with others and with the social context.4 Such a propensity is defined as a ‘generalized expectancy’ that the words, promises and statements made by another person or group may be reliable (ibid.: 444). In view of the extreme subjectivity of learning mechanisms, individual propensity to trust cannot but vary, thus demonstrating the importance of profile-characterizing elements in order to achieve a broader understanding of trust. To verify such a hypothesis and to implement the conceptual model suggested, Rotter initially developed an interesting scoring method – called the Interpersonal Trust Scale5 – aimed at measuring individuals’ propensity to trust. Naturally, one of the author’s main goals is the isolation of individual characteristics (for instance, ethnic group, age, education) to which this propensity is more closely related. In one of his first studies (performed on a sample of college students) he demonstrated how the results of the Trust Scale are directly correlated with the position occupied within the family (thus starting to verify the role that the position within social networks plays in trust generation), the socio-economic level, and the religious denomination and cult differences of the subject’s parents. Rotter (1980a, 1980b) pointed out that ‘high trusters’ are more reliable, happier and, usually, more pleasant persons than the ‘low trusters’. Furthermore, he refutes the correlation – previously hypothesized by some, undoubtedly low trusters themselves – between greater propensity to trust and lower intelligence or greater gullibility. Thus, this denied the existence of a correlation that belittled the concept of trust,6 implicitly making it unimportant as a topic of analytical research. One of the limits of psychological approaches – both the one considering the propensity to trust as an individual characteristic and the experimental one studying the requirements for cooperation among individuals – is the


55

fact that they tend to deal with trust as an individual or dyadic construct, neglecting its external, situational and social aspects as a whole. These aspects may have a considerable influence on the level of trust experienced by an individual, especially in some specific contexts and with regard to a single relational counterpart. This inevitably determines a simplification which does not capture the phenomenon’s real essence.7 Sociological contributions help to bridge this interpretative gap by recognizing trust as a social reality (Lewis and Weigert 1985) that permeates not only the individual but also the institutions.8

3.

TRUST IN SOCIOLOGICAL STUDIES

The growing interest of sociology in the concept of trust is essentially motivated by the need to find new interpretation keys for a rapidly changing model of society. In this new context, the connective element may no longer be the strength of personal relations, as was the case with traditional societies based on small groups of individuals with scarce permeability and few social contacts. In fact, sociologists must provide an explanation for the functioning of social and economic systems more and more structured and founded on an increasing specialization of functions and a greater decentralization of institutions. In these post-modern, post-industrial, global and post-Fordist systems, cooperation among individuals and ‘dispersed’ institutions becomes increasingly critical, as there no longer is common ground (Rocco 2001a) deriving from a consolidated previous relational experience or from a shared social and value-based context. In these situations, social collaboration cannot rely entirely on the mechanism of direct personal relationships but calls for novel systems with a higher abstraction level. The monographs by Luhmann (1979) and Barber (1983)9 are among the first contributions dealing exclusively with the concept of trust. Both defined trust as a certainty of one’s expectations regarding the behaviours of external subjects (that is, individuals, institutions, professionals, and so on). In particular, Luhmann (1979) sees trust as the basic element reducing the growing social complexity and as a fundamental component allowing society to function. In fact, the sociologist’s goal consists in identifying the factor that supports social systems in coping with the ‘unmanageable complexity’ of modern times, in order to guarantee an adequate level of social order. Trust appears to be the best candidate. It is capable of activating social systems’ complexity potential, by increasing the ‘tolerance of uncertainty’ (ibid.: 50). The growing critical features of systemic trust are thus highlighted. Systemic trust is founded on the principle that all subjects belonging to the same system are implicitly ‘trusting in trust’. It appears as

56


a sort of public good that succeeds in reducing the complexity level of the social system, and from which the individuals can obtain positive externalities. Luhmann (ibid.: 67) described trust as a type of ‘collective representation’ of society that constitutes the foundation of social contacts. In this way each party belonging to the system complies with the rules of the game and cooperates with others, eliciting trust-based behaviours to perpetuate the trust-based image of the society. Therefore, it appears that trust not only is an element fundamental to the functioning of society, ‘reducing’ its complexity, but also represents a ‘social construction’ of itself. In fact, trust elicits trusting behaviours learned from and shared with others. We could synthesize Luhmann’s thought saying ‘I trust because others trust’, which is not far from the social learning hypotheses proposed in Rotter’s psychological studies, comparable to a relational sensemaking à la Weick (1997) (Pruvost 2001). Following in Luhmann’s footsteps,10 Barber (1983) defines trust as a set of expectations a subject has vis à vis a third party. Such expectations11 are defined as the fundamental element of social relationships, just as matter constitutes the fundamental element of physical things. Barber contributed significantly to the understanding of the construct by accurately identifying various expectation typologies, corresponding to different ‘forms’ of trust.12 These are organized in three different levels. The more general one refers to the expectation of ‘persistence and fulfilment of the natural and moral social order’,13 which enables the functioning of society and the perpetuation of social order. Such a type of trust forms the foundations of social life, enabling individuals to carry out their daily activities without considering all the possible events that might hypothetically occur.14 The other two types of trust refer to a more specific and concrete level of expectations. The second typology refers, in fact, to the trustee’s level of competencies. The third one concerns the expectation that the partner will comply with his or her obligations and responsibilities, eventually subordinating his/her interests to those of others. The second type of expectation, based on the knowledge of the trustee’s competencies, refers to an individual’s expectation of the counterpart’s ‘competent performance’, capable of satisfying his/her needs. Such an expectation becomes increasingly critical in today’s social systems characterized by greater complexity, imposing more and more structured function division and specialization in knowledge production. In these systems, it is impossible not to delegate production and cognitive activities to other specialized subjects and trust is basically linked to the trustee’s level of competencies and capabilities. The third type of expectation goes beyond the cognitive dimension (referring to competencies) to place itself on a moral dimension, which


57

envisages a trust-based obligation toward a third party. In this case, trust represents a social mechanism that facilitates a balanced use of power and knowledge, thus avoiding abuse (Barber 1983: 15). Barber’s definition of trust underlines the ‘social ordering’ function that characterizes it, providing individuals and systems with a map of cognitive and moral expectations (the former especially referring to competencies and the latter to trust obligations). This leads to a stabilization of social relations (Blau 1964) and a reduction of complexity (Luhmann 1979) for all who interact in increasingly complex and structured social contexts. Actually, Barber’s final objective was to verify the underlying elements of the diminished trust that some observers generally associated with North American society. In order to achieve that goal, the author contextualized his own definition of trust into some of the most significant North American social institutions, namely the family, the foundations, the political system, and the business and professional milieu (devoting a chapter of his book to each). The conclusions drawn by Barber are quite relevant even today. He maintained that the issue was not a drop in the propensity to trust of American society (at the beginning of the 1980s) as much as an increased need for coordination (and, consequently, trust), triggered by the growing social complexity and a greater intensity of knowledge characterizing relations among individuals and institutions. Therefore, modern societies are not facing a drop in trust level as much as a growing relational uncertainty, due to the increased social fragmentation and articulation. This, in turn, seems to call for an increased level of trust in the system or, even, for more sophisticated trust typologies (as will be discussed in Chapter 6, section 6). Parsons’ and Simmel’s conceptual contributions preceded and, in part, inspired those of Barber and Luhmann. Albeit not completely devoted to trust, these efforts delved into the issue providing explicit reference to its nature and functions within the framework of society’s interpretative models proposed by the former authors. In particular, Simmel contributed more than others to clarifying the usefulness of the concept of trust in individual social relationships (micro effects). Parsons, instead, underlines the macro aspects of the issue, referring to the functioning of the general social system and to the role trust plays within it (Misztal 1996). Simmel describes exchanges as the crucial element of his model of society, which he defines as a system of individuals linked by interactions. According to him, each social interaction stems from a conceptualized exchange in terms of ‘a sacrifice in return for a gain’ (Simmel 1971: 51), which, in turn, becomes the basic constituent of society. Hence, conditions determining the existence and functioning of exchanges make an essential prerequisite as they guarantee the very essence of society’s functioning and perpetuation. One of the major conditions for the existence of exchanges

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is trust, which becomes one of the ‘synthetic forces’ of society (Simmel 1950: 326, quoted in Misztal 1996).15 Simmel underlines that the fundamental condition of trust’s existence is the existence of uncertainty. Only if it is impossible to make an accurate estimate of the probability of the occurrence of specific events in the future will there be a need to trust (or distrust, which, according to the author, has an equal informative power).16 Whoever has a perfect knowledge of the relational context (certainty) will not feel the need to trust. On the other hand, when one lacks any knowledge of a situation, trust will have no interpretative relevance. Therefore, it is necessary to be in intermediate situations of incomplete knowledge for trust to acquire some theoretical relevance (Gambetta 1988).17 If Simmel is particularly interested in the micro aspects of society’s functioning, as mentioned above, one of Parsons’ major objectives is the comprehension of the conditions determining the social order as a whole. This is guaranteed not only by the rationality of individual concerns and the existence of a system of externally imposed sanctions (micro aspects) but, above all, by a system of shared values. Hence, trust is seen by Parsons as the equivalent of solidarity, providing a general integration of society and its diverse roles and subsystems. Starting in the second half of the 1980s, some sociological contributions have analysed the concept of trust, applying the rational choice theory. Generally speaking, such a theory stems from the principle that every decision regarding single actions aimed at cooperation may be referred to a purely utilitarian rationale: the satisfaction of the subject’s system of preferences. Hence, decision-making can be traced back to the selection of the action that can maximize individual utility. When sociologists adopted this approach, they contextualized social life as the result of all (naturally rational) choices made by individuals. This has led to the achievement of an important objective in sociology studies, that is, the combination of the micro dimension (the level of individual choices) with the macro one (interpreting the system as a whole), which became a good alternative theory to the more traditional a priori approaches focused on macro-structural and functionalist aspects. According to Misztal (1996: 77), this lies at the basis of the popularity of the theory which, by formalizing individual choice models, succeeded in defining the functioning of the social system as a whole, hence becoming the ‘most general and elaborate individualistic theory within the framework of social sciences’ (Hetcher 1987: 30). This theory intends to connect the dimension of subjective choices with the conditioning exercised by the actions of others, borrowing some principles and tools of game theory. In fact, this theory tries to understand situations in which the maximization of personal utility depends on the


59

actions of the other actors involved in the interaction. Thus, beside a clear utilitarian rationale being provided for the theory, the theoretical construction’s rigour and elegance are enhanced and it assumes a distinct rational and economic character rather than social. The influence of the economic matrix is not limited to the utilitarian approach and to the analytical tools (prevalently referring to game theory), but expands itself to the very definition of trust, which takes an ‘almost calculative’ connotation. In accordance with the above-mentioned approach, Gambetta (1989) defined trust as a specific level of probability that an agent assigns to the performance of a well-defined action by other agents (ibid.: 281). Such a definition provides for, on one hand, a purely – albeit subjective – rational connotation to the choice of trusting and, on the other, the fact that trust lies at the basis of cooperation propensity, which is a fundamental element to guarantee a social system functioning. Gambetta made another step forward in this approach by developing, together with Bacharach (Bacharach and Gambetta 1997, 2001), an interesting quantitative modelling of trust, inspired by game theory. The two authors highlighted the situations in which the signals intended to increase the counterpart’s trust may represent a sort of ‘trust-based mimicry’ generating a (false) opportunistic ‘trust façade’. Hence, the problem is whether to trust not only the subject per se or his cooperative propensity but also the message he sends (Six, 2004). In order to solve what is known as ‘a secondary problem of trust’, the authors rearranged the issue by using the conceptual tools of signalling games, developing once more a quantitative modelling. Coleman (1990) suggested a similar trust conceptualization. He considers trust as an intentional behaviour aimed at maximizing utility under uncertain conditions, thus reasserting the centrality of risk in attributing to trust a significant interpretative function. Specifically, the author related risk, and thus trust’s relevance, to the presence of a growing time lag in social exchanges. He stated that the temporal asymmetry in delivering mutual performances and, consequently, the impossibility of instantaneously monitoring the behaviours of others generate the risk triggering the need to trust. In fact, trust is put in subjects who will perform future actions that are not controllable ex ante at the time at which the trusting decision occurs. Actually, Coleman claimed that trust plays an increasingly critical role in society owing to the growing number of decisional situations characterized by time lag. Giddens (1990) too identified the temporal separation added to a spatial one (defined as ‘time–space distantness’) as one of the major elements underlying the passage from traditional to modern society, which appears implicitly more risky and, consequently, more trust demanding.18 The spread of digital networks and, above all, the diffusion

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of virtual intermediation increase the likelihood of such a situation. For instance, consider the time lag between the moment the customer types the order and pays for it and the time of delivery, or the geographical distance that separates suppliers from customers in a global digital economy. Within the ‘virtual’ relationship, such situations increase the need for trust contents and chunks of trust capable of neutralizing the related risks.19 To cope with such risks, Coleman (1990) pinpointed the need for a trust based not only on the cost–benefit rationale (where potential benefits are greater than potential costs), but also on an efficient sanction system that increases trust effectiveness. Coleman’s view of trust seems to be more calculative and rational – in spite of some limitations effectively summarized by Misztal (1996: 80) – than the view offered by Gambetta (1989) and the authors that contributed to his anthology. The two analytical approaches examined here – the psychological and sociological ones (see Figure 3.2) – have been effectively integrated by social psychologists (for example, Mayer et al. 1995), who proposed a synthesis between individual and psychological dimensions of trust (for example, Rotter 1980a, 1980b; Deutsch 1958, 1962) and its social aspect, referring to personal interactions. According to these authors, trust certainly represents a psychological construct, yet based on social interaction and, in more general terms, on the context in which the relationship takes place, which is both the element conditioning trust development and the source of learning. More recently a line of research using modal theory logics, inspired by rational choice theory, has modelled the decisional process that generates a trusting outcome. Such a modelling enables the construction – through the innovative use of artificial intelligence and neural network applications – of systems and experiments capable of simulating the individual choice process and trust-based behaviours. This provided significant analytical and interpretative cues for the way social groups function. A book edited by Castelfranchi and Tan (2001) collects contributions that apply this approach to virtual social systems – a field recently opened following the

PSYCHOLOGY

Personal characteristics (trustworthiness and propensity to trust) Situational elements (the prisoner’s dilemma and social dilemma)

SOCIOLOGY

Balancing social complexity and uncertainty Trust as social learning Rational choice theory: trust and probability

TRUST’S SOCIOPSYCHOLOGICAL DIMENSION

Figure 3.2 The beginning of trust’s socio-psychological dimension: an overview


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development of relationships in digital environments. In particular, Falcone and Castelfranchi (2001) propose a distinctive cognitive approach to trust finalized in the delegation decision that can be quantitatively formalized and applied in conformance with the principles of artificial intelligence. Thus, it is possible to define the interactional logics of hypothetical ‘virtual intelligent agents’ who have to make their own trust-based choices as humans do. The trust definition offered by the authors builds upon those based on probability, adding to Gambetta’s (1989) predictive dimension another one based on individual competencies, thus better clarifying the process of trust creation in virtual environments. This brief reconstruction of the sociological contributions, which as mentioned earlier naturally converge with those of psychology, shows how trust theories have developed in parallel with the growing complexity of social systems. Now, the virtual economy is making them absolutely critical, owing to the extreme amplification of time- and space-lags and the lack of trust’s traditional substrate identified in past relationships (the socalled ‘common ground’). The concept of trust in digital society and its creation mechanisms are indeed one of the most exciting frontiers of sociological (and many other) researches (Chapter 4, section 7). Further study of trust relationships within social systems has led to analysing trust’s role within the interdependencies developed in organizations and, more specifically, in firms viewed as social systems. Hence, organization disciplines, inspired by the principles of psychology and sociology, have focused on trust as a key concept of organization dynamics.

4. THE CONTRIBUTION OF ORGANIZATION STUDIES Organization theories have made a significant contribution to trust studies, analysing the construct at two analytical levels. First, according to psychology and sociology tradition, trust mechanisms have been examined referring to intra-organizational personal relations, that is, among peers, between subordinates and superiors, and within inter-functional teams. Subsequently, as mentioned in the previous chapter, the analysis has included inter-organizational relationships, examining further trust as a mechanism coordinating alliances, partnerships and, in more general terms, channel relations. In this context, there is evidence of cross-fertilization with other management disciplines, as will be seen later. With reference to the first area – that of organization behaviour – some studies have explored trust’s role in specific organizational structure typologies, investigating both the various trust needs (their quantity and type) of

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different organizational typologies (functional, divisional, matrix-type, network-based ones), and the impact and costs of a possible lack of trust (for example, Powell 1996).20 Other researchers have interpreted personal relationships at the micro level (for example Six, 2004), that is, among peers or between manager and assistant, underlining the critical character of mutual trust as an antecedent of cooperative behaviours and organizational climate. Some scholars have proposed articulated models focused on the relationship between managers and their subordinates, such as Whitener et al. (1998), which examined what induces the managers to exhibit behaviours that promote their supervisees’ trust. The innovative element in this model may be found in the perspective adopted, which differentiates it from more traditional views. The latter, in fact, assume an assistant-based perspective; hence, they are mainly concerned with establishing the elements perceived by the supervisee as expressions of their manager’s reliability. To the contrary, Whitener et al.’s model explores organizational, individual and relational antecedents of the (trustee) manager’s trusting behaviours, which trigger and promote trust development in his/her subordinates (trustors). The trustee is seen as the ‘activator’ of the trust relation,21 which is responsible for fulfilling both organizational prerequisites (structure, functioning mechanisms and cultural climate) and relational requirements (referring to initial interactions, expectations developed by the counterpart, and exchange costs) required for the creation of an adequate trust climate and a good relationship with his/her assistants.22 The third topic addressed by organization behaviour studies refers to trust building mechanisms within specific contexts, such as teamwork and inter-functional groups. The members have to manage uncertain and risky activities such as those needed to produce singles events or develop new products, often in a set time lag. Within the team coordination mechanisms studies, trust and communication have been studied in depth as the mechanisms that best explain the group activity success rate. A free circulation of information within the group improves work efficiency, promotes alignment, increases connectivity, and enhances performance (Dougherty 1990, 1992; Johannessen et al. 1997).23 The specific elements of teamwork are: (1) task impermanence – these groups are often formed in response to a finite project, without future prospects for other joint activities; (2) high uncertainty level of the assigned task, requiring a strong interdependence among members; (3) team/group members’ significant heterogeneity. In fact, teams are often composed of individuals who do not know each other (without significant prior relationships) and have diversified cultural and knowledge backgrounds. Obviously, these conditions are hardly conducive to a prompt development of trust relationships among the involved subjects. In these cases, Meyerson et al. (1996) suggest the possibility of resorting to a


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specific trust typology, namely the so-called ‘swift trust’, enabling the prompt functioning of temporary teams. This is an almost paradoxical type of trust as it is achieved in a very short time, thus allowing the group to meet its goal in a reasonable time-frame. Great attention is currently paid to trust’s role in facilitating virtual teamwork, where team members cooperate to perform a common task while lacking common ground and significant past relationships. In this case, both the cultural and geographic distance separating the members and the absence of non-computer-mediated interaction and personal communication channels compound the problem, making coordination more difficult and, consequently, trust more critical than in the case of traditional temporary groups.24 Team members contribute to knowledge production with their individual competencies and as ‘carriers’ of the knowledge generated with external actors. Therefore, the activity does not end within the firm but, owing to the growing cognitive work specialization that characterizes our economy, also includes managing relationships with other subjects. Hence, even organization theories have broadened their scope in understanding trust that develops in inter-firm relationships. In particular, research has been focused either on partnerships and alliances or on buyer–seller dyads within channel or vertical relationships. These are indeed the themes which have triggered most interaction and cross-fertilization among organization scholars and strategic management models and theories – highly concerned with partnership and joint-venture governance systems (see section 7) – and marketing literature exploring trust’s role in buyer–seller relationships. In the literature, the models applied to the first issue – alliances – highlight, on one hand, the importance of trust to the functioning of alliances and, on the other, the elements enabling an adequate level of mutual trust. To this purpose, the model proposed by Das and Teng (1998, 2001) exemplified the modalities by which trust and the traditional control mechanisms jointly contribute to enhance an actor’s confidence in the partner’s propensity to cooperate. Figure 3.3 synthetically illustrates that model. It shows how trust building mechanisms in alliances (for example, risk taking decisions, fairness guaranty, transparency and intensity of communication, and inter-firm adaptation), together with control mechanisms (that is, goal definition, structural agreements and cultural mixing) concurrently affect the levels of both trust and control,25 making it possible to rely on the partner’s cooperative behaviour. Das and Teng underlined the different configurations of inter-firm relationships derived from the different mix of trust and control levels, thus defining different types of alliances that require differentiated levels of confidence. Such typologies range from joint ventures, based on a high

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TRUST LEVEL TRUST BUILDING Risk taking Equity preservation Communication Inter-firm adaptation

CONFIDENCE IN PARTNER’S COOPERATION

CONTROL MECHANISMS Goal definition Structural Specifications Cultural blending

CONTROL LEVEL

Source: Das and Teng (1998: 497)

Figure 3.3 Impact of trust building and control mechanisms on trust in the partner propensity for mutual cooperation and generating a strong need for both control and trust, to non-equity based alliances, which do not require high reliance on the partner’s willingness to cooperate and, therefore, are not particularly demanding in terms of control and trust mechanisms (as they rely on minority equity-based alliance systems). This confirms the correlation between the different relational typologies and structures on one hand and the different trust types on the other. This issue has already been mentioned in Chapter 1 (section 5) and will be further analysed in Chapter 6, which discusses trust’s role within different market relationships. Many contributions – mostly offered by organization and, more specifically, strategic management scholars – deal with trust’s role in alliances and joint ventures. As will be further presented later, one of the main goals of these studies is the integration of traditional relationship governance mechanisms with trust-based systems and, more generally, systems based on self-enforcing coordination mechanisms. These studies formulate hypotheses and general models demonstrating the beneficial effect of trust on alliance and joint-venture governance mechanisms, while evincing the limits of the transactional costs model (for example, Ring and Van de Ven 1992; Zaheer and Venkatraman 1995; Gulati 1995). These researches are often associated with empirical tests such as those which investigated trust’s role in relationships in several countries (for example, Cullen et al. 2000) and different sectors, such as industrial machinery and furniture

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Inter-organizational trust

Negotiation

Performance

Interpersonal trust

Conflict

Source: Zaheer, McEvily and Perrone (1998: 154)

Figure 3.4 Distinction between interpersonal and inter-organizational trust: a relational exchange structural model (Lane and Bachmann 1998) or the car manufacturing industry (Dyer 1997; Sako and Helper 1998). These contributions underline the need to closely consider – in addition to economic and structural aspects – the soft side of alliances and supply chain management, often conceptualized by means of variables related to the partner’s commitment and, above all, to trust.26 Recently, a new and interesting research trend has emerged in organization studies, focusing in particular on relationship management. It stems from the observation that inter-firm relationships are managed by individuals who – at a personal level – represent the firm (‘gatekeepers’ as conceptualized by Allen (1971)). Consequently, the need to consider at the same time both the personal and the inter-organizational dimensions of trust, delving into the interactions between these two layers, emerged. Zaheer et al. (1998) have offered a model that discriminates between the inter-organizational dimension of trust (defined in terms of a leap of faith) and the interpersonal one. These dimensions are conceptualized as two different constructs, following an empirical study demonstrating their different effect on negotiation costs, conflict level and, in the last instance – through the direct and mediated impact of the previous variables – on the exchange relationship performance (Figure 3.4). By the same token, in marketing studies, Jap and Weitz (1993) and Jap (1999, 2001a) have made some first attempts to jointly consider both analytical levels of channel relationships, trying to clarify how individual trust developed between buyer and seller might affect relationships at the inter-organizational level. Similar attempts have been made by Doney and Cannon (1997), referring to the industrial goods market. These models,

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TRUST’S SOCIOPSYCHOLOGICAL

ORGANIZATION (OB)

Trust among subjects at the intraorganizational level (enabling factors and drivers) Trust among temporary workgroups Relation between trust and control

ORGANIZATION (INTER-ORGANIZATIONAL)

Trust in alliances and partnerships (evolutionary models and antecedents) Interaction between inter-organizational and interpersonal trust

DIMENSION

TRUST’S ECONOMIC DIMENSION

Figure 3.5

Trust in organization studies: an overview

dealing with trust in typical buyer–seller market relationships, will be further examined in the next chapter. Organization studies, whose contributions are summarized in Figure 3.5, highlight the construct’s complexity and various application levels (interorganizational, interpersonal and institutional). The same complexity characterizes marketing studies as well. There the participants of the dyadic relationship can be quite diversified, thus offering a considerable variety of relational typologies. To this purpose, it is also worth considering that the relational interface does not always consist of a subject (organization or individual) but may also be represented by its direct manifestations, including brands, products, signs and real or virtual stores, thus making the understanding process more complex still.27

5. TRUST’S ECONOMIC DIMENSION: THE RATIONAL CHOICE THEORY According to economic studies, trust has been an important lubricant of economic exchange relations and an effective transaction governance mechanism (Arrow 1974). In the context of neoclassical economic theoretical assumptions, which hypothesize transparency of information and a perfect individual rationality, trust plays a minor role since there are no uncertain situations. Often the term is associated with a purely social matrix, not easily integrated into the theoretical economic pattern. More recently, some contributions applying game theory principles and agency theory to exchange relationships have highlighted the critical aspects of trust in economic relations.28

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Customer

The customer does not enter the dealership A: Sells a lemon The customer enters the dealership

Profits Salesperson Dishonest

Honest

0

0

0

–b

g

m

1–b

a

d

B: Sells a good car

g > a > 0;

0 < b < 1;

d > 0; d > m

Source: adapted from Dasgupta (1989: 79)

Figure 3.6

The decisional tree of a car salesperson

Dasgupta (1989) has explicitly conceptualized trust as an ‘economic good’ demonstrating the value associated with reputation.29 His initial hypothesis maintains that individuals, guided by their rationality, willingly decide to be cooperative or reliable in order to achieve a specific goal, that is, to build a reputation that may provide them with future economic advantages. To demonstrate the economic value of reputation and the rationale motivating its building, Dasgupta proposed a model based on a game between buyer and seller, characterized by incomplete information (in the absence of seller’s guarantees, or other trust substitutes). As an example, he adopted the traditional car dealer situation. A decision-making situation in which a potential customer is buying a used car at a dealership that offers good cars as well as lemons is assumed. The dealer knows exactly which car is which. The customer, who is assumed to be the first to make a decision, has two options: to enter the dealership, buy a car (selected by the car dealer) and pay the price requested or not to go in and, hence, not make the purchase. The latter option offers no pay-off to either subject involved in the simulation. Once the customer has entered the dealership, the seller has two options as well, that is, either sell a ‘lemon’ (option A) or sell a good car (option B). Each column in Figure 3.6 shows the outcome of each of the alternatives respectively: ●

for the customer, whose preference order is: to buy a good car (1b), not to buy it (0) and as a last resort – to be avoided as such – buy a lemon (b);

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The contribution of the different disciplinary contexts ● ●

for the dishonest salesperson, who, above all, prefers to sell a lemon (g), followed by selling a good car (a) and, as a last resort, not to sell (0); for the honest salesperson, who prefers selling a good car (d) instead of a lemon (m).

The assumption is that the customer does not know a priori whether the salesperson is honest (hence, trustworthy) or dishonest (untrustworthy) and therefore s/he ascribes a subjective probability (p) to the salesperson’s honesty. In such a decision-making context, p represents the salesperson’s honest reputation, or – consistently with trust definitions proposed by Gambetta (1989) and Coleman (1990) – the likelihood that s/he will behave in the customer’s interests. If we assume that all of the above data are common knowledge, the customer will have zero profits if s/he decides not to go into the car dealership. Conversely, s/he will gain an expected profit equal to the pay-off difference associated with options A and B, weighted by the salesperson’s reputation probability, namely p(1b)(1p) b, or pb after simplification, if s/he decides to enter and make a purchase. Consequently, it is easily deduced that the customer’s decision to enter the dealership is essentially linked to the value of p, corresponding to the salesperson’s reputation value. The above choice will occur only when the value (the ‘probability’) of the positive reputation is greater than b (the negative pay-off associated with purchasing a lemon). This proves that trust is an economic commodity fundamental to the conclusion of an exchange, and that salespersons have every interest in developing it, so that it constantly exceeds the value of b. Studies based on rational choice theory suggest considering not only instant decisions made at a given time but also the possibility that future events might occur and condition the actors’ past behaviours. To this effect, they maintain that the beginning of cooperation between two individuals – when it is reputation-dependent – should be traced back to the eventuality that they might meet on a future occasion. If the parties do not expect future involvements, trust is bound to lose much of its interpretive relevance. Instead, when the relationship between two parties is ongoing, the interdependence of subsequent events makes reputation useful. Therefore, a choice made at a given time determines not only the outcome of the single move then made, but it also affects all future decisions of both players. Hence, the future casts its shadow onto the present, affecting the current strategic situation (Axelrod 1984: 18). This is the typical effect of trust, therefore described as a shadow of the future. Applying the analytical tools of repeated game theory, Axelrod (ibid.) demonstrates that reputation derived from past cooperative behaviours is fundamental to the onset of reciprocity actions. In particular, in order to


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maximize the joint outcome, it appears fundamental to start a repeated game, clearly demonstrating cooperative behaviour from the first move and subsequently reciprocating the opponent’s behaviour, implementing a ‘quid pro quo’ strategy.30 One of the most frequent critiques of the economic matrix studies analysed thus far – in line with sociology models that apply the rational choice theory – concerns their real object of study. In fact, it has been stated that these works do not explore the trust concept, but – also as a consequence of the analytical tools employed – concentrate instead on cooperation decisions, making them implicitly coincide with the trust construct. This position cannot be fully supported because – as will be demonstrated later – the two concepts do not coincide. Cooperation may, in fact, result from a rational decision, the actual trust placed in a subject notwithstanding.

6. WILLIAMSON’S NEO-INSTITUTIONALIST MODEL: THE THEORETICAL IRRELEVANCE OF TRUST Transactional costs theory has fostered several studies which are particularly useful to better understand the scope of the debate on trust’s relevance (Williamson 1979, 1985). Initially this theory was aimed at detecting the most appropriate economic and contractual safeguards in order to reduce the threat (or, rather, the risk) of opportunistic behaviours. Such behaviours, defined as ‘self-interest seeking with guile’ (Williamson 1975: 26), represent one of the ‘taken for granted’ hypotheses of the theory, as an expression of a peculiar human behaviour occurring whenever a subject initiates an economic transaction. Consistently with the assumption of opportunistic behaviour, at first the trust concept was completely ignored by the theory. In fact, if one assumes that the other party always tries to favour his/her interests (pursuing them with guile), it is unthinkable to trust him/her. The meaning of trust presumes exactly the opposite of Williamson’s hypothesis, namely that one party – albeit having the option of acting opportunistically – behaves to protect the counterpart’s interests, even when they are inconsistent with his/hers. Therefore, transactional costs theory adopts a stance of distrust toward the behaviour of others – which determines a score of relevant consequences at the interpretive level. In subsequent works, Williamson (1985) appears to reappraise this hypothesis by introducing the concept of transactional atmosphere, which somehow seems to integrate some of the meanings of trust. Williamson’s concept seems to represent a factor capable of economizing transactional costs by reducing the information needs of transaction governance (Mutti

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1987: 228). More recently, in 1993, the author decisively refused what appeared to be a common trend in transactional costs theory, definitely excluding the trust concept from his theoretical framework. An analysis of the reasons underlying that choice will help in understanding the very concept of trust and the role it plays in economic relationships. In response to the numerous critiques of the excessive ‘opportunistic rationality’ of his model, Williamson demonstrated what he defined as the theoretical irrelevance of the trust concept. The key to his methodological proposal is the concept of transactional cost and the transaction governance mechanisms most appropriate to defend oneself from the typical ‘widespread opportunism’ of current economic systems. Williamson (1993) replies to those who criticized the extreme rationality of this approach with a four-pronged defence: ●

●

●

●

First, he demonstrated the integrity of the rational economic approach (or rational choices), as proven by the success of this perspective when applied to other disciplines receptive to the trust issue, including contract theory, political sciences, sociology – which adopts rational choices theory in direct reference to the trust issue – and the conceptualization of human choices (Becker 1976). Secondly, the author delved into the trust concept, subdividing its various logical levels. He began analysing the so-called calculative trust, considered as the only type compatible with his theoretical model. It is assimilated to risk, which constitutes – according to the author – the very core of the trust concept. In fact, social science scholars have considered the occurrences in which trust is relevant as a subclass of risk-taking situations.31 This shows the inner contradiction of the calculative trust concept, and the possibility of tackling risk by resorting to the most efficient contractual safeguards.32 Thirdly, different types of trust – besides the calculative one – are taken into consideration, judged inconsequential to the comprehension of the transaction, and described as a ‘contradiction in terms’ (Williamson 1993: 463). Institutional trust is analysed first. It is defined as a type of ‘composite’ trust (for example, societal trust, political trust, and so forth), and it is maintained that it can be easily traced back to the exogenous environmental variables of the transactional costs model, still under consideration in order to define the most appropriate transaction governance mechanisms within the framework of the calculative approach. Lastly, Williamson analysed the issue of personal trust. He defined it as ‘nearly non-calculative trust’, showing that even the willingness to behave in a non-calculative way is a rational decision. Furthermore,


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the author maintained that pure non-calculative trust situations should be considered as true exceptions within the framework of economic transaction, if they exist at all. True personal trust, seen in its emotional dimension, according to the author is related only to affective and friendly relationships, and not to commercial transactions. The latter are always pervaded by calculative rationality linked to the risk concept; hence the trust concept does not have the relevance that many disciplines ascribe to it.33 Williamson’s criticism of trust, considered an ‘elusive notion’, has triggered an unexpectedly mild debate. In fact, many authors have continued to consider trust as a fundamental aspect of inter-organizational relationships. By means of in-depth empirical research they have further proven the significance of the concept in interpreting the evolution of firm interdependencies, and also as a variable mediating the relational interpretive models. Conversely, the calculative dimension of trust has also been described as a type unrelated to the true essence of the trust concept. If the decision of trusting is a matter of mere economic convenience, one is not talking about real trust but of a rational decision based on the convenience to trust, because the potential advantages of the decision are greater than possible harm. It might be possible to refer to it as ‘initial’ trust within the framework of the evolution cycle of inter-organizational relations, whereby the decision to trust – in the absence of reliable information on the counterpart – is founded on a mere convenience calculation. Williamson’s contribution (1993) has certainly raised doubts about the consistency of the construct within a rational choice theory that favours calculative trust. We believe that the concept of calculative trust is entirely consistent with the model’s conceptual structure, especially when considering its proposed probabilistic-rational definition. However, disagreement emerges with Williamson’s attempt to trace back the exchange contents exclusively to an economic and rational dimension within the boundaries of economic risk management. Actually the overlap between the two theories – the rational choice theory and the sociological one – has generated some confusion. It is not by chance that, at the beginning of his study, Williamson refers to Gambetta (1989), Coleman (1990) and, more generally, to the sociologists who advocated the principles of rational choices theory, rationalizing trust as an economic-probabilistic (albeit subjective) calculation. If it is partly acceptable to consider this a type of ‘opportunist trust’, it is nevertheless impossible to ignore all of the other trust typologies proposed by other disciplines (‘hyphenated’ in Williamson’s parlance) and which neither have a purely rational matrix – although cognitive (for example, Falcone and Castelfranchi 2001) – nor are only emotional

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in nature. Furthermore, it is equally impossible to ignore the numerous empirical studies that have proven the significance of the construct while comparing alternative models, not including it. In addition to the abovementioned considerations, and to clarify the importance of trust in exchange relationships, it is important to synthesize some of the main replies to Williamson’s ‘provocation’: ●

●

●

●

A first group of scholars refuted one of the initial assumptions of transactional costs theory, namely opportunism, disagreeing with the excessively rationalistic and under-socialized view proposed by Williamson. The transactional costs model is founded on the assumption that the individual is completely aware of his rationality limits and capable of differentiating economic relations from social relationships (for example, Cummings and Bromiley 1996; Lane 1998: 6). Another group of authors accepted Williamson’s criticism, considering the trust definition – calculative and probabilistic in nature – proposed at first by the author,34 but subsequently kept its distance from a calculative concept of trust in se, undermining the main assumption of his logical argument.35 Some authors maintained that the theoretical framework of transactional costs is neither very ductile nor capable of assimilating social matrixes such as trust. In fact, Williamson (1993) tried to translate socio-economic principles into a purely economic language. Hence the attempted expanding of the interpretive capacity of the economic scheme to social issues enhances the reductionist feature of the model much more than when the exploration is limited to the economic variables. A last group of authors, following Gambetta’s trust definition (1989), proved that the mere calculative dimension is inadequate to understand the reality of economic relations among individuals.36

Some transactional costs theory proponents have adopted a different approach from the one chosen by Williamson (1993). As will be seen in the next section, they tried to incorporate trust instances within a more general framework, contemplating both the social and economic dimensions of business relations.37 Actually, shortly after the introduction of transactional costs theory, some breakthroughs broadened the conceptual horizon, encompassing social aspects and moving away from the theory’s early economic milieu.38 This happened at first with the concept of clan and by proposing intermediate forms of transaction governance, as suggested by Ouchi (1980). The latter helped to reduce the economic mechanistic patina over transactional costs theory by introducing the concept of serial equity,

Multidisciplinary studies on trust ECONOMICS AND RATIONAL CHOICE THEORY TRUST’S ECONOMIC

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Trust as probability of cooperation (game theory) Reputation’s economic value Repeated games: trust as shadow of the future

DIMENSION

TCA

Figure 3.7

Calculative trust, replaceable by the risk concept Irrelevance of personal and institutional trust First integration attempts between economic and social dimension

The economic dimension of trust: an overview

which sanctions the broadening of the analytical landscape, shifting from transaction examination to relationship investigation.39 Subsequently, even the studies belonging to the social capital approach underlined the need to consider the social and trusting dimension of relations. The critical issue lies in the fact that such concepts do not fit into the economic scheme proposed by the TCA model. Hence, later developments were inspired by transaction costs theory, but moved away from its principles. The instant economic mechanism highlighted in transaction costs, representing the core of the entire model, was integrated or replaced by other constructs more consistent with the social dimension. Consequently, highly structured multidimensional models developed. These are more prone to embrace social concepts, such as trust (for example, Powell 1990; Zaheer and Venkatraman 1995; Dyer 1997; Uzzi 1997). Figure 3.7 shows a synthesis of contents developed (in this section and in the previous one) with reference to trust’s economic dimension.

7. INTEGRATION OF TRUST RELATIONSHIP’S SOCIAL AND ECONOMIC DIMENSIONS: THE ROLE OF ‘STRATEGIC MANAGEMENT’ Strategic management contributions attempted to integrate the economic and social dimensions of relationship, specifically referring them to the relation governance mechanism, along two main paths: ● ●

On one hand, integration efforts were the results of rethinking the relationship concept. On the other hand, a synthesis was derived starting from the trust concept itself, regarded as capable of directly integrating in se (thus avoiding the consideration of the relationship concept) the transaction’s economic and social instances.40

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7.1


Trust Relationship’s Multidimensional Nature

A first series of contributions tries to integrate the relationship’s two analytical dimensions (economic and social), using wider interpretative models that allow considering them both at once. Yet, these contributions link trust only to the relationship’s social dimension. This is viewed together with the economic one and thus is enmeshed with other transaction governance mechanisms which have a more rational matrix. On this matter, there are two modalities by which integration is sought: 1.

2.

Trust is proposed as an element capable of substituting (albeit partially) the transaction governance mechanisms already indicated by the transactional cost theory (thus considering it a determinant of the governing structures) (for example, Heide and John 1992; Gulati 1995; Chiles and McMackin 1996; Dyer 1997). Alternatively, trust becomes a stand-alone transaction governance mechanism, with a role that complements and supplements those proposed by the transactional cost theory (for example, Bradach and Eccles 1989; Sako 1991, 1998; Zaheer and Venkatraman 1995; Sako and Helper 1998).

In the first case, trust’s presence reduces the safeguard level needed to counteract the risk of opportunistic behaviours. For example, it has been shown that the greater the trust existing between two partners joined by an alliance, the less the need for equity-based governance mechanisms. Also, the greater trust’s presence within a certain transactional context, the less is the need to use transactions’ hierarchical governance mechanisms. In this case, trust acts as an attenuator of the safeguard level against opportunism, becoming an important determinant in choosing the most appropriate transaction governance mechanism. In particular, transactional costs theory establishes the central role of relation-specific investments in understanding the magnitude of contractual and relational safeguards. The hypothesis is that any increase in relation-specific investments determines a transactional cost increase as well, as a result of the need to set up more complex transaction governance mechanisms and more significant safeguards, capable of lessening opportunistic behaviours associated with specialized assets. Contrary to Williamson’s theory, a comparison study of supply chain relationships between US and Japanese car markets has shown that an increase of asset specificity causes a reduction in transactional costs. In fact, while linked to the specificity level of relational resources, transactional costs can vary independently from the said resources (Dyer 1997: 539). Such an effect can be associated with several phenomena, among


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which stands out the use of non-contractual coordination mechanisms based on self-enforcing safeguards (such as the so-called goodwill trust, reputation and financial hostages). Unlike contracts that have limited validity, these mechanisms remain active over undefined time horizons (ibid.: 544).41 Non-contractual coordination mechanisms add credibility to one’s promises, and determine both a transactional cost reduction and the availability of increasing the relation-specific investments. In turn, the latter operate as pledges, increasing one’s very credibility. These consequences maximize what Dyer (ibid.) defined as transactional value (not cost), increasing the joint performance level of the parties. This in synthesis shows how, in exercising a positive effect on the parties’ credibility, trust also induces a specific investment increase and a transactional costs reduction, improving the overall value generated by the relationship (a paradoxical and unexplainable result according to Williamson’s theoretical framework). This should suffice to show how the inclusion of the trust construct within transactional cost theory allows understanding of phenomena that are otherwise difficult to understand. Similarly, while discussing alliances, Gulati (1995) notes that the familiarity developed by subjects who had past relational experiences induces the parties to choose non-equity-based transaction governance forms, contrary to situations in which prior experiences are absent. Behind this assumption an implicit hypothesis emerges: familiarity is at the basis of trust, which in turn allows a choice of transaction governance less burdened by safeguards.42 This opens the door to interesting implications in terms of governance mechanism evolution at the various stages of relationship development (for example, Zajac and Olsen 1993; Ring and Van de Ven 1994; Gulati 1995; Joshi and Stump 1999). Another group of authors considered trust as a transaction governance mechanism which is autonomous but not as formal as those proposed by transactional cost theory. In this case trust is added to transaction governance traditional mechanisms (hierarchy, market, long-term contracts). Again, it does not replace them, but makes them more effective, while also increasing learning potential and relational performances.43 On this topic, an empirical test was run by Zaheer and Venkatraman in 1995. It showed that integrating trust with more traditional economic determinants of transaction governance mechanisms (such as asset specificity, uncertainty and mutual investments level) induces a better understanding of the relationship governance mechanisms in terms of both structural dimensions (semi-integration level) and process (joint action level developed within the relationship). Demonstrating the significant difference between trust and opportunism analytical determinants, Sako and Helper (1998) clarified that trust and the other safeguard mechanisms against opportunism are not

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simple direct substitutes for each other. On the contrary, they are complementary elements of the relationship. A reduction of opportunism in a relationship is not equivalent to an increase of trust, because these two elements refer to different analytical determinants. Therefore, they need to be developed concurrently. The above integration attempts also have different operative modes. In particular, some authors start by criticizing Williamson’s theory foundation. By far the most common critique is on the adoption of opportunism as a prerequisite and driving element of the theoretical framework logic and on its normative implications (for example, Bradach and Eccles 1989; Ghoshal and Moran 1996; Nooteboom 1996). Transactional cost theory considers opportunism as the real cause of market failures and the element determining the birth of organizations.44 In particular, Ghoshal and Moran (1996), exploring the concept’s less evident implications, state that its normative application is quite dangerous (‘bad for practice’), because of the ‘self-fulfilling prophecy’ effect (that is, the mere hypothesis of opportunism triggers that very same behaviour). Foreshadowing Dyer’s proposal (1997), Zajac and Olsen (1993) called for a shift from an exclusive focus on transactional costs to an explicit evaluation of transactional value. Noting TCA45 limitations, they introduced a transaction value analysis (TVA) model, which maximizes the parties’ output while explicitly considering their joint process of value production.46 Chiles and McMackin (1996) established that, considering relationships steeped in trust, it is possible to significantly modify many of the basic assumptions of transactional cost theory (limited rationality, presence of opportunism and people’s neutrality toward risk). In particular, trust is shown to reduce the likelihood of opportunism and allow the selection of transaction governance expressions featuring less contractual safeguards. Trust also affects the limited rationality level, reducing complexity and uncertainty regarding the behaviour of others involved in economic relations (Zand 1972; Chiles and McMackin 1996). Therefore ‘economies in limited rationality’ are made, lowering the transactional risk level47 and extending the trust-associated market efficiency as a transaction governance mechanism to idiosyncratic investment levels much higher than those typical of trustless situations. 7.2

Trust as an Integrating Mechanism Between Relational Dimensions

A second group of contributions tried the integrating gambit. Far from reacting against the previous one, these attempts appear to be their natural evolution, orienting the synthesis more toward the trust construct than the relationship concept. In fact, trust is considered an effective coordination


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mechanism for both economic and social dimensions. It is no longer sufficient to show that in a given relationship the social dimension (ruled by trust) is present together with the consolidated economic dimension (to which apply transaction governance mechanisms derived from economics). Now, trust itself can help in coordinating even the economic dimension of transactions, integrating within both relational aspects. For instance, Zucker (1986) conceptualized trust in social terms, as well as Kramer et al. (1996), but stated that a somewhat calculative element colours all types of trust behaviour. Similarly, Shapiro et al. (1992) and Lewicki and Bunker (1995) integrated economic and psychological views and defined trust as a state that, in a risky situation, implies a positive expectation toward the actions and motivations of others. These expectations, detailed in Chapter 6, can be based on prize or punishment systems underlying the other party’s behaviour (calculative dimension), as well as the predictability of his/her actions, or a complete internalization of his/her desires and intentions. Trust can well be characterized by contents based on economic expediency (especially during the early stages of the relationship’s evolution). Nevertheless, in time and because of the recursiveness of relational interdependencies, it develops social and psychological contents (for example, Bhattacharya et al. 1998). Considering the importance of these integration efforts, we believe that market relationships represent a valid field of research for determining the analytical relevance of trust. If psychology, sociology and organization studies naturally tend to favour the relationships’ soft aspect and economicsinspired works are more focused on the calculative-rational dimension, marketing contributions can provide the needed synthesis between these two analytical dimensions. Such a need has been clearly felt in regard to channel relations (for example, Anderson and Narus 1990; Jap 1999, 2001b) and industrial market relationships (for example, Håkansson and Snehota 1989; Ferrero 1992; Iacobucci 1996). In these areas, a greater sensitivity toward the cooperative dimension has long induced the definition of models that harmonize economic-functional and socio-political aspects. The following chapter discusses these facets in an attempt to clarify the role of trust within market relationships between buyer and seller and in all types of marketing and channel partnerships.

NOTES 1.

As we will see in the next chapter, marketing scholars are also interested in exploring existing relations between firms and customers, attempting to interpret trust’s role in the relationship established between a firm, its sales staff, stores and brand, on one hand, and the shopper or buyer, on the other.

78 2. 3.

The contribution of the different disciplinary contexts For further studies and examples on trust’s role with regard to the prisoner’s dilemma, see Rocco (2001b: 83 ff.). Deutsch (1958: 266) defines trust as follows: ‘An individual may be said to have trust in the occurrence of an event if he expects its occurrence and his expectation leads to behavior which he perceives to have greater negative motivational consequences if the expectation is not confirmed than positive motivational consequences if it is confirmed.’ An example by Deutsch (1962: 303) accurately clarifies the terms of the above-mentioned definition. A mother who has to leave the child with a babysitter makes a typical trusting choice. It is assumed that the mother: (a)

is aware that her choice may determine positive or negative consequences for herself and her child; (b) realizes that such consequences are determined only by the babysitter’s behaviour; (c) is aware that the possible damage due to trust betrayal is undoubtedly greater than the advantage derived by the babysitter’s reliable behaviour. 4.

5.

6.

7.

8.

9. 10.

11. 12.

It is interesting – also considering the social implications involved – to note that ‘the development of such a generalized attitude may be learned directly from the behavior of parents, teachers, peers, etc., and also from verbal statements regarding others made by significant people or trusted source of communication such as newspaper and television. It is ironic that we can learn to distrust large groups of people without personal experience validating such distrust, because people who are themselves trusted teach distrust’ (Rotter 1967: 653, emphasis added). Such an indicator is structured in a series of items expressed using Likert’s scales, empirically verified through face validity, reliability and construct validity tests. Likert’s scales are an indirect mode of detecting individual perceptions, based on the request of an agreement/disagreement judgement regarding given affirmations. Rotter’s methodology has been revised and refined in order to highlight the specificity of some relational contexts. An example is the doctor/patient relationship examined by Anderson and Dedrick (1990) or the Dyadic Trust Scale, proposed by Larzelere and Huston (1980) to pinpoint mutual trust in close sentimental and affective relationships. Of course, measurements proposed by psychologists have considerably developed through time and have become new frontiers of research in trust literature. Lewis and Weigert (1985: 976) maintain that there may be a risk of assimilating trust to one of the many psychological states conceptualized by doctrine (for example, hope, love, faith, behaviour prediction, and so forth), thus inducing scholars to adopt inappropriate experimental models and empirical control methods that limit the phenomenon interpretation. Lewis and Weigert (1985: 686) are extremely explicit on this: ‘We see that the primary function of trust is sociological rather than psychological, since individuals would have no occasion or need to trust apart from social relationship. In addition, we would like to argue that, like its function, the bases on which trust rests are primarily social as well.’ An exhaustive review of sociological studies on trust can be found in Misztal (1996) and Sztompka (1999). Actually, by analysing contributions prior to Luhmann’s and Barber’s it clearly appears that the concept of trust had already been explored by sociologists, yet not in monographs devoted exclusively to it. The continuity between the two authors’ works is particularly evident and becomes even more interesting if one considers that Barber – as he himself states (1983: 5) – became acquainted with Luhmann’s monographic study in an advanced stage of his theoretical formulation. Barber (ibid.: 9) suggests a definition of expectation as a system of meanings associated with the system of choices triggering the subject’s actions and reactions (effective from the rational viewpoint and morally and emotionally appropriate). The tendency to classify trust into several typologies is further confirmed by other sociologists, such as Lewis and Weigert (1985), whose contribution will be explored in detail in Chapter 6 (section 6).

Multidisciplinary studies on trust 13.

14.

15.

16. 17. 18.

19.

20.

21.

22.

79

Garfinkel (1967) had already examined in depth the concept of trust as ‘expectation of persistence of moral social order’. In particular, the author conducted empirical research based on experimental methodology to prove the actual existence of this type of trust, and the difficulty and impossibility of coexisting without an appropriate level of trust in the social order. Lacking this type of trust, it would be rather complicated, if not impossible, to perform even the simplest daily actions. The consequences of 11 September 2001 may be seen especially at this level of trust, by undermining the pre-established social order each one implicitly trusts. This type of trust has made it possible for a small terrorist cell to circumvent the security systems of two major institutions – the aviation and the postal systems – implementing actions beyond common sense and social order. Consequently, this undermined the institutional trust level in regard to what were considered routine activities. This is the goal of those who aim at destabilizing public order through ‘uncertainty strategies’, as interestingly exemplified by Gambetta (1992) in his reconstruction of the Sicilian Mafia. Similar effects may occur also in food adulterations as in the ‘methanol case’ in the Italian wine market and the ‘mad cow’ case in the fresh meat market. According to Simmel, to better understand the concept of trust it is worth exploring the function of money in exchange, as it plays a fundamental symbolic role replacing, albeit in more abstract terms, the personal contacts typical of traditional societies. For this tool to be effective, it is fundamental to trust its function and the economic system fostering it. Simmel, in fact, maintains that money is only a promise that the exchange will be honoured (Simmel 1978: 179). See Chapter 6 (section 6.4) for differences and analogies between the trust and distrust concepts. ‘Trust is . . . unprovable, based on knowledge and non-knowledge since it involves a degree of cognitive familiarity with the object of trust which lies somewhere between total knowledge and total ignorance’ (Simmel 1950: 318, quoted in Misztal 1996: 50). Giddens isolates two different categories of trust, namely trust in people (face-to-face commitment) and the trust in abstract systems (faceless commitment), thus discriminating between the personal and the institutional levels. He suggests defining trust as ‘confidence in the reality of a person or system, regarding a given set of outcomes or events, when that confidence expresses a faith in the probity or love of another, or in the correctness of abstract principles’ (Giddens 1990: 34). On this issue, Falcone and Castelfranchi (2001: 55) state: ‘with the growing impact of e-commerce distance trust building becomes more and more important, and better models of trust and deception are needed’. On the same subject see also Tan and Santosa (2001), who proposed a model explaining the trust gaps that hinder first transactions in e-commerce (see Chapter 4, section 7). It has been underlined that, in the case of functional typologies, the lack of trust reduces efficiency; in divisional typologies, it impacts effectiveness, thus determining higher costs; in matrixes, the typology itself fails; and in network-based structures, the lack of trust may lead to the failure of networked firms, nullifying their co-evolution (Creed and Miles 1996: 26). Whitener et al. (1998: 527) maintain: ‘from the manager’s perspective, initiating involves engaging in trustworthy behavior preemptively, perhaps before the subordinate has demonstrated his or her worthiness. . . . We propose that managers and organizations interested in establishing trust make the first step.’ The authors have also identified the characteristics of managers’ behaviours that generate trust in subordinates, namely consistency over time, behavioural integrity, control sharing and delegation, communication transparency and demonstration of concern toward third parties. Such antecedents are moderated by variables such as the perceived similarity, the manager’s competency level as perceived by his/her subordinates, the latter’s propensity to cooperate, and task’s interdependence. These are the elements composing the analytical structure of a typical model aiming – as so many others do – to expound trust’s role in organization dynamics.

80 23.

24. 25.

26.

27. 28.

29.

30.

31. 32. 33.

34.

The contribution of the different disciplinary contexts Song et al. (1996) proposed an empirically assessed model with the purpose of isolating the main antecedents in teamwork involvement and the level of information exchange among team members. Among the six factors assessed, two are fundamental to the information exchange, namely credibility and inter-functional relationship quality. See also Hatzakis (2001), which suggests a model to interpret interpersonal trust dynamics among virtual teams, and Rasters (2001). Figure 3.3 shows that trust also has a mediated effect on control, by conditioning the relationship between control mechanisms and control level. The issue of the trust–control relation is one of the new frontiers in trust studies. It was the central theme of volume 22 (2001), second issue, of Organization Studies. This special issue included a study by Das and Teng (2001), who examine in depth the relationship in strategic alliances between different types of trust (competence- vs. goodwill-based), different control mechanisms and various perceived risk levels (relational and performance-based). The authors demonstrate that trust and control mechanisms represent the main relational risk antecedents. The model suggests that appropriate trust building strategies and control mechanisms can minimize the risk associated with strategic alliances and promote their adequate development. Once the criticality of such aspects within partnership relationships is verified, it is possible to design management models that consider the dynamic dimension of relationships. In fact, as the relationship develops, the structure of interdependencies changes and, consequently, so will the governance mechanisms most apt to achieve coordination. Thus the very profile of the trust construct shows an evolution (Ring and Van de Ven 1994). The topic of trust development in the relationship evolutionary cycle will be further discussed in Chapter 8. As will be seen in the next chapter, differences in relational interface structuring have a significant effect on defining both trust drivers and the signals that manifest them. The success of those applications is confirmed by their adoption in sociological studies (that can be traced back to rational choice theory) to justify the definition of social order. For further details of the economic dimension of trust see the interesting analysis conducted by Moellering (2006, Chapter 2). Dasgupta (1989: 79) actually maintains: ‘reputation is capital. It is possible to increase it following specific courses of action or destroy it following others . . . A person’s reputation is the “public” attribution of a probability distribution of the diverse types of person an individual can be’ (translated from Italian). A large base of experimental data supports a four-fold generalization of the principles behind the success of any decision-based rule in cooperative games, namely: (1) avoidance of useless conflicts, cooperating until the other party cooperates as well; (2) provocativeness (in the sense of reaction to provocation) in facing unjustified defection by the other player; (3) clemency after reaction to provocation; (4) clear behaviour, in order to allow the other party to adapt to one’s ways (Axelrod 1984: 24). On this subject, Williamson (1993: 463) maintains ‘trust is purportedly made more transparent and operational by treating calculated trust as a subset of calculated risk’. ‘I argue that it is redundant at best and can be misleading to use the term “trust” to describe commercial exchange for which cost-effective safeguards have been devised in support of more efficient exchange’ (ibid.). Some empirical evidences (for example, Jap 1999, 2001a) refute that stance, proving that the salesperson’s personal reliability can be a significant element of cooperative performance in channel relations. Chapter 4, devoted to trust in marketing relationships, will expound how personal trust in a salesperson plays a significant role in finalizing exchanges and selling activity. Williamson’s conceptual assumption (1993) about the logical uselessness of the trust concept in interpreting economic relations is clarified by Tyler and Degoey (1996: 332) as follows: ‘The calculative image suggests that people trust others either because these others have acted in favorable ways in the past, or they can be expected to act favorably in the future. . . . Trust is seen as a subjective probability calculation of the potential costs and benefits of future interactions (for example, Gambetta 1988). As Williamson


35.

36.

37.

38.

39.

40.

41.

42.

43. 44.

45.

81

(1993) has noted, however, trust thus defined adds little to our understanding of human behavior that cannot be explained more parsimoniously by economic theory.’ Tyler and Degoey (1996: 344) have empirically demonstrated that the restrictive economic conceptualization of trust as personal profit is inadequate to explain the variance in importance and meanings of the concept, while proving the social nature of trust even in what Williamson considered commercial relationships. Dunn (1989) and March and Olsen (1975) also rejected a connotation of trust based only on a calculative interpretation. For example, Bhattacharya et al. (1998) developed a quantitative model of trust (defined as ‘outcome trust’), demonstrating the validity of trust’s probabilistic definition proposed by Gambetta (1988), and ascribing to it a more solid structural validity. They also demonstrated, contrary to Williamson’s assumptions (1993), the co-existence of a calculative dimension associated with a significant psychological dimension of trust. Barney and Hansen (1994) maintain that the simultaneous consideration of the economic model – scarcely interested in considering variance in trust propensity among individuals – and of the psychological model – concerned with trust’s individual dimension and less interested in the context in which the relationship takes place – represents a clear breakthrough in theory development. Some have opted to differentiate the two theoretical development stages, seeing them as two different models. Thus the organization failure theory was identified (in reference to the first development stage) within the organization and market perspective. On this, see Grandori (1984: 62–3), Perrone (1990: 33–44) and Biggiero (1992: 120 ff.). Barney and Ouchi (1984) found it difficult to apply to all situations the ‘market and hierarchies’ dichotomy proposed by Williamson, and modulated several intermediate forms of transaction governance according to their complexity. Together with many others who will be presented later, Dwyer and Oh (1988) expressed similar opinions, stating that it is difficult to apply Williamson’s model to market relations. In reality, as seen in Chapter 2 (sections 2 and 3), an evolution has taken place even within the resource-based view in order to integrate the original models, mostly economic in matrix, with more recent ones, much closer to marketing and organizational analysis. Among the other factors that explain the transactional cost reduction, albeit in the presence of highly specific investments, Dyer (1997) highlights the following: repeated transactions with small sets of suppliers; scale and scope economies, associated with a significant volume of exchanges in the case of transactions with a small number of suppliers; information sharing, thus reducing the information asymmetry between the parties; and investments in co-specialized assets. These elements, together with the use of self-enforcing safeguarding mechanisms, explain why Japanese car manufacturers can contain the costs of transactions with their suppliers, notwithstanding the presence of high relation-specific investments. It is important to note that Gulati (1995) assimilates trust and previous experience. That simplifying assumption is partially linked to the empirical verification methodology he has chosen, according to a database of alliances, which makes available a limited set of variables. On this matter, Sako (1998: 91) states: ‘while formal governance structures may act as “safeguards” against opportunistic behavior, they are, in themselves, not sufficient to ensure the sort of performance – innovation and learning – which trust induces’. Nooteboom (1996: 990) maintains: ‘both trust and opportunism are likely to arise in transaction relations. Neither should be ignored, and we should find a way of systematically exploring their joint occurrence. Therefore, in spite of the differences between economics and sociology, we should seek to integrate them.’ Even Bradach and Eccles (1989) show the weakness of Williamson’s hypothesis, suggesting that the opportunistic risk is constantly ‘lurking’ in all economic transactions. They introduce an economic exchange notion that includes some social elements and allows considering trust as a mechanism which substitutes and complements the traditional transaction governance mechanisms (hierarchy and market). TCA’s limitations are summarized by two fundamental points (Zajac and Olsen 1993):

82

The contribution of the different disciplinary contexts ●

●

46.

47.

individualism, which finalizes the goal of reducing transactional costs from the perspective of a single party, without considering any interdependency established among the subjects involved in the exchange during the implementation of joint value building strategies; excessive emphasis on the transaction structural aspects, ignoring other process elements.

Within this process, organized in three phases (initializing, processing and reconfiguring stages), trust plays a fundamental role in terms of cooperation toward value creation. This is particularly true during the processing stage, when the parties, upon completion of the first stage of the relationship, start to factually cooperate toward joint value production and sharing. Nooteboom et al. (1997: 329–30) state that an increase of trust, caused by institutionalization and relational repetitiveness, determines a reduction of risk seen as perceived likelihood of losses.

4. 1.

Trust in marketing INTRODUCTION

In the first years of the last decade, initial studies specifically dedicated to the systematic exploration of the trust concept appeared in marketing literature. Before that time, the term trust appeared in several works, without any precise definition of its meaning.1 Today, the situation is quite different, to the point that the quantity and variety of works and approaches on this subject require a further analytical effort such as the one proposed in this chapter. Initially, the theme has generated particular interest among those streams of research that are more focused on analysing market relationships in a business to business context. This is especially prevalent in sales management, where special attention has been paid to the relationship’s interpersonal dimension; the literature dealing with industrial goods marketing; and the contributions on relational dynamics in distribution channels. More recently, some works related to consumer marketing have considered new trust concept ramifications. These contributions are linked to the effort of developing consumer-specific constructs, such as customer satisfaction, loyalty, brand image and, more generally, brand equity. Often these works are contextualized within the reality of services and retailing, fostering the evolution of service and retail marketing. The emergence of digital channels has allowed the verification the construct’s central role in terms of development of computer-mediated market relationships, starting a stream of research centred on e-trust. Considering trust relevance in determining market relationships, this chapter analyses the modes by which each study domain has dealt with the construct. As will be illustrated in the final section, the differences among the above-mentioned areas are far less marked than one would initially expect. Actually, the overlapping of the interpretative models elaborated in different disciplines is large because of the common focus of these endeavours, that is, the relationship between buyer and supplier. Nevertheless, in this chapter the various areas of marketing studies remain separate in order to both mirror the discipline strands discussed in Chapter 1 and highlight their relevant peculiarities. For instance, specific attention will be given to multi-layer relationships, coupling inter-organizational and buyer–seller interpersonal dimensions, and 83

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situations featuring particular ‘trust devices’ such as brand, store or web site.

2. RELATIONSHIP MARKETING: INDUSTRIAL GOODS MARKETS AND NEW PRODUCT DEVELOPMENT Industrial marketing scholars were the first to consider the marketing relational aspects, studying, in line with Bagozzi’s contributions (1974, 1975, 1979), the relationship’s social dimension in addition to the economic one. They highlighted the role of trust, considering it as an element that fosters cooperative relations between the interacting actors, especially when complex mutual performances inhibit activities formalization through contracts. Thus, trust becomes the relationship’s stabilizing factor, increasing the certainty level of future situations and, at the same time, widening the set of alternatives available to the parties. On this matter, the contributions on industrial goods marketing can be classed in two groups: 1. 2.

studies that conceptualize the so-called relational atmosphere, mainly offered by the IMP Group; contributions focused on trust within relationships whose object is difficult to evaluate (that is, information provided by market research and knowledge targeted to new product development).

According to the IMP Group’s model (1) (for example, Ford 1990), trust was considered at first as a marginal element describing the relational atmosphere (Håkansson 1987b).2 Initially, it was suggested that the said atmosphere could be determined by variables derived almost exclusively from the traditional economic-political model: the relationship’s degree of power/dependency, the level of cooperation/conflict and familiarity (considered a trust’s proxy) among the parties and the typology of mutually exhibited expectations. In subsequent works, in view of the dissatisfaction toward the limited interpretative capability of the original formulation, in addition to trust itself, others set forth relational atmosphere components such as mutual knowledge level and commitment to the relationship (Ferrero 1992: 100; Marcati 1992: 7). Once the atmosphere components were defined, some models were introduced to elucidate the most significant correlations between these and some outcome variables, namely the propensity to cooperation of the dyad’s actors, and the relational performance (for example, Hallén and Sandstrom 1991).

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More recent IMP works are free from the early reduction of trust to a mere atmosphere-describing item, and focus on specific contents of the construct, which refer to inter-organizational relations and networks of firms (for example, Huemer 1998, 2004; Naude and Buttle 2000; Batt and Purchase 2004). While conceptualizing trust’s role in business relationship, Huemer’s (1998, 2000) goal was the integration of transactional cost theory tenets with IMP’s interpretative model. To this effect, trust is defined along two main analytical planes. The first dimension is aligned to traditional management studies, favours the concepts of risk and passive behaviour, and implies a degree of behavioural inertia, with the tendency to conform to habit and eschew deviations. The more innovative, second dimension focuses on the opportunities a trust relationship can present. Contrary to the risk concept, these opportunities require the assumption of proactive attitudes by the parties involved in the relationship. Thus, the contrast between a static and passive vision associated with the first dimension (hazardousness) and a dynamic and active facet of trust, linked to its opportunities, guides the evolution from trust to trusting, defined as the active use of trust in discovering new relational horizons.3 As a result the relevance of active and innovative uses of trust emerges. The construct is no longer limited by the need to minimize (and control) risk and uncertainty, but can open new relational paths, overcoming the danger of ‘sclerotization’ always lurking behind passive, riskbased only relationships.4 The second group of studies, dedicated to transactions with very complex contents, is exemplified by the contribution of Moorman et al. (1993). These authors verified trust’s relevance in the context of high informational intensity buyer–seller relations, such as the relationship between a supplier of market research and its customers. In particular, they were interested to ascertain whether trust in the research provider determined a greater propensity to use its very researches. In other words they demonstrated that surveys conducted by trusted actors do not ‘remain in a drawer’. Moorman et al.’s work sought to understand the main antecedents of trust and, therefore, the proportion in which market research information is used.5 This model has a significant analytical valence, establishing trust’s relevance in relationships centred on goods or services with high informational content (experience or credence). In particular, information and knowledge are ‘objects’ the transfer of which is exceedingly complex and whose value (and, consequently, use) is determined more by trust in their source than by actual evaluation of the object to be transacted. Similar situations are presented by interorganizational relationships geared to new product conception and development. Here, trust is put at the forefront by the uncertainty that

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characterizes all innovative processes and the intangible nature of performances expected from the members of the inter-firm network that generates innovations. In these contexts, several disciplines have contributed their perspectives to the understanding of trust, mostly pertinent to strategic and technology management. In fact, it has been proven that firms capable of developing a favourable trust climate can almost guarantee more successful products, especially when greater technological and environmental complexity requires the activation of a network of specialized competencies (Urban and Hauser 1993; Leonard-Barton 1995, Chapter 6; Chesbrough and Teece 1996; Powell et al. 1996; Castaldo and Verona 1998; Blomqvist 2001, 2002). The aspects that have been better studied are the following: 1. 2.

trust’s function in the process of knowledge transfer among actors; trust’s role in innovation diffusion and the need to enact ‘trust intermediaries’.

To build and strengthen an innovative network, lasting relationships among the network nodes need to be developed and consolidated, linking together sources of knowledge that are functional to the innovative process (1). Information and, more generally, knowledge transfers generate a significant trust demand (Moorman et al. 1992; Rindfleisch and Moorman 2001). Therefore, to achieve a real transfer and an effective sharing of the informational potential, one should not ignore the existing long-term relationships, far beyond the transience of single transactions. On this matter, Sivadas and Dwyer (2000) introduced the concept of ‘cooperative competency’.6 It indicates the mix of trust, communication and coordination that constitutes the main antecedent of successful new products developed by activating alliances and joint ventures. A more recent study, by Rindfleisch and Moorman (2001), on horizontal partnerships aimed at new product development, established a need to separate the concept of strength of ties (see Chapter 1, section 5) into two dimensions: a structural component, referring to the relationship’s redundancy level, and a motivational one, essentially the parties’ level of embeddedness. According to Granovetter (1973), strong ties differ from weak ones because of their high level of both informational redundancy and embeddedness.7 The study demonstrated that relational embeddedness, which characterizes vertical relationships enacted during new product development, is directly correlated with inter-firm information exchange, while knowledge redundancy, typical of horizontal alliances between competitors, is inversely correlated with information acquisition within new product alliances.8

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Trust is a fundamental resource of innovative activities. Not only does it allow transferring knowledge among participants in a new product development, but it also facilitates the new product diffusion on the market, reducing the decisional process uncertainty of the first adopters (point 2). To this effect, the firm can exploit its own trust resources, for example its brand equity, or leverage the trust placed by external subjects. The latter can contribute to the innovation diffusion in several ways. For example, final customers (and especially the lead users) contribute – with their behaviours, interpersonal communication and credibility – by activating the social network through which innovation is diffused (Rogers 1983; Robertson et al. 1996). Thus, they become the ‘warrantors’ of the innovation, reducing new buyers’ uncertainty about purchasing it. Similarly, distributors can participate in trust creation, triggering a process of trust extension from the retailer brand to the product brand, creating a trusted ‘product-outlet’ binomial. Also suppliers, through trust in the component brand and their knowledge (for example, INTEL and PC manufacturers or Gore-Tex and technical apparel producers, Tetra Pak and milk or juice manufacturers), warrant both innovative content and quality of product-embedded knowledge, increasing the firm’s trust patrimony. Therefore the participants of the innovative network induce a convergence of their trust resources, determining a co-evolution of both their competencies and trust level. However, optimal performance of activities linked to innovative product development cannot be achieved simply by building and managing an adequate external network as a source of knowledge and trust. To produce new knowledge that adequately exploits its competencies and effectively assimilates external informational assets, a firm must also mobilize and connect its internal knowledge sources. Complementary to the inter-organizational network, an intra-organizational network, governing within the firm the various stages of a new product development process,9 has to be created. In fact, it is the interaction between individual skills and intelligence that produces, by social interconnections, the organizational knowledge from which innovation springs.10 As we have seen already while dealing with organizational contributions (Chapter 3, section 4), trust assumes a central role as the main integration mechanism. This is also true in terms of team functioning, especially when the task is characterized by high uncertainty, as always happens during new product development (for example, Takeuchi and Nonaka 1986; Bingham and Quigley 1990; Donnellon 1993; Hershock et al. 1994; Meyer 1994; Towner 1994; Johannessen et al. 1997).11 In the end, facing a growing environmental complexity, new product development processes can be viewed only through the lens of a trust-based approach. In fact, technological and cognitive progress causes a constant increase of uncertainty and (internal and external) specialization in the

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knowledge production process. This requires more and more often the transfer of increasingly abstract know-how. Thus, trust-based relationship building becomes the main goal of any firm that innovates, especially in contexts more and more complex and undergoing significant evolutionary dynamics (for example, Blomqvist 2001, 2002).

3. TRUST AS A COOPERATION ANTECEDENT IN DISTRIBUTION RELATIONS In marketing, trust has emerged and has been studied mostly with reference to channel relations. These relationships are characterized by the coexistence, within the same inter-organizational relationship, of two dimensions: a competitive one, pertaining to function sharing (and, therefore, margin sharing), and a cooperative one, leading to collaboration and ‘pie expansion’ partnerships (Jap 1999). Some recent experiments, such as ECR’s initiative,12 offer insights into the opportunities generated by cooperation while exploiting new sources of value creation within the channel.13 Traditional channel marketing models (of economic and behaviourist origins) were developed viewing the distributor in a functionalist light. Thus, they did not capture the cooperative dimension of distribution relationships. A more recent stream of study is focused mainly on the opportunities associated with cooperation and its achievements. In particular, these studies demonstrate that trust between the parties is indeed the fundamental antecedent and essential precondition to activating a working channel partnership. The construct’s analytical relevance is much enhanced by the rising uncertainty level that characterizes today’s relationships between manufacturers and distributors, mostly as a consequence of the level of environment heterogeneity14 and variability15 (for example, Dwyer and Welsh 1985; Achrol and Stern 1988). This uncertainty (outside the dyad) requires the counterweight of ‘more certain’ relational structures, derived from instituting clear power relations within the dyad and/or a greater mutual trust among the interacting actors. The above-mentioned phenomena, namely the tendency to cooperate – seen as a new source of competitive advantage for firms belonging to the channel-system – and the increase in environmental uncertainty – which marks all distribution relationships – induced a growing number of marketing channel scholars to study the concept of trust and consider it as both the main antecedent of cooperative behaviours and the fundamental reducer of environmental uncertainty. On this issue, several works can be found in the literature and tentatively grouped as follows:

Trust in marketing

1. 2.

3.

89

at first, a few seminal contributions established trust’s central role within distribution relationships, and its analytical borders; subsequently, attempts were made to specifically delve into the relationship between trust and the same behavioural variables, developing interpretative models that isolated trust’s main antecedents and most relevant consequences; more recently, a new level of understanding has been reached, thanks to the analysis of specific aspects of relationships, such as the interdependence between the personal and inter-organizational dimensions of trust, together with its longitudinal dimension.

The first group of contributions will be discussed in detail in the following chapter. Currently, the forerunners will suffice. Dwyer et al. (1987) highlighted the central role of trust, considered a pin hinging the expectation development process. Typically, channel relationships are a mélange of competition and cooperation, and as such are extremely complex. In fact, it can be impossible, or very costly, to foresee all eventualities and include them in a formal contract. Therefore, trust assumes a central role as a mechanism of informal and self-enforcing integration. At first, channel marketing scholars gave trust a meaning in line with original psychological and sociological interpretations, linking it to expectations about the other party’s behaviour, and, in particular, the certainty that the said party will keep its promises. One of the very first contributions to explicitly consider the concept of trust was offered by Schurr and Ozanne (1985). They defined trust as a belief that a party’s word or promise is reliable and that the said party will honour the commitments of the exchange relationship. Later, Dwyer and Oh (1987) discussed the trust role in coordinating the parties, stating that it refers to the expectations that the counterpart with whom one seeks to coordinate behaviours will discharge his/her obligations and contribute to the relationship success. 3.1

Trust Models

The above-mentioned second group includes several works. Deductively at first and then inductively, they verified the hypothesis of trust as the fundamental construct activating a partnership relationship between manufacturers and distributors. Anderson and Narus (1984, 1990), and Sethuraman et al. (1988) proposed one of the first interpretative models of channel working partnerships, inspired by the principles of social exchange theory16 and, in particular, by the outcome matrix concept. In the context of a dyadic relationship, this matrix represents each party’s possible behaviour and the consequences of alternative actions, concurrently considering the

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other party’s behaviour. The interaction result (outcome) is translated into rewards gained and costs incurred by each participant, following specific actions. The logical constructs defining the outcomes of a particular relationship are summarized by the comparison level (CL) and the comparison level for alternatives (CLALT).17 The authors establish that when an exchange relationship produces outcomes that exceed one participant’s expectations, satisfaction level, trust and propensity to cooperation increase as well.18 Thus, trust’s new relevance is confirmed, but once more as the capability to fulfil promises and satisfy the other party’s expectations. Among the direct consequences of trust, most attention is given to the increase in cooperation level, and the reduction in conflict level. Both consequences have a positive impact on the parties’ satisfaction level toward the relationship, mediated in turn by the dependency structure within the relationship and the relative influence exercised or felt by the partner. This model offers a particularly relevant contribution, highlighting the centrality of the analytical perspective in order to understand the real meaning of the relationship. In its initial hypotheses, and in agreement with Anderson and Weitz’s thesis (1992), trust is considered as a construct based on behavioural reciprocity. Coherently with this assumption, the model hypotheses are verified assuming a double perspective: the industrial firm’s and the retailer’s. This analysis shows that trust’s role, its determinants, analytical consequences and structural relations between the various model variables are significantly different in these two cases, implicitly demonstrating the importance of the research perspective in really understanding this construct.19 Subsequent empirical researches have confirmed the central relevance of trust and cooperation between firms in distribution channels. This first clear empirical evidence induced some scholars to further study the construct characteristics within marketing relationships, offering specific theoretical contributions to the study of trust. Morgan and Hunt (1994) attempted to understand the relationship between two key variables of a relationship, commitment and trust, centring their model on them. The authors adopted an analysis design based on a comparison between two competitive models: the hypothesized one (defined as key mediating variable (KMV) mode of relationship marketing), where trust and commitment are the mediating variables, and the rival one, which does not consider the two variables as mediators but as additional antecedents. They verified both variables of the market relation model (Figure 4.1), and defined their main determinants (namely shared values, communication and absence of opportunism) and consequences (cooperation, functional conflict and relational uncertainty reduction). The empirical test confirmed many of the hypothesized relations, but the survey detected the weight of two other

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Trust in marketing

Relationship termination costs

Acquiescence + + RELATIONSHIP COMMITMENT

+

Relationship benefits

–

Propensity to leave

+

+

Shared values

Cooperation

+ + +

Communication

+

TRUST

– Opportunistic behaviours

Functional conflict

+

– Uncertainty

Source: Morgan and Hunt (1994: 22)

Figure 4.1 A model of marketing relationship based on the relationship between commitment and trust: the initial hypothesis variables which were not explicitly considered at first: the power coercive dimension and conflict. These variables were the central concepts of the traditional channel behavioural models (for example, El-Ansary and Stern 1972). This is a further proof of the need to integrate, with appropriate caution, the main constructs developed by different conceptual paradigms, avoiding mere substitutions. Aiming at integrating different models, and forecasting later studies of strategic management (discussed in Chapter 3, section 7), further conceptual schematizations emerged, such as Ganesan’s (1994). This analyses the trust role in distribution relationships, in association with (and not in substitution for) variables of a more economic matrix. Thus, Ganesan better detected the double content of the relationship and the interdependence linking its two main analytical dimensions: the economic and social ones. In particular, he sought to establish the variables that define the long-term

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orientation of a retail firm (trustor) toward managing the relationship with its suppliers (trustees). He hypothesized that such an orientation is determined by two main variable categories: economic, referring to mutual dependency, and social ones, referring to trust between the parties. Specifically, the first category seems to require a double construct, namely the business firm dependency (from the trustor’s standpoint) on the supplier and the perceptions of the supplier’s dependency on the retailer. Instead, according to Ganesan, trust consists of the supplier’s credibility and a component referred to as goodwill.20 As seen above, models proposed in the context of distribution relations mainly attempt to verify the cause–effect sequential relationship existing between antecedents, trust and its analytical consequences. On this matter, a meta-analysis of channel literature has shown that the most often considered antecedents of distribution relationships are the following (Geyskens et al. 1998): level of environmental uncertainty; structural state of the relationship and, in particular, its dependency structure; partner’s use of coercive power; communication transparency, intensity and frequency; economic outcomes. The consequences of establishing a trust relationship are summarized by the partners’ satisfaction increase and, as indicated above, the relationship’s long-term orientation. The analysis has further confirmed trust’s role as a mediating variable between antecedents and consequences, reasserting once more the construct’s absolute analytical significance within interpretative models of distributive relationships.21 3.2 New Dimensions of Trust Relationships in Channels: Time Lag and Multi-layer Effect More recently, the research on trust in distribution relationships has significantlyevolved.Goingbeyondthemereunderstandingof trustantecedents and consequences, the analysis has been extended to contingent and situational elements (previously considered ‘external’ to the proposed models), verifying their impact on trust creation. In particular, the aspects most often considered include the relationship’s various (inter–organizational and interpersonal) levels of interdependency, and its longitudinal dimension. Jap (1999, 2001a, 2001b) has verified the relevance of both aspects in terms of distribution relationships, with interesting results. Firstly, explicit consideration is given to the impact of the seller’s personal reliability on decisions and behaviours of the dyad’s actors, referring both to the coordination efforts and the idiosyncratic investments in the relationship (Jap 1999, 2001b; Iacobucci and Hibbard 1999). Secondly, as seen already, the model has deliberately included the relationship’s dynamic dimension, verifying the impact of antecedents (personal

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trust and other structural dimensions of the relationship, competency complementarity and goal congruence) on later outcomes. This way the time lag between surveying a relational variable state, the (cooperative) behaviours and its future outcomes has been explicitly evaluated. Therefore the longitudinal dimension of relationships emerges and requires analysing trust as a dynamic concept. This is a twofold problem. On one hand, we need to measure the performance of a cooperative behaviour when it really happens. It is crucial to avoid referring all variables to the same moment in time, ignoring the lag existing between the unrolling of an event (trust or cooperation emergence) and the outcome of that event (performance). On the other hand, as will be shown in the last chapter, one needs to consider trust’s metamorphosis during the relationship’s evolutionary cycle. In fact, many have verified that actors with a different relational past show markedly different intensity and typologies of trust. Jap and Ganesan (2000) showed how, during a relationship between a retail firm and its suppliers, specific investment protection mechanisms can significantly evolve in time, differently affecting the parties’ commitment level.22 This level, in turn, has significant effects on the relationship outcomes in terms of relationship satisfaction, supplier’s performance evaluation and conflict level.23

4. ‘SALES MANAGEMENT’ CONTRIBUTION: THE PERSONAL DIMENSION OF INTERORGANIZATIONAL RELATIONSHIPS Following the firms’ market orientation evolution, more and more relational in nature (Grönroos 1994a, 1995; Sheth and Parvatiyar 1995), sales management is induced to renew its customer relationship management modes. Thus the seller figure decisively evolves into a ‘relationship manager’ profile.24 In a sales context increasingly seeking cooperation beyond mere negotiation, the firms have experienced trust relevance first hand. In particular, firms are interested in understanding the modes by which those who are responsible for interfacing with the demand (salespeople, key account or sales engineers) can conquer and develop the buyers’ trust and, more generally, the trust of those subjects working as interface at the customer firm. In fact, it has been ascertained that the level of trust is the variable that most conditions the decisions of those in charge of buying, their propensity to cooperate, and the time horizon of the relationship. Thus, trust conditions the customer’s lifetime value and the firm’s customer retention rate, with a far from secondary impact on the firm’s economic results and its capital economic value (as seen in Chapter 2, section 5).

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The contributions on this set of issues have mostly focused on three themes: (a) trust building between seller and buyer and trust antecedents (b) interaction between personal and inter-organizational dimensions of trust (c) inter-organizational relationships between salespeople and sales manager. Starting with the first analytical context (point a), a few managerial-type models were originally proposed with the goal of describing the building stages of trust between salesperson and buyer, and the factors that most impinge on trust creation. In the model proposed by Swan and Nolan (1985), trust building depends most of all on the customer’s past experiences with the salesperson or the represented firm. In the absence of those experiences, great importance is acquired by the salesperson’s personality and his/her skills and motivation not to behave in an opportunistic manner.25 Following this new path, Swan et al. (1985) performed an empirical research on a sample of salespeople in the pharmaceutical and medical instrument industries, and proposed a prescriptive model of behaviours aimed to gain the customer’s trust on the industrial goods markets. Their research proves that to look reliable, honest, competent, customer oriented and friendly is critical to building a trust relationship (Weitz et al. 2001).26 Thus they introduced a management model finalized to trust development and capable of differentiating behaviours according to the state of the relationship with a specific customer (first contact vs. established relationship) and the latter’s trust propensity. More recently, the focus has shifted from the trust creation process as a whole to the impact of specific selling strategies. In particular, Strutton et al. (1996) verified the impact on trust of different typologies of ingratiatory behaviour, showing that offensive behaviours (for instance, self-promotion and favour rendering) have a negative effect on trust. On the other hand, defensive behaviours (such as court and counsel and other enhancement) have positive consequences. Hawes et al. (1996) conducted a structurally analogous study on the effect of five different closing techniques27 upon the level of trust the buyer puts in the salesperson. An empirical research on a sample of buyers showed that, in the long run, these techniques cause the erosion of the trust relationship. As previously remarked, the relation between interpersonal and interorganizational dimensions of trust (point b) is the focus of a growing interest, due to its managerial implications.28 Some researches in this area have shown how the relationship evolves differently according to the diverse states of knowledge and/or trust both between buyer and supplier and

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between buyer and salesman. In a consolidated relationship with a firm represented by a new salesperson, personal trust building and the extension at the interpersonal level of the reputation derived by the inter-organizational relationship are critical. The opposite case presents exactly the opposite problem, namely how to use the potential offered by personal trust to guarantee a new firm’s offer. Both scenarios establish the significant relation existing between the trust developed on these two analytical planes. A study by Doney and Cannon (1997), sampling manufacturing firms’ buyers on the industrial goods markets, evinced the significant role of trust in the seller as an ‘order qualifier’, but not as an ‘order winner’. In fact, no significant correlation was found between trust in the seller and his/her firm and purchasing decisions. The latter are dictated by elements directly linked to product performance, its economic value and delivery service efficiency. This is quite expected in view of the fact that many purchases in this sector are based on auctions and competitive tenders. Instead, trust in the firm (determined in turn by the trust put in the salesperson) influences future purchasing intentions, amplifying the relationship’s time horizon, and eases the firm’s inclusion in the buyer’s consideration set. Finally, a set of works have been dedicated to the relationships between salespeople and sales manager within the firm (point c). Rich (1997) highlighted the crucial impact that trust in the sales manager has on the sales network activity. In particular, his contribution clarifies the effects of role modelling29 on the salesperson’s level of trust in his/her manager, job satisfaction and overall performance. An empirical research conducted on a sample of sales manager–salespeople dyads belonging to different firms operating on the industrial goods market, has confirmed role modelling as an important influence on trust in the manager and, indirectly, on the salesperson’s job satisfaction and overall performance. A similar empirical research by Perrone and Chiacchierini (1999) confirmed the correlation between trust in co-workers, management and immediate supervisor, and organizational citizenship behaviours,30 namely altruism and civic virtues of the sales force.

5.

CUSTOMER-BASED TRUST RESOURCES

Within the large field of consumer marketing, trust has been directly or indirectly addressed in the context of three main areas of study: the concept of brand image; its direct evolution, brand equity and, more specifically, consumers’ loyalty; and, lastly, services marketing, a much broader area, which intersects the previous two. A brief summary of the main contributions in each area follows.

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5.1


Brand Image

Studies on the image concept have shown that it basically depends on two orders of elements: those related to the firm or, more generally, the observed object (stimulus), and those more directly referring to the consumer. As a consequence, in cognitive terms, the image is the product of the interaction between an object (the firm, its products, brands, and so on) and an observing subject (actual or potential customer), within whom the image is formed and resides. Scholars who privilege the perceived object’s perspective paid particular attention to identifying the image determinants (antecedents), namely those elements that most contribute to the creation of an object’s mental representation. Some of these authors have reached the conclusion that a firm’s reliability and reputation often assume a central role among the factors determining the image of a brand or store (for example, Golden and Zimmer 1988). Thus, trust (or, more precisely, reliability and reputation) is reduced to the rank of an item within the set of elements that shape the image, becoming a brand and store image component. This approach has an evident limit: it forgoes the analysis of the individual cognitive mechanisms, soon to be shown as a main influencer of image formation. Contributions that focus on consumer related aspects while also considering, albeit not explicitly, trust’s role can refer to: (a)

behaviourist studies focused more on the role of experience than on trust; (b) cognitivist studies, which have first conceptualized the trust content of image. The behaviourist model is based on the principle that most human behaviours are learned by experience, thanks to a stimulus–response mechanism; the likelihood that a given behaviour will be repeated again varies as a function of its consequences, be they prizes (reinforcing stimuli) or punishments (adverse stimuli). The response that produces reinforcement is considered more valid and ‘stronger’, whereas that which is not followed by reinforcement is weakened.31 This implies that experience is a fundamental element of image (and trust alike). The expression of continuous reinforcing stimuli referring to a given object (brand, sign or firm) positively affects the consumers’ trust level and loyalty, as a product of learning reinforcement and behavioural consolidation. The analytical framework of the stimulus–response paradigm, though useful to image conceptualization, especially in defining the role experience plays in building a trust relationship, seems far too simplistic. In fact, it

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does not analyse the so-called intervening variables, namely the reasons for a certain response to follow a given stimulus. To fully understand the relationship between the concepts of trust and image, it should be not ignored how cognitive and affective mechanisms influence consumers’ decisions (for example, Mazursky and Jacoby 1986; Williams 1989). On this matter, some authors (for example, Howard (1977)) consider brand image as a synthetic construct, essentially based on confidence. The last is once more a product of past experiences and allows the consumer to balance the uncertainty associated with the evaluation of various purchasing alternatives. Mostly, trust depends on the experience stratified in the historic memory of individuals. In fact, brand image is deeply conditioned by the satisfaction level derived from past purchasing experiences. In turn, according to the confirmation/disconfirmation theory, satisfaction depends on the comparison between actual results and expectations about the selected brand. The post-purchasing evaluation affects attitudes and, especially, trust, increasing the certainty associated by the customer with his/her own judgement skills and reducing the quantity of information needed to take future purchasing decisions. Trust is positively correlated with the evidence (image) persistence in time and, even more, the consensus of others. As previously mentioned, this moves trust’s social dimension to the foreground (Howard 1977; Luhmann 1979). In fact, the trust accrued by some brands is essentially the fruit of the collective and socially shared representation acquired by the brand image.32 Basically, if an attitude is mainly referred to as the judgement attributed to a stimulus by a subject, trust contributes to increase the certainty of his/her evaluation. Trust is an image’s critical component, especially when it is difficult to find identification criteria and, consequently, the consumers cannot precisely define their attitude toward each alternative offer. Lacking sufficient information to decide on a given transaction, one ends up relying on trust in brand or sign, thus reducing the risk of deciding. Therefore, trust is represented by ‘adequate cognitive schemes’ that allow both reduction of uncertainty and containment of the information search effort (Vicari 1991). Consequently, trust has a priority role, especially in those purchasing situations characterized by a high level of perceived risk.33 5.2

Trust as Main Component of Brand Equity and Customer Loyalty

Studies on brand management (for example, Aaker and Keller 1990; Aaker 1991; Dimitriadis 1994), highlighting the critical role of brand image in the context of the firm’s customer-based intangible resources, identify confidence and trust as one of the main cognitive antecedents of brand equity and customer loyalty. According to Howard (1977), as already seen, ‘a brand concept

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is made up of three parts: ability to identify a brand, liking of the brand, and the strength of the concept. These are called brand identification, attitude, and confidence respectively’ (Howard 1977: 46). The latter element is based on the consumers’ confidence in their ability to judge brand quality. ‘This is defined as the degree of certainty that a consumer subjectively experiences with respect to satisfaction expected from a brand. . . . It is merely the capacity to judge.’ This capacity is based on three main elements: distinctiveness of a brand, consistency of evidence over time and consensus and support from others (ibid.: 55–6). Therefore, trust toward the brand is mainly derived from confirming – at individual or social level (consensus) – the expectations that motivated its choice. This confirmation defines the customers’ satisfaction level.34 According to the level of past satisfaction generated by positive experiences with a brand, consumers assign it a given likelihood of future satisfaction, simplifying the buying selection process.35 Brand image is closely related to another intangible resource of great value to the firm: customer loyalty. This appears only in instances of the copresence of the behavioural dimension (repeated purchases) and the cognitive dimension (expressed as favourable image or satisfaction level), or when a systematic choice in favour of the same brand is derived from a buyer’s precise act of will, which in turn is based on a clear preference and a strong attitude for a single alternative (Jacoby and Chestnut 1978). Brand image is thus configured as the fundamental element of loyalty’s cognitive dimension, which materializes only when a favourable attitude is followed by a repeated purchasing behaviour. Loyalty has been further qualified in many dimensions and typologies; for example, the one following the purchasing process’s different phases: cognitive loyalty (based on product attribute evaluation), affective loyalty (founded on the overall product preference), conative loyalty (indicated by the intention to buy) and behavioural loyalty. Conative and behavioural loyalty, according to Oliver (1999), constitute different typologies of customer loyalty and, at the same time, its main evolutionary stages (Table 4.1).36 Some works (for example, Singh and Sirdeshmukh 2000; Chaudhuri and Holbrook 2001: 83) have noted that trust is the main cognitive antecedent of consumer loyalty,37 proposing specific approaches to customer relationship management, and loyalty and trust management. On this matter, Costabile (2001: 109) asserts that satisfaction, or the relation between customers’ perceptions and expectations, is the main antecedent of trust, which in turn determines various loyalty typologies within a relationship evolutionary model. Recently, some empirical studies have attempted to escape the restrictions of the consolidated view of the relationships between satisfaction, trust and loyalty. In particular, Reichheld (1996) coined the expression

Trust in marketing

Table 4.1

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Loyalty stages

Loyalty stage

Identifier

Cognitive

Loyalty based on information such as price, characteristics and benefits. Loyalty as approval: ‘I buy it because I like it.’ Loyalty as intention: ‘I am interested in buying it.’ Loyalty as behavioural inertia: ‘I buy it because I am used to it.’

Affective Conative Behavioural

Source: Oliver (1999: 36)

‘satisfaction trap’ to indicate that the customer satisfaction orientation does not guarantee customer loyalty. On the contrary, when it becomes structured intervention, it leads to resources wasting. Specifically, research by Bain & Co. in the US has shown that significant percentages (from 65 to 95 per cent) of very satisfied and satisfied customers buy a different product from the one with which they expressed satisfaction. ‘Satisfaction is not enough’ reads the title of some recent works, which suggest a break with traditional approaches to customer satisfaction (for example, Jones and Sasser 1995: 91; Stewart 1997: 112). Contrary to such a vision, numerous authors have closed ranks, including Mittal and Kamakura (2001) and Oliver (1999). The former focused their attention on problems related to the quantitative dimension of the opposition’s thesis, showing how the alleged non-existence of the satisfaction–repurchase relation is mostly caused by errors in satisfaction measuring.38 Instead, Oliver (ibid.) faced the issue in conceptual terms, showing that a radical posturing and complete refusal of customer satisfaction are not justified. In fact, after considering various and somewhat direct relationships between the concepts of satisfaction and loyalty, the author proposed an evolutionary model of the transformation from satisfaction to loyalty which takes place during the relationship, just as ‘a caterpillar becomes transformed into a butterfly’. After their metamorphosis the two creatures (namely, concepts) are no longer comparable and do not share any characteristic, beyond their common biological origin (ibid.: 42). From this it is clear that satisfaction is a fundamental step in the loyalty formation process, becoming less and less relevant with the progressive development of the relationship and the consolidation of loyalty by other mechanisms, including the social and communitary variants,39 mostly based on the trust concept.40 Albeit limited in terms of a variable set, Chaudhuri and Holbrook’s contributions (2001, 2002) represent the first empirical researches about the

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PRODUCT-LEVEL CONTROLS

Utilitarian value Hedonistic value

BRAND TRUST

PURCHASE LOYALTY

MARKET SHARE

BRAND AFFECT

ATTITUDINAL LOYALTY

RELATIVE PRICE

BRAND-LEVEL CONTROLS

Differentiation Share of voice

Source: Chaudhuri and Holbrook (2001: 83)

Figure 4.2

Brand trust, brand loyalty and brand performance

relationship between the above-mentioned customer-based intangibles (brand equity, trust and loyalty) and competitive performances.41 In fact, their model hypothesizes a direct relationship between trust in a brand (generically called brand trust) and loyalty in its dual cognitive and behavioural dimension (Figure 4.2), translated in turn into competitive performance. The detection of the said competitive performance is limited to the measure of both market share and competitive differential in terms of premium price. The model has been empirically verified with reference to various product typologies, classed in utilitarian categories (mainly based on functional-type utility) and hedonistic categories (producing emotionaltype utility). The hypothesis underlying the research foresees that brand trust, mainly considered in its calculative aspect, prevails for utilitarian categories of products. Contrariwise, the affective component of brand equity is assumed to prevail for hedonistic categories.42 Chaudhuri and Holbrook’s empirical research, in addition to proving the above-mentioned hypothesis, has confirmed that the relationship between brand trust and competitive performances (market share and premium price) is mediated by the loyalty concept in its dual cognitive (attitude) and behavioural dimension. Notwithstanding the already mentioned limitations, the following casual relation is empirically confirmed: trust – loyalty – economic and competitive performances.

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5.3

101

Trust in Service Marketing

Trust is particularly relevant for firms operating in the services business. The good’s immateriality forms the basis of the uncertainty that permeates the whole selection process. In fact, before purchase, the services buyer cannot access sure information on the qualitative level of the offer, which is often characterized as an experience good (Nelson 1970). Thus, the firm–market relation is regulated by trust, as this is the resource that can deal with the relationship’s complexity. Within the framework of empiricalmanagerial literature, Normann (1984) explicitly considered the image as one of the basic elements of his model of a ‘services management system’. Considering that services can be illustrated with less precision than material products and are seldom experienced ex ante, Normann maintained that it is strategically important to enact an effective image (and trust) management, counteracting the uncertainty that characterizes the consumer’s decisional process (ibid.: 129). Image is also a critical variable in the managerial model proposed by Eiglier and Langeard (1987) to define a new service formula. Within the process that guarantees an adequate perceived quality to the customers, reliability and trust are listed among the main elements proposed by Grönroos (1994b). He defined them as the firm’s capability to face any unforeseen situation occurring during a service performance, satisfy the customers’ needs and fulfil the firm’s promises. In the context of the well-known SERVQUAL model, Zeithalm et al. (1991) introduced the concept of reliability, namely the capacity to deliver a promised service while satisfying the expectations of the demand, as one of the main antecedents of service quality and customers’ satisfaction level.43 Following the same trajectory, Crosby et al. (1990) developed the concept of relationship quality as the element most instrumental in reducing perceived uncertainty and complexity of service choices. A consistent ‘relational quality’ allows the customer to rely on the supplier’s integrity and the value of its offer, even without in-depth checks and evaluations beforehand. According to the authors, the relational quality construct comprises two fundamental elements: trust and past satisfaction. Jointly, these factors trigger virtuous circles boosting the firm’s patrimony of intangible resources. Garbarino and Johnson (1999) have expounded the relation between the concept of trust and other customer-based relational resources, in particular commitment, satisfaction and loyalty. In order to verify the central role of these constructs in customer relations within the services industry, the authors have tested the soundness of two competitive models, adopting a logical path similar to the process followed by Morgan and Hunt (1994), albeit with dissimilar analytical objectives. Specifically, the two considered

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models expect the same antecedent set (satisfaction, familiarity and attitudes toward the supplier), the same consequence, namely future purchasing intentions, but different intervening variables. In the first model the mediating variable is overall satisfaction, from which directly derive future propensity, commitment and trust. The second model considers trust and commitment as intervening variables linked to future purchasing propensity. The empirical research yields an interesting result, which partially confirms the already mentioned conclusions about the ‘dynamic’ relationship between trust, satisfaction and loyalty. In fact, occasional customers rely on satisfaction, which in turn generates trust, commitment and future purchasing intentions, but more consolidated customers with higher relational propensity (specifically the subscribers to a theatre season) look upon trust and commitment as the fundamental intervening variables, between the antecedents and future purchasing intentions. In other words, the first satisfaction mediated model is more useful to interpret the cognitive process of occasional subscribers and individual buyers, still at the first evolutionary stage of their relationship. To the contrary, the trust and commitment mediated model is better suited to the interpretation of relationships with faithful and top customers, who enjoy an older relationship with the supplier. Thus, the relational stage relevance to the interpretation of trust is verified in the services industry as well, together with the extant relationships between the concepts of trust, satisfaction and loyalty, exactly as highlighted by Oliver (1999) and Costabile (2001). If in the first stages of the relationship loyalty is essentially determined by satisfaction, in the more advanced phases of relational dynamics, loyalty is substituted by trust, which, along with commitment, assumes the role of central variable in terms of prediction of future purchasing intentions.44

6.

e-TRUST45

In the recent past, the technological development that has invested the whole society has led many authors to emphasize the relevance of trust in the online context. The aim of this section is to provide an overview of the main studies on online trust. The development of IT technologies and the consequent increase in Internet users have influenced an excessively positive forecasting of the virtual marketplace potentialities, which has led to the well-known phenomenon labelled ‘Internet bubble’. Following the collapse of the new economy, many studies investigating the causes of this phenomenon have appeared. Their results converge in showing that the problems in online transactions are mainly due to the high level of risk and uncertainty characterizing this

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marketplace46 and the lack of the trust needed to overcome it. Customers seem to increasingly rely on the Internet as an information tool, but they actually do not conclude their purchases in the virtual channel (MacGraw 1999). Online transactions often do not involve simultaneous exchange of goods and money; indeed spatial and also temporal separation between partners is common. Therefore, Internet shopping creates uncertainty and increases risk through the delay between payment and delivery (HeeWoong et al. 2004). Furthermore, risk and uncertainty are increased by anonymity (Grabner-Krauter and Kalusca 2003) and information asymmetry between the involved parties (Hee-Woong et al. 2004), which can easily lead to a lack of control and to opportunism (Grabner-Krauter and Kalusca 2003). In the presence of such a risk, lack of trust has been identified as one of the greatest barriers inhibiting Internet transactions (Hoffman et al. 1999a). Researchers have proved that trust encourages the purchase intention of both potential customers (Gefen et al. 2003; Jarvenpaa et al. 2000) and repeated customers (Garbarino and Johnson 1999), and increases the loyalty of repeated customers (Gefen 2002). On the opposite side, the lack of trust has been identified as the main reason why individuals do not shop online (MacGraw 1999; Luo 2002). Therefore, trust is regarded by scholars as one of the most important prerequisites for the success of electronic commerce (Hoffman et al. 1999a). The review of the main contributions on this subject supports the conclusion that studies of trust in the online marketplace focus basically on four different topics: conceptualization, multi-level dimensions, antecedents (and consequences) and evolutionary process. A brief analysis of these lines of research will follow. 6.1

e-Trust Conceptualization

Basically, the efforts in conceptualizing online trust refer to previous research conducted in the off-line environment.47 The conceptualization of trust in e-commerce has been advanced by McKnight et al. (2002a), who identified the following four aspects of trust in e-commerce:48 disposition to trust (that is, general willingness to trust others), institution-based trust (that is, perceptions of the Internet environment), trusting beliefs (that is, perceptions of web vendor attributes), and trusting intentions (that is, intentions to engage in trust-related behaviours with a web vendor). Bhattacherjee (2002) is the author of the second relevant contribution to trust conceptualization. He specifically addresses individual trust in online

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firms (the ‘trusting beliefs’ of McKnight et al.) by developing a seven-item scale for the construct.49 Nah and Davis (2002) adapt to online settings McAllister’s (1995) concepts of cognition-based and affect-based trust. They argue that, in the e-commerce context, cognition-based trust refers to reliability and dependability of the trustee, which Mayer et al. (1995) called ‘integrity’. Affect-based trust refers to care and concern for the other party, or ‘benevolence’ in the parlance of Mayer et al.50 Several empirical studies have also developed measuring instruments for increasing online customer trust. For instance, Newholm et al. (2004) attempted to summarize previous studies and classified the tools identified in the literature in five categories: interface features, offer fulfilment, reputation policies, web site transactions, and multiple contact points. Finally, some authors have analysed the relationship between trust and distrust in e-commerce and argue that trust and distrust are not just two ends of a single bipolar construct51 but two distinct constructs, with differential effects on behaviour (Kramer 1999; Lewicki et al. 1998). For instance, McKnight and Chervany (2001) argued that distrust is based on different emotions from trust: the former comes from feelings such as fear and worry, while trust is based on feelings of calm and security. In a subsequent study, McKnight et al. (2004a) provided support to demonstrate the distinct nature of trust and distrust.52 6.2

e-Trust Multi-level Dimensions

An online setting peculiarity is that it involves trust not simply between the customer and the vendor, but also between the buyer and the transaction medium – the Internet environment (Lee and Turban 2001; McKnight et al. 2002b; Shankar et al. 2002). Unlike the vendor–customer relationship in traditional business settings, the primary interface that connects buyers, sellers and third parties is an electronic market structure supported by information technology (IT), the web site53 (Gefen et al. 2003). Many studies have highlighted the concept of ‘Technology trust’, defined by Ratnasingam (2005: 22) as ‘the subjective probability by which organizations believe that the underlying technology infrastructure is capable of facilitating transactions according to their confident expectations’. Actually, Ratnasingam (2005) argues that trust in the e-commerce context takes two forms: trust in the technology54 and trust in one’s partner. In particular, the author examined trust from four different perspectives (technological, economic, behavioural and organizational) and, on the basis of case study research, argues that trust in e-commerce relationships gradually evolves from technology trust to relationship trust.

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A multi-level analysis of e-trust has emerged in the literature, based on studies which have demonstrated that online shoppers simultaneously trust or distrust (Harris and Goode 2004): ● ● ●

the e-vendors themselves (for example, Fukuyama 1995; Urban et al. 2000), which refers to interpersonal trust; the payment systems (for example, Hoffman et al. 1999a), which lead to technology trust; the very nature of the Internet and online shopping (for example, Hoffman et al. 1999b; Schoder and Yin 2000), which involves institutional trust.

Given the reality of the online setting, and contrary to the traditional environment, in Internet transactions interpersonal trust seems to play a secondary role if compared with that of technology and institutional trust.55 Gefen and Straub (2004) attempted to focus on the concept of interpersonal trust in the virtual setting. The authors investigated, by means of a simulation experiment, which of the established dimensions of trust in interpersonal relationships and in traditional commerce pertain to consumer e-trust.56 Finally, since the web site is in essence an information technology, some studies focused on the role of the technology acceptance model (TAM) in developing trust in online shopping (for example, Gefen et al. 2003).57 6.3

e-Trust Antecedents and Consequences58

Studies on e-trust antecedents and consequences can be classified in two main groups: ‘general’ and ‘clustering’ studies. The researches belonging to the former group – which basically represent the first approach that has been conducted on this topic – are aimed at identifying trust antecedents and consequences that can be generalized to every virtual setting. On the other hand, the latter group includes studies which have investigated how e-trust antecedents and consequences change according to some variables (that is, types of customers and different site characteristics). Among the most quoted ‘general’ studies on this topic in the online trust literature are those developed by Jarvenpaa et al. (2000). The authors conducted a causal research model assuming that two independent variables, the perceived size of an Internet store and its perceived reputation, are positively related to the consumers’ initial trust in the Internet store. They posited that trust in the store would have a direct positive effect on the attitude toward it and an indirect positive effect on attitude through the mediating variable of perceived risk associated with buying from that store.

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Additionally, they assumed that both the latter constructs would have a direct effect on the consumers’ willingness to buy from the Internet store. Using structural equation modelling techniques, Jarvenpaa et al. (2000) found that their model provided a good fit to the data. Perceived reputation had a much stronger effect on trust than perceived size.59 Gefen and Straub (2003) generated a research model in which they expected the predicting variable of social presence on the web site to affect trust in an e-service provider. They further assumed that trust in the e-service provider would be positively related to the consumers’ purchase intention. In addition they hypothesized that the perceived usefulness of a web site would affect the purchase intention, affected in turn by perceived ease of use of the web site and social presence on it.60 Lee and Turban (2001) presented a more comprehensive model, which introduced the multi-level dimensions of trust in the study of its antecedents and consequences. Their framework hypothesizes four antecedent dimensions of trust: trustworthiness of the Internet merchant, trustworthiness of the Internet shopping medium,61 contextual factors62 and other factors not fitting the other three dimensions but possibly influencing trust. The dependent variable in Lee and Turban’s model is consumers’ trust in Internet shopping. Additionally, consumers’ propensity to trust (dispositional trust) is included as the moderating variable that supposedly mediates all relationships between trust and its antecedents. The variables of trustworthiness of the Internet shopping medium and contextual factors are indicators of system trust.63 Among studies belonging to the ‘cluster’ group, some classified e-trust antecedents and consequences on the basis of customers’ typology, while others tried to verify whether sites with different characteristics would require different antecedents for trust. Hee-Woong et al. (2004) investigate trust antecedents distinguishing two different typologies of consumers: potential and repeated customers.64 For potential customers, because of the unavailability of a complete purchase experience, the institutional mode of trust building (Zucker 1986) can constitute an important way to build trust. For repeated customers, however, in addition to the institutional basis of trust, personal experience offers further evidence.65 Potential customers tend to be more exploratory with an Internet store, carrying out tasks like product search, comparison shopping, and negotiation terms (for example, the evaluation of service policies). At this stage, potential customers can experience only the web site quality of an Internet store, not its service quality.66 In addition, potential customers may interpret the web site information (for example, service policy) and attempt to determine the vendor’s intentions (vendor’s concern for customers) in the exchange, implicitly invoking intentionality in trust building. In Internet shopping, legal and

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technological safeguards are important not only for potential customers but also for repeated customers. Repeated customers, as system users, have comprehensive experience with the web site of a vendor, as well as having full transaction experience with the store. Therefore, they are able to evaluate both web site quality and service quality.67 Bart et al. (2005) investigated trust antecedents’ strengths across different web site categories according to some site factors they have identified: financial risk, information risk, involvement with or ticket price of the product or service in the web site, information on the web site, and search for the product or service on the web site. The results of the study showed that different site characteristics require different e-trust antecedents.68 By looking at the evolution of studies investigating trust antecedents and consequences in the online environment, we can state that they seem to develop models that are more contextualized in different settings, and therefore ‘actionable’ in various real contexts. 6.4

e-Trust Evolution

Most studies on online trust have focused on trust building in the relationship’s initial period, analysing the concept of ‘initial trust’ (Koufaris and Hampton-Sosa 2004). As seen at the beginning of this section, in the e-commerce context, online retailers must face the challenge of building consumer trust prior to online transactions, because virtual shoppers perceive more risks than in traditional channels (Van den Poel and Leunis 1999) and so are less likely to enter into initial transactions. Indeed, the previous period is critical because the consumer chooses very quickly whether to purchase on a specific web site. Failing to overcome the initial trust barriers, all other efforts of online retailers will be in vain (McKnight et al. 2004a).69 For this reason, many studies have investigated how online retail can build initial customers’ trust, while the concept of ongoing or longterm trust in e-commerce has still not been deeply investigated70 (Nah and Davis 2002). Among the studies focusing on initial trust building, those of McKnight et al. are most significant (2002a, 2002b, 2004a), arguing that disposition to trust is an antecedent particularly important in the initial stage of the relationship. In another study, McKnight et al. (2004b) investigated the elements allowing online retailers to create initial trust by distinguishing two stages of the initial relationship: the introductory and the exploratory stages. The authors believe that during the introductory stage users have not yet experienced a specific web site and are still trying to assess the site and the web business based on second-hand information on what they have to offer. Users who decide to use the site enter the exploratory stage.

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In this phase, consumers have obtained some (albeit limited) first-hand, credible information, creating a situation characterized by limited familiarity. The study shows that both dispositional trust and institution-based trust are important factors initially related to trust in e-business. A further study analysed the impact of different trust antecedents on building initial trust.71 Finally, regarding the online trust-building process, Kim et al. (2005) maintained that it has two main characteristics: ● ●

6.5

it is a cumulative process, as the level of trust in previous stages affects the trust level in later phases; it is an interactive process. e-Trust: A Summary

Previously, the main points of study on e-trust were summarized and shown to be mainly focused on four topics: concept definition, dimensions of the construct, antecedents and consequences, and evolution of trust in the relationships. The concept of trust has been conceptualized by adapting to the virtual setting the most important concepts that emerged in the studies focusing on off-line trust. Specifically, e-trust comprises four aspects: disposition to trust, institutional-based trust, trusting beliefs and trusting intentions (McKnight et al. 2002a). The concept of e-trust has been applied to different objects (namely the e-vendor, the technology and the nature of online shopping), leading to multi-level dimensions of the construct. Furthermore, the identification of e-trust antecedents (that is, perceived size, perceived reputation, perceived risk, trustworthiness) and consequences (that is, conclusion of the online transaction, loyalty) has seen an evolution from general studies to more contextualized ones. Finally, owing to the relevance of the first contact between customers and the site, studies analysing the evolution of e-trust have focused mainly on how online firm managers can build initial trust, investigating the most powerful tools used to reach this goal (that is, structural assurances and reputation).

7.

CONCLUSION

This chapter has shown that all market relations (between firms and individuals, off-line and online) are impacted, in various degrees, by trust. Thus, trust emerges as the very construct that permeates any type of

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Trust in marketing

Table 4.2

Contributions of marketing studies to research on trust

Conceptual contribution

Industrial marketing

Channel marketing

Sales management

Customerbased resources

Antecedent and consequent variables (models) Relationships between satisfaction, loyalty and trust (models) Interaction between interpersonal and inter-organizational dimensions (multi-layer) Longitudinal dimension of trust Transfer of intangibles

X

X

X

X

Intra-organizational trust

X

X

X

X

X

X (services)

X

X

X

X

X (researches and new products) X (team)

X (services)

X (sales person– manager)

relationship. In particular, it is at the basis of knowledge exchange within relationships formed to develop new products. It facilitates innovation diffusion on the markets. It represents the main antecedent of cooperation and long-term orientation in distribution relationships. It facilitates a positive conclusion of contracts in buyer–seller relationships. Finally, as a component of brand image and an antecedent of loyalty, it constitutes an essential element of customer-based relationships, representing a fundamental underpinning of economic value production. The analysis of previously developed contents has established that some topics have been studied by several disciplines, resulting in useful cross-sectional analyses, referred to as diverse relational typologies (industrial markets, distribution relationships and consumer, goods and services markets). In particular, as shown in Table 4.2, a matrix can be produced isolating the main themes discussed in marketing literature and matching them with the areas of study presented in this chapter. Such a matrix is characterized by a significant overlapping of themes, especially:

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(a) a tendency to define models of trust antecedents and consequences; (b) a growing interest in the relationship’s longitudinal dimension; (c) the relation between the construct’s interpersonal and interorganizational dimensions. On the first point (a), it is very clear that every discipline and its branches are particularly interested in isolating trust’s antecedents, namely the elements that most condition its development. This topic is the main subject of Chapter 7, but it seems appropriate to mention the main question considered so far: is it possible to increase trust in a planned and deliberate way? Some scholars state that, when trust is deliberately developed, it loses its core ‘transparency’, owing to its artificial creation and consequent inability to embody its own true essence. Again, the topic is discussed in full in the last chapter, but a strong belief must be expressed beforehand in the effectiveness or, even better, the necessity of implementing trust-building policies. In fact, trust is a precious resource for firms, consumers, institutions and economic and social systems. Therefore it must be developed, carefully avoiding its ‘secondary’ effects, its so-called dark side. Trust oriented marketing is mandatory for firms involved in today’s connection economy. It increases trust in marketing, often ‘discouraged’ and ‘accused’ of opportunistic behaviours toward the customers, such as the creation of ‘futile’ needs and information asymmetries. Trust longitudinal analysis (b) is another aspect further studied by all marketing areas. The longitudinal approach explicitly considers the relationship’s evolutionary dynamics. Furthermore, it allows following trust transformation during the relationship life and, as seen in the fifth section, clarifying the relationship between trust and customer-based constructs such as satisfaction and loyalty. If loyalty is established in the very first development stages by satisfaction and the offer’s perceived value, whereas later it is based on trust in the firm, it seems to constitute a datum destined to significantly condition the firms’ relational behaviours and their customer relationship management initiatives. Finally, considering the relation between a relationship’s interpersonal and inter-organizational levels (c) works on sales management and furthers studies of relationships in the context of channels, industrial markets and services industry have underscored the crucial role of that relationship, and the need to capture its interdependencies and antecedents. A last consideration on future researches on trust in marketing concerns the critical importance given to the relationship observation perspective and, especially, to the opportunity of transcending the traditional relationship between customer (trustor) and firm (trustee), extending the analysis to the opposite perspective and considering the possibility, by now quite real, of a role inversion. Thus the firm assumes the function of trustor,

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and the customer becomes the trustee (for example, Achrol and Kotler 1999). In this case, it is the selling firm that has to make decisions in vulnerable situations, exposed to the risk of the customer’s opportunistic behaviours, highlighting the fundamental characteristic of reciprocity upon which the trust concept is based. In conclusion, we believe that the time has come to perform a systematic analytical study on trust dynamics in relationships between different individuals (customers vis-à-vis other customers) in the context of the so-called consumer communities. In this case, the customer can increase the personal level of trustworthiness through belonging to a firm-specific network (brand community, loyalty card network or virtual community) or through his/her reputation as a reliable customer of a firm (for example, Cova 1997; Oliver 1999; Munitz and O’Guinn 2001; Bagozzi and Dholakia 2002). In this way, the single customer can produce personal utility and value ‘using’ the trust relationship forged with a firm or community in order to consolidate his/her trust relationships with other individuals (considered as his/her peers). Thus, a new and enticing frontier opens to studies on trust in market relationships.

NOTES 1.

2. 3.

Focusing on market relationships, Dwyer et al. stated in 1987 (p. 23): ‘Recent work on trust in marketing (Schurr and Ozanne 1985; Swan and Nolan 1985) has only scratched the surface of its rich conceptual and empirical foundations in interpersonal and small group research’. On this theme and the concept of social exchange in industrial markets, within the IMP Group framework, see Håkansson (1987a, 1987b), Håkansson and Snehota (1989), Ford (1990) and Snehota (1990). In particular, Huemer (1998) suggests three fundamental aspects of the trust development process, the so-called three E’s: ● ● ●

4.

5.

6.

the environment in which a relationship is entertained and which affects the processes of trust development the establishment of a trust relationship the employment of trust.

Iacobucci (1996) has highlighted trust’s crucial importance in networks of firms dealing in industrial goods markets. He considers trust as the central variable in terms of comprehension of the way relationships work in these markets. On this subject, see also Iacobucci and Hopkins (1992) and Iacobucci and Ostrom (1996). Trust antecedents mostly refer to individual and organizational variables of the dyad’s actors. According to Moorman et al. (1993: 83), the main trust antecedents are the user’s competency profile and the characteristics of his/her organization, the researcher’s capabilities and motivations, the dyad’s structural characteristics, and the project typology. These authors explain that ‘cooperative competency’ is a property of relationships established between organization entities that participate in new product development: ‘We do not claim that these variables exhaust the domain of this cooperative competency, but regard them as three compelling facets of this relationship attribute’ (Sivadas and Dwyer 2000: 33).

112 7.

8. 9. 10.

11. 12.

13. 14.

15. 16. 17.

18.

The contribution of the different disciplinary contexts While this could be valid for personal relationships, the same cannot be said for interorganizational relationships. In these situations, a high relational embeddedness can be associated with a poor information redundancy, as is the case with vertical relationships or, vice versa, horizontal relationships, when the collaborative dimension coexists with a structural competitive propensity. In fact, in channel vertical relationships, a high level of commitment to a partnership project is generally associated with very different knowledge among the partners, with limited overlapping. Vice versa, in horizontal relationships (as seen among competitors trying to develop similar new products), the redundancy level is much higher, while competitive interdependencies force a limited embeddedness (the relationship’s motivational dimension). Both relational dimensions affect the level at which information (once acquired) is applied to new product development, enhancing creativity and speeding up the whole process. According to Brown and Eisenhardt (1995: 367), the product team represents ‘the heart of the product-development process’. On this matter, Glynn (1996) proposed a model that conceptualized innovation as a strictly cognitive process. Studying the relationship between individual and organizational capabilities and innovation generation and implementation, he explicitly considered the role of several enabling factors and contextual variables. On relations between individual competencies and organizational knowledge, see Troilo (2006). Research by Ittner and Larcker (1997) showed that cross-functional teams are the ‘enabler’ of the potentiality generated, reducing innovation development time. On this very theme, see also Griffin (1997). ECR (Efficient Consumer Response) is ‘a joint retailers and manufacturers body, launched in 1994 to make the grocery sector as a whole more responsive to consumer demand and promote the removal of unnecessary costs from the supply chain’ (www.ecrnet.org). Member firms are committed to re-engineering connection processes, thus reducing the interfacing costs within the distribution channel. Their aim is to induce price reductions, increase profitability and cooperate to enhance the competitive power of industrial brands and their distributors, with the result of strengthening the competitive position of all supply chain subjects. It has been shown that a cost reduction equal to 6.7 per cent of the sale price follows the implementation of (logistics and information) efficiency measures, and that sales increase once demand side partnerships are established (source: ECR Italy). Environment-related uncertainty depends on the environment complexity and the speed at which it changes. For simplicity’s sake, Dwyer and Welsh (1985) limit themselves to considering uncertainty as directly related to environmental heterogeneity, defined as the degree of variation among the environment’s parties and the destructuring level of their interrelations. On uncertainty in distribution channels, see also Etgar (1977), Achrol et al. (1983) and Achrol and Stern (1988). Environmental variability presents many facets. The most relevant ones are demand variance, competitive pressure intensity, required resource availability and offer adaptability to demand changing needs. See also Thibaut and Kelley (1959), Kelley and Thibaut (1978). The comparison level represents a qualitative standard of the results a distributor (or manufacturer, according to the selected point of view) expects from a given relationship. The comparison between CL and a relationship’s actual results helps in establishing the distributor’s (or manufacturer’s) satisfaction level. The comparison level for alternatives (CLALT) defines instead the outcome standard of the best alternative exchange relation available to each party. In short, it represents the minimal output level that the distributor (or manufacturer) can accept to continue the exchange relationship. In other words, the difference between CLALT and the actual result of a relationship measures how much one party depends on that relationship. When, thanks to a distributor, a manufacturer can achieve on the local market a far superior result to that offered by the best alternative in that geographical area, then that distributor offers an advantage to its industrial partner. In other terms, the latter acquires

Trust in marketing

19.

20.

21.

22.

23.

24.

25. 26.

27.

113

a ‘partnership advantage’, strengthening its competitive position on local markets. Obviously, the same situation can be seen in a similar vein from the opposite standpoint, observing the advantage gained by the distributor because of its relationship with a specific manufacturer. For further insights on the transformation of partnership advantage into competitive gain see Sethuraman et al. (1988: 331). In particular, the research shows that, for a retailer, trust is a consequence of cooperation and a result unto itself; whereas, for an industrial firm, it plays a fundamental role as mediator of both conflict reduction and satisfaction increase. This experiment puts in a good light the specificity of LISREL, showing how this research methodology allows influencing the model’s very structure while testing the hypotheses. These four variables have the following antecedents: environmental uncertainty (defined in this case as environmental diversity and volatility), perceived specificity of mutual investments, supplier’s reputation, and satisfaction with past experiences. This model has been confirmed by analysing the relationship between buyers of department store chains and their suppliers, once more collecting data and testing the hypotheses according to the perspectives of both dyad members. Recently, these same authors have performed a wider literature review on distribution channels, adopting a theoretical framework inspired by the tenets of the structure– conduct–performance model and applying the economic-political paradigm to distribution relationships (Geyskens et al. 1999). That analysis has shown the presence of a strong link among the relationship’s structural variables (namely, the relationship’s centralization level, parties’ dependency and formalization level), behavioural elements (in particular, use of threats, promises and non-coercive influencing strategies) and, finally, performance. In particular, it has been established that a retailer can safeguard its specific investments by adopting several control mechanisms, such as: specific counterbalancing investments made by the other party, relational rules, and explicit contracts. These elements impact the retailer’s perception of the supplier’s commitment level. Nevertheless, according to the model advanced by Jap and Ganesan (2000), that relationship is mediated by its stage (exploration, growth, maturity or decline). Some works have been dedicated to the last stage of supplier–distributor relations, and particularly to the impact of trust-killing actions and breaches of contract within marketing channel relationships (for example, Antia and Frazier 2001; Hibbard et al. 2001). Considering the relevance of analysing trust’s dynamics and ‘topic’ moments of the relationship life cycle (in particular, beginning and end), this matter is further discussed in the second section of the last chapter. When firms focus on developing partnering relationships, salespeople become relationship managers. They are responsible for identifying opportunities for creating value and organizing the resources of their companies to make sure these opportunities are exploited (Weitz et al. 2001). On salespeople’s role evolution, see also Weitz and Bradford (1999). To explore the first attempts to understand the role played by trust in buyer–seller relationships, see also Weitz (1981), Swan and Nolan (1985), Swan et al. (1985) and Oakes (1990). For an overview of the literature on trust in buyer–seller relationships see the metaanalysis conducted by Swan et al. (1999). Their study identifies some classes of antecedents referring to salespeople (for example, benevolence, competence, likeability/ similarity, skill in using sales techniques, and past experience) and other classes related to the firm (for example, determinants associated with salesperson, firm and company reputation). On this theme, Guenzi (2002a) has conducted an empirical research on a sample of Italian sales managers, showing the crucial role of company-specific elements (such as satisfaction derived from past interactions with the firm and its propensity to cooperate) followed by the salesperson’s honesty and competency. Negotiation closing techniques can be organized in five main categories. First are the persuasion-based techniques such as the assumed close technique, whereby the salesperson fills in the purchasing order or behaves as if the purchase had already been

114

28. 29. 30. 31.

32.

33. 34. 35.

36. 37. 38. 39.

The contribution of the different disciplinary contexts decided by the customer, and the either–or close technique, when a customer is presented with a secondary post-purchase choice (such as a request to provide a shipping address), implying a positive negotiation outcome. The social validation principle requires that a reference be made to other firms or significant customers who have already made the purchase and are now called as credible witnesses to the offer validity. The norm of reciprocity is based on the favour exchange concept: a deal is more likely to be struck if it is linked to favours, albeit not equivalent in terms of commitment, granted in the past by the salesperson to the buyer. The if–then closing technique refers to the offer of concessions (such as better payment terms) in exchange for the negotiation conclusion. Finally, the impending event technique is based on the probability, as expressed to the buyer, that future events will make an item’s future purchase less convenient. Weitz and Jap (1995), Doney and Cannon (1997), Zaheer et al. (1998), Iacobucci and Hibbard (1999), and Jap (1999, 2001a) highlight the role personal dimension plays in inter-organizational relations. Role modelling has been conceptualized as the way in which the sales manager’s behaviour is perceived as a good example to follow, showing high consistency with the sales manager’s values and the organization’s goals. Corporate citizenship behaviours are defined as discretionary behaviours that favour effective organizational functioning but which are not directly prescribed by role or norms. Inspired by those principles, Kunkel and Berry (1968: 22) defined the store image concept as a result of past experiences (‘differential reinforcement’) within the context of the same business concern and, more precisely, as the actual or expected reinforcement associated to a particular point of sale. On this subject, a recent work by Munitz and O’Guinn (2001) introduces the concept of brand community, namely a social group characterized by a strong commitment to a brand. Bagozzi and Dholakia (2002) have empirically ascertained the existence of a social dimension of brand consumption among communities associated with the Harley Davidson brand. Also, Oliver (1999) hypothesizes the existence of a communitary component of loyalty, introducing the concept of a social consumption village, referring to goods enjoying a significant social support. In fact, trust need depends on the perceived risk and structural complexity of the situations (Luhmann 1979, 1989, 1991). To better understand customer satisfaction determinants, see the review by Spreng et al. (1996). In fact, according to Busacca (2000: 36), trust is as important a resource for the consumer, who uses this form of information structuring to minimize the quantity of data required to make a choice. Similarly, Costabile (2001: 120) defines trust as the subjectively perceived likelihood of the expected value actualization. Furthermore, trust influences the transaction costs (reducing them) and the transition costs (increasing them as soon as the consumer evaluates the option of exiting the relationship). Further discussions on the various typologies of loyalty can be found in Oliver (1999) and Busacca and Castaldo (2002). Although referring to a field of study different from marketing, Mutti (1990: 130) maintains that loyalty can be seen as the ‘temporal stabilization of trust within the validity of an overall relationship’ (translated from Italian). According to the authors, these mistakes are mostly linked to satisfaction thresholds, response bias and non-linearity of the ratio between satisfaction levels and re-purchasing rate, which vary in turn as a function of the different customers’ profiles. On this matter, the authors proposed several strategies of loyalty development, from the traditional product superiority, where loyalty is based on differential performances warranted by the offer, to the village envelopment, where a firm builds loyalty inducing social environments and networks (for example, clubs). In this case, the customer is passively influenced by external influences. During the more advanced stages of the relationship, the so-called immersed self-identity represents a more structured and evolved strategy. Combining individual strength and social support, it allows a person to identify his/her

Trust in marketing

40.

41.

42.

43.

44.

45. 46. 47.

48. 49.

50.

115

own self-image with that of the social system to which the brand belongs. Thus a synergy is established between social dimension and individual beliefs. An empirical study run by Garbarino and Johnson (1999) in the service industry fully confirms the evidence advanced by Oliver (1999) regarding the role of satisfaction and trust in the earliest and more advanced stages of relational dynamics respectively (see Chapter 6, section 3). Sirdeshmukh et al. (2002) have performed analogous research in two specific service contexts, retailing and aviation. Their proposed model is twofold. On one hand it is geared to exploring the determinants of trust (conceptualized as competence, goodwill and problem solving orientation) in contact personnel and the firm’s managerial policies. On the other hand, it is expected to verify the existence of a mediation variable (conceptualized as value) between the already defined two typologies of trust, and customers’ loyalty. A more recent model proposed by Chatterjee and Chaudhuri (2005) is aimed at verifying whether trust facilitates obtaining superior brand outcomes in terms of market share and advertising returns. Delgado-Ballester and Munuera-Alemán (2005) demonstrate that brand trust is rooted in the result of past experience with the brand (customer satisfaction), and it is also positively associated with customer loyalty, which in turn is directly correlated with brand equity. Reast (2005) verifies that brand trust is significantly related to brand extension acceptance. The model (Chaudhuri and Holbrook 2001) also included brand-referred control variables and, specifically, the product differentiation level and the share of voice, which is assumed to be directly related to market share and price differential. The Chaudhuri and Holbrook (2002) model considered also the age of the brand and the number of competitors as control variables. In these cases, trust or reliability constitute the antecedents of service quality and customers’ satisfaction level, whereas the previously analysed contributions on brand image and customers’ loyalty normally propose trust as a consequence of both the product/brand quality level and the satisfaction level associated with it. Thus, the relationship between satisfaction and trust, which will be fully explored in Chapter 7, represents an interesting field of study, hypothesizing, within a dynamic vision, recursive and circular relationships. On the relation between commitment and loyalty in the service industry, see also Pritchard et al. (1999). They demonstrate the interpretative valence of commitment (conceptualized in terms of resistance to change) as the fundamental variable, mediating between its antecedents and loyalty. This section has been co-authored by Monica Grosso. Many authors state that the degree of risk and the uncertainty of the economic transactions are higher in a virtual environment than in a traditional setting (Nah and Davis 2002; Gefen and Straub 2004; Pavlou and Gefen 2004). The Internet environment has some peculiarities which differentiate it from the traditional one and which must be kept in mind when analysing trust in the online marketplace. The most important difference is that, in the online environment, customers no longer interact with salespeople or have a direct physical experience of the store and its products. Since the development of trust, as analysed in the traditional setting, often depends on direct physical experiences of the company’s store and its salespeople (Doney and Cannon 1997), it is sometimes unclear how online customers develop the same feelings of trust towards the web-based companies they visit. The most important bridge between literature on online and offline trust is represented by McKnight, who is a ‘central’ author in both the literature streams. In both the McKnight et al. (2002a) and Bhattacherjee (2002) studies, the concept of trusting beliefs is operationalized according to the dimensions proposed by Mayer et al. (1995): ability (competence), integrity (reliability and dependability), and benevolence (care and goodwill) of the trustee (or the online firm or party in the context of e-commerce). The authors argue that the ability or competence is a necessary, but not sufficient, condition for trust. Therefore, they suggest that, when engaging in a trusting online

116

51. 52. 53. 54. 55. 56.

57.

The contribution of the different disciplinary contexts relationship, a consumer is likely to first evaluate the competence and integrity of the online firm or counterpart. Hence, cognition-based trust is crucial in establishing an initial relationship with an online party (Nah and Davis 2002). On the other hand, the authors underline that the effect of perceived benevolence on trust is likely to increase over time as the relationship develops. Therefore affect-based trust is expected to become more important in subsequent online relationships (Nah and Davis 2002). The concept of distrust will be analysed in section 6.4 of Chapter 6. Please refer to this section for an insight into the construct. Specifically, they found that dispositions to trust and distrust factor separately, co-exist, and – in the context of web providers of expert advice – have different consequences. A web site is defined as a two-dimensional graphical display and represents the medium that allows a transaction without any face-to-face interaction with human representatives of the company (Koufaris and Hampton-Sosa 2004). Trust in technology includes trust in security services and in the technical solutions embedded in virtual technologies. The concepts of interpersonal and institutional online trust are inferred from studies of trust in the off-line environment, which will be analysed in section 6.1 of Chapter 6. The results of their study show that: e-trust is composed of four distinct beliefs dealing with the integrity, benevolence, ability, and predictability of the vendor; among these beliefs, integrity and predictability are the pertinent ones; the control variables, disposition to trust and familiarity, affect these beliefs; e-trust, especially in the benevolence belief, is increased by the perception of a social presence in the web site. According to the TAM, the intention to voluntarily accept, that is to use, a new IT is determined by two beliefs dealing with (Davis 1989; Davis et al. 1989): (1) (2)

58. 59.

60. 61. 62. 63.

64.

the perceived usefulness (PU) of using the new IT the perceived ease of use (PEOU) of the new IT.

The PU is a measure of the individual’s subjective assessment of the utility offered by the new IT in a specific task-related context, while the PEOU is an indicator of the cognitive effort needed to learn and to utilize the new technology (Davis 1989; Davis et al. 1989). The main trust antecedents and consequences of online trust will be reviewed in Chapter 7, which focuses on these topics. The results of the original study were confirmed in a cross-cultural validation of the same framework in Israel and a shortened setting in Finland (Jarvenpaa and Tractinsky 1999). In contrast to hypothesized cultural influences no strong cultural effects were found regarding the antecedents of trust. Data from the study, analysed using confirmatory factor analysis, confirmed all hypotheses related to trust, that is, social presence affected consumers’ trust in the electronic service provider, and trust on the other hand positively affected the purchase intention. Composed of technical competence of the medium, reliability of the medium and medium understanding of the consumer (Lee and Turban 2001). Such as effectiveness of third party certification and security infrastructure (Lee and Turban 2001). Consumer trust in Internet shopping in this study is defined as the willingness of a consumer to be vulnerable to the actions of an Internet merchant in an online shopping transaction and thus has to be categorized as trusting intention, which is influenced – among other factors – by the assessment of the trustworthiness of the Internet merchant, representing trusting beliefs. The authors tested their hypotheses using multiple linear regression. Findings confirmed the moderating effect of trust propensity on perceived integrity. The results further indicated a strong direct effect of perceived integrity (one element of trustworthiness of the Internet merchant) on consumer trust toward Internet shopping. Potential customer trust refers to the initial trust that a potential customer has in an unfamiliar trustee (it is therefore related to the initial trust concept). Repeat customer

Trust in marketing

65. 66. 67. 68.

69.

70. 71.

117

trust refers to the trust that a repeat customer has in a familiar trustee after having transaction experiences with it. This corresponds to Zucker’s (1986) process model of trust building. McKnight et al. (2002b) identified web site quality as a significant antecedent of trust belief about an Internet store. Service quality has several dimensions, including reliability, responsiveness, assurance, and empathy (Devaraj et al. 2002; Gefen 2002). Empathy means the degree to which an Internet vendor attends to, understands and adapts to the needs of individual customers. In particular, findings showed that privacy and order fulfilment are the most influential determinants of trust for sites in which both information risk and involvement are high, such as travel sites. Navigation is the strongest antecedent for information-intensive sites, such as sports, portal, and community sites. Brand strength is critical for high-involvement categories, such as automotive and financial services sites. Online trust partially mediates the relationships between web site and consumer characteristics and behavioural intent, and this mediation is strongest (weakest) for sites oriented toward infrequently (frequently) purchased, high-involvement items, such as computers (financial services). In particular, overcoming the initial trust barriers is more difficult for small online retailers due to the general lack of national reputation and impressive size, which are seen as the two most frequently declared antecedents of consumer trust (Doney and Cannon 1997; Jarvenpaa and Tractinsky 1999). The trust-building process has been more completely investigated in off-line studies. This topic will be analysed in Chapter 8. Findings highlighted that disposition to trust, structural assurance and reputation advertising affect each type of trust during both stages (introductory and explanatory).

PART THREE

The trust construct’s analytical boundaries

5. Trust definition: a content meta-analysis 1.

INTRODUCTION

A feature common to all of the disciplines that have studied the concept of trust is the lack of a shared, clear definition of this construct. Shapiro (1987: 625) has clearly synthesized this situation maintaining that although trust has been conceptualized in numerous analyses, the result has been a ‘confusing potpourri of definitions applied to a host of units and levels of analysis’. McAllister (1995: 709) and Andaleeb (1992: 7) share this view and the latter asserts: ‘an examination of social sciences literature suggests that there is some conceptual confusion regarding the construct’. Considering the great variety of definitions, Mutti (1987: 224) states ‘the multiplicity of meanings ascribed to the concept of trust in social analysis is disconcerting. Undoubtedly this regrettable state of affairs is the outcome of general historical neglect, as if by effect of a bizarre selfreflective mechanism, social science does not trust in the possibility of relevantly reflecting upon trust’.1 The above-mentioned misalignment has caused a good deal of ‘communication’ problems among scholars who allegedly refer to the same construct while actually referring to considerably different trust concepts and typologies. Thus, the academic discussion is quite sterile, since it is vitiated by different objects of analysis that inevitably determine different (and at times conflicting) interpretative proposals. When the debated issue is clearly expounded, the nature of the discussion and the stances are easily comprehensible; yet, when the issue is fuzzy – lending itself to ambiguous definitions and interpretations – the dialectic argument becomes much more complex, lacking the needed clarity from the start. In order to avoid an empty argument among authors and theoretical perspectives inspired by different trust concepts and to recognize the true essence of the construct, it appears useful to clarify the boundaries and declinations proposed by different extant definitions. To this purpose, a computer-aided analysis has been conducted on a set of definitions suggested by the most important contributions in management and social sciences literature. The results, reported in the sections that follow, prove that 121

122


there is, on one hand, an expected high heterogeneity of definitions characterized by high lexical variety indexes and significant differences between the consequent defining clusters. On the other hand, many definitions share the same underpinnings, thus showing evident commonalities among contributions. Such analysis – which represented an excellent opportunity to explore the ‘many facets’ (Blomqvist 1997) of the construct – has triggered a number of responses useful in clarifying the meaning of the construct and leading to a more structured definition. Nevertheless it has also left many unanswered questions on the grey areas of the concept, thus calling for the in-depth analysis presented in the following chapters.

2. THE CONSTRUCT AND ITS MEANING: A CONTENT ANALYSIS The computer-aided content analysis is an analytical method frequently used in social studies2 to analyse texts3 using special software, such as Text Smart (by SPSS Inc.), adopted in this study. The most important input needed to carry out this computer-aided content analysis is a text database containing the definitions selected from significant contributions in management and social sciences literature. The studies have been chosen after analysing contributions published mainly in management journals,4 as well as in significant sociology, psychology and social psychology publications. Collected essays and monographs frequently quoted in research studies have also been taken into consideration. After analysing each contribution – amounting to more than three hundred in the initial database – the studies containing a clear definition of trust were isolated. Subsequently, all contributions offering a definition taken from previous studies without significant changes were removed. Finally, a dataset consisting of 72 different definitions was drawn up (see Appendix A). Table 5.1 shows that the dataset is mainly composed of definitions drawn from strategic management and organization studies (considered jointly since, as mentioned in Chapter 3, – especially for research studies on trust in interorganizational relationships – it is objectively difficult to make a single classification); marketing studies were included at a second stage. Table 5.2 shows the structure of the definition sample, analysed according to the year of first publication. This table illustrates the significant time progression in generating definitions relevant to the concept of trust included in the sample.5 After creating the definition sample, it appeared necessary to draw up two lists of terms required to perform the content analysis: the ‘excluded word list’ and the ‘alias list’.6 The processed analysis has produced the following outputs:

123

Trust definition: a content meta-analysis

Table 5.1

The sample of definitions by disciplinary domain

Discipline

Frequency

Percentage

Strategic management and organization Marketing Psychology Sociology

33 17 13 9

45.8 23.6 18.1 12.5

TOTAL

72

100.0

Table 5.2 Years

The sample of definitions by year Frequency

Percentage

1960–69 1970–79 1980–89 1990–99

4 5 19 44

5.6 7.0 26.4 61.0

TOTAL

72

100.0

(1) lexical richness index (2) most frequently used terms list (3) map of lexical correspondences. Such results allow us to synthesize the variety of definitions identified, extrapolating the basic elements of the trust construct and the main homogeneous and divergent instances of cognitive representations proposed by the examined authors. Lexical richness (1) consists in the percentage of different words used in the definitions of trust over the total terms used. As shown in Table 5.3, this amounts to 33.4 per cent, which means that out of 818 words used (considering also the excluded terms, the database contains a total of 1582 lemmata) in 72 examined definitions, 273 different terms were detected, thus producing a 33.4 per cent lexical richness index. Considering that the object of all definitions is the same (trust), this finding underlines that there is little agreement among scholars on the content of the construct and the variety of terms and concepts used to define it. As to output (2), it will clearly appear that the list of most frequently used terms provides a ‘quantitative’ type of information on the recurring concepts found in the definitions collected, seen as the phenomenon constituting elements by scholars who proposed them. The list of most frequently used terms (shown in Table 5.4) demonstrates that there is frequent reference to

124

Table 5.3


Lexical richness index

Total number of definitions Total number of lemmata Total number of different terms Lexical richness index

72 818 273 33.4%

the subjects involved in trust relationships, (that is, party, actor, trustor, trustee), at times more generically defined (for example, agent, other, another), or referring to specific relational typologies (for example, company, firm), some of which are relevant to the domain of marketing and sales management (for example, customer, salesperson). Frequently, reference is made to the behaviour and action of subjects (for example, action, act, behaviour, behave); indeed trust is put in the other party’s action, from which the trustor expects to get a positive result (outcomes, results) in line with his/her expectations. The third most common term, namely will, requires special consideration, because it demonstrates the construct’s decisive orientation to the future, consistent with what some scholars (for example, Axelrod 1984) have conceptualized as the ‘shadow of the future’. The actions the trustor trusts have, in fact, yet to happen. It is, actually, the uncertainty associated with them that determines the need for trust. The most frequently used terms can be classed in three fundamental conceptual categories to be expanded in order to interpret the concept meanings. The terms referring to the conceptual frame of the construct will be analysed first. In the next chapter, trust will be conceptually defined as expectation, belief, reliance, confidence and willingness. As to expectations (expectation, expected, expectancy), they often refer to the likelihood that a trustee’s given action or behaviour will take place in the future. Frequently, reference is also made to the term beliefs as numerous authors have a propensity to define trust either as a belief or, less frequently, as an attitude based on deeply rooted convictions. Several definitions refer explicitly to relying/rely/reliable or to confidence/confident in someone else’s action or behaviour, which is independent of the trustor’s will or control. The construct has also been defined in terms of willingness to place one’s trust in a given action or given person, showing the willingness to risk.7 A second set of terms refers to the consequences of trust. These usually designate both the results of supposedly positive (or, at least, not negative or detrimental) actions performed by the trustee (that is, outcome, result, performance), consistent with the trustor’s concerns; and, in more general terms, collaborative behaviours (cooperation, coordination), tuned to


Table 5.4

125

Most frequently used terms in trust definitions

Term

Original terms associated

Subject

Actor, Agent, Another, Company, Customer, Firm, Group, Individual, It, One, Other, Party, People, Person, Salesperson, Somebody, Trustee, Trustor Action, Act, Behaviour, Behave, Behavioural Will Expect, Expectation, Expected, Expectancy Belief, Believe Outcome, Result, Performance, Perform Rely, Reliable, Reliance, Relied, Reliability, Relying Trust, Trusting, Trustworthy Confident, Confidence Willingness, Willing Take, Taken, Taking, Accept, Accepted, Acceptable Risk, Risky, Risking Vulnerable, Vulnerability Relationship Exchange Based Competent, Competence, Capabilities Positive Cooperate, Cooperation, Coordination Exploit, Exploitation Situation Attitude Decide, Decision Fulfil, Fulfilled, Fulfilment Held Intention, Intentionally, Intend Involve, Involved, Involvement, Involving Mutual, Mutually Word Would

Action, Behaviour Future auxiliary Expectation Belief Result Reliability Trust Confidence Willingness Taking, Accepting Risk Vulnerability Relationship Exchange Based Competency Positive Cooperation Exploitation Situation Attitude Decision Fulfilment Maintain Intention Involving Mutual Word Conditional auxiliary

Frequency 180

42 29 24 23 19 18 17 16 14 11 11 11 10 9 8 7 7 6 6 6 5 5 5 5 5 5 5 5 5

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the trustor’s objectives. The possible consequences of trust include also decision-making possibilities. In fact, highly uncertain situations, unless appropriately supported in terms of trust, involve a decisional impasse, thus inducing subjects to postpone their choices to a time when, having acquired more information, the choice between the available alternative actions appears to be less risky. A third set of terms refers to what in the next chapter will be defined as trust’s analytical prerequisites. Explicit reference to the trustor’s taking or accepting the risk/s (risk taking, risky) occurs eleven times. Therefore, the trustor is vulnerable (vulnerability) toward his/her counterpart. This is a fundamental concept in the definition of trust. Some authors, in fact, believe that in order to ascribe theoretical relevance to the construct, it is important to underline the need for the trustee’s expected actions – influencing the trustor in the achievement of his goals – to be impossible to check prior to the trustor’s decisions (Williams 1989: 5–18). In other words, as will be expounded in the next chapter (Chapter 6, section 3), there must be an uncertain situation, that is, a risky circumstance, placing the subject in a vulnerable condition, depending on the other party’s actions. The analysis of lexical correspondences (3) pinpoints adjacencies between the most frequently used terms in order to accurately isolate the basic meanings associated with the trust concept. This type of analysis provides ‘qualitative’ information, showing how the different constituting elements (the previously analysed concepts and terms) are intertwined in the definition of the ‘trust’ construct. Although the same terms are used to express a given concept, the meaning may be completely different, depending on the way the terms are associated one with the other. Such an analytical step – utilizing the Multidimensional Scaling algorithm – produces a map of lexical similarities, whereby each term is collocated on a given point, according to the relative adjacency level to other terms. The method follows two main steps. Firstly, a similarity matrix of terms is constructed according to the intensity that they have been jointly used in the same definition. When two concepts are often associated, they receive a higher similarity (or, more accurately, a contiguity) score. Whenever two given terms are not (or are seldom) jointly used, similarity values will be lower. By means of an iterated application of a quantitative routine (based on the concept of Euclidean distance) on the above-mentioned data matrix, a lexical association map may be obtained (see Figure 5.1).8 The relative collocation of a single term indicates that it has been frequently used in association with terms more proximate to its position in the map. Therefore, it is possible to isolate a number of areas (or spatial clusters) including concepts linked one to another representing, for this purpose, the main meanings proposed by the studied definitions.

127

Figure 5.1

TERM

PERCEIVE

FULFIL OBLIGATIONS

PROMISE WORD MANNER NEGOTIATE OPPORTUNE

1B. PROMISE KEEPING

BENEFICIAL HONEST CIRCUMSTANCE GOODWILL EXPERT INTEREST COOPERATE COMPETENT

2B. SUBJECT’S CHARACTERISTICS

RELY

TRUST

ACTION TAKE

3. ACTION

WILLINGNESS

WOULD

BELIEF

PARTICULAR

ATTITUDE

INTEND

PSYCHOLOGICAL STATE

1A. CONSTRUCT

Lexical associations map for the entire sample

ORDER MORAL SOCIAL

6. INSTITUTIONAL TRUST

RELATIONSHIP

INVOLVE

5A. RISK

RISK UNCERTAINITY SITUATION DECIDE

OUTCOME PRODUCE

POSITIVE NEGATIVE

4. RESULTS

EXCHANGE

WILL

MUTUAL EXPLOIT

VULNERABLE

5B. VULNERABILITY

CONFIDENT SUBJECT

2A. SUBJECT

128


The different areas embracing some of the terms included in the map (Figure 5.1) highlight the constituting ‘nuclei’ of the definitions, that is, the major conceptual clusters, which have been diversely combined from different authors to define the construct under examination. Analysing the map, at the top centre there is an area (1A) containing the terms that define the construct’s conceptual typology, that is, belief, reliance, willingness, attitude, psychological state. These usually represent the initial part of most of the definitions examined. On the right, there is a second area (3) outlining the behavioural dimension of trust (taking action) and a third one (2A) that refers to the subjects involved in the relationship, who are asked to trust and gain it in turn. Such subjects are often qualified in terms of honesty, competency, experience and so on, as may be seen within the area immediately beneath the centre (2B). To the left of area 1A (containing the different conceptual categories of the construct), there are terms referring to risk and uncertainty about the decisionmaking situation (5A), the prerequisites of trust’s existence. Still another conceptual typology that is quite important in the definitions under scrutiny refers to the capability of keeping promises, cooperating in the common interest (area 1B). Moving clockwise from the upper left to the peripheral areas of the map, it is possible to read the area of expected results (4), meanings related to vulnerability9 (5B), the fulfilment of obligations (centre bottom) and the maintenance of social and moral order (area 6). Summing up the results of this analysis, it is possible to assert, in general terms, that trust definitions can be classed basically in five interrelated conceptual categories, as illustrated in Figure 5.2: 1.

2.

The construct. Trust has been prevalently conceptualized as expectation, belief, willingness, and attitude. The next chapter will expound this issue, which appears to be a departure point for understanding the concept’s meaning. Subjects in whom trust is put (trustee). These are usually individuals, persons, groups, firms, organizations, salespersons, and so on. The different categories of subjects (individuals, organizations and social institutions) correspond to different trust typologies (personal, interorganizational and institutional) that will be analysed in Chapter 6 (section 6). Such subjects are often characterized by several distinctive elements, for example, specific competencies, capabilities, nonopportunistic motivations, personal values, propensity to trust others. These elements, which will be discussed more extensively in Chapter 7 (section 2), have also been conceptualized as fundamental cognitive antecedents of trust.

129

Trustee ........ CHARACTERIZED BY COMPETENCIES, MOTIVATIONS, VALUES, ETC.

Individual Agent Actor Group Firm Salesperson

2. A SUBJECT

performs

Acceptance of risk Vulnerability

5. IN RISKY SITUATIONS

Actions Behaviours

3. FUTURE ACTIONS that produce

Diagram of content analysis results

The highlighted areas indicate the main elements of marketing as defined in section 4 of this chapter.

Figure 5.2

Note:

RELYING … on

ATTITUDE … towards

CONFIDENT … so that

WILLINGNESS TO BE CONFIDENT … so that

CONFIDENT … that

EXPECTING … that

1. CONSTRUCT

Outcome Performance

4. POSITIVE RESULTS

130

3.


Actions and behaviours. The behavioural dimension of trust is highlighted by some authors (for example, Moorman et al. 1992), who ascribe to it a fundamental analytical value in recognizing the very concept of trust. As soon as an individual places trust in someone/ something, the trustor will behave coherently with his/her decision to trust and the trustee will take actions in order to achieve the trustor’s objectives. Trust’s behavioural dimension and its multidimensional nature will be analysed in Chapter 6 (section 5). Results and behavioural outputs. From the standpoint of the trustor, the trustee’s actions are assumed to be predictable or, at least, positive. The predictability of another party’s behaviour and the fact that it can produce favourable outcomes, in line with the trustor’s objectives, represent two typical consequences of trust – an aspect that will be amply discussed in Chapter 7 (section 3), devoted to the analysis of trust consequences. Risk in decision-making situations. Trust is significant only when there is an uncertain, or risky, situation whereby the trustor is ‘voluntarily’ vulnerable. From this study’s perspective, risk, uncertainty and ambiguity are trust’s fundamental analytical prerequisites (as illustrated in Chapter 6, sections 3 and 4), qualifying situations in which trust acquires predictive significance.

4.

5.

Figure 5.2 highlights the above-mentioned trust underpinnings and portrays the logical sequence in which they have often been introduced in definitions. These definitions are often configured as an expectation, a belief that a subject having specific characteristics (that is, honesty, goodwill, competency, and so on) will take future actions, under perceived risk conditions, in order to produce positive results for the trustor.

3. ANALYSING CONCEPTUALIZATION VARIETIES: THE DEFINITION CLUSTERS An overview of the sample of trust definitions has been provided, to this point, conducting a general type of analysis. However, as mentioned earlier, owing to the high lexical richness index, the sampled definitions are highly differentiated. Therefore, it has been possible to isolate some significant clusters, that is, sets of homogeneous definitions. The following rationale has been used to conduct the clustering process: ●

Firstly, the main conceptual categories have been isolated by means of a manual categorization process available on Text

131


Table 5.5

The main conceptual categories of trust definitions

Categories

Terms associated with each category

Subject

Actor, Agent, Another, Company, Customer, Firm, Group, Individual, It, One, Other, Party, People, Person, Salesperson, Somebody, Trustee, Trustor Action, Act, Behaviour, Behave, Behavioural Take, Taken, Taking, Accept, Accepted, Risk, Risky, Risking, Uncertainty, Exploit, Exploitation., Opportunism, Vulnerable, Vulnerability Will, Future, Would

Action Risk taking

Future, Conditional Getting results

Personal characteristics Expectation Belief Relying Relationship and exchange Trust Commitment

Willingness Promise keeping Confidence

Produce, Outcome, Result, Performance, Perform, Positive, Negative, Cooperate, Cooperation, Coordination, Beneficial Personal, Characteristics, Competent, Competence, Capabilities, Confident, Honest, Benevolent, Fair Expect, Expectation, Expected, Expectancy Belief, Believe Rely, Reliable, Reliance, Relied, Reliability, Relying Relationship, Exchange Trust, Trusting, Trustworthy Commitment, Mutual, Mutually, Common, Effort, Interest, Involve, Involved, Involvement, Involving Willingness, Willing Fulfil, Fulfilled, Fulfilment, Held, Promises, Obligation, Word Confidence

Definitions containing the category 61

31 30

28 25

24

23 23 17 17 15 15

14 14 11

Smart.10 This process has enabled the construction of a category set including the single terms examined earlier (see Table 5.5). In fact, that table shows that the aforementioned terms fit exactly into the same categories, being sufficiently rich in synonyms or, at least, analytically relevant, whereas other categories show a further

132

●

●


aggregation level. Only the conceptual categories most frequently found within the set of definitions under study are reported in the table. A dichotomy matrix has been produced portraying, on one side, all definitions included in the analysis sample (by row) and, on the other side, the categories detected by the previous step (by column). Each cell contains data on the presence (with a value equal to 1) or absence (with a value equal to 0) of terms included in the category within each definition. The data matrix produced has been processed by means of statistical multivariate analysis. Specifically, applying non-hierarchical cluster analysis algorithms,11 it was possible to construct some definition typologies, each of which is composed by a set of definitions characterized by the prevalence of the same conceptual categories (in order to guarantee the utmost internal consistency). Results of such a process have led to the implementation of four different sets of definitions and are reported in Table 5.6. This table summarizes the absolute and percentage frequency (calculated by row) with which each conceptual category is included in each cluster.

A first analysis of results shows that some concepts are present uniformly across the different definitions, assembling what may be considered the common basis of the trust concept. The Subject category indeed is present in most definitions included in the different clusters, although with a significantly different occurrence (p0.01). Other concepts thoroughly discriminate definition clusters, such as Future (prevalently found in definitions included in clusters 1 and 4, with a p0.01), Expectation (characterizing clusters 2 and 4, with a p0.01), Willingness (typifying cluster 3 definitions, with a p0.01), Fulfilling promises (cluster 4, with a p0.01), and Confidence (cluster 1). After the analysis of the tabulated data the content of the four resulting cluster definitions can be interpreted as follows: ●

The first cluster, comprising 27.8 per cent of cases included in the sample, is characterized mainly by the concepts of ‘subject’ (category found in 100 per cent of definitions), ‘future’, ‘belief’, ‘action’, ‘relationship’ and ‘confidence’. Thus, trust is conceptualized above all in terms of ‘belief’ and ‘confidence’ in a relationship, and in the future behaviours of others. It is worth mentioning that definitions included in this cluster never refer to the concept of ‘expectation’, while only one definition contains the concept of ‘willingness’. Synthetically, this

133

Note:

16.0 20.8 – 52.2 29.4 47.1 13.3 26.7 7.1 28.6 72.7

4

5

– 12 5 8

2 4 1 4 8

*** p 0.01, ** p 0.05, * p 0.1

32.8 35.5 20.0 57.1

Per cent

20 11 6 16

Absolute values

Cluster 1 (Frequency 20) 27.8%

2 5 – 1 –

8 1 – 2

7

3

6 2 1 –

Absolute values

13.3 33.3 – 7.1 –

34.8 4.3 – 11.8

29.2

12.0

9.8 6.5 3.3 –

Per cent


9 4 10 1 3

– 9 8 5

9

9

20 7 15 3

Absolute values

60.0 26.7 71.4 7.1 27.3

– 39.1 47.1 29.4

37.5

36.0

32.8 22.6 50.0 10.7

Per cent


Main conceptual categories in trust definitions (percentages per row)

Subject*** Action*** Risk taking* Future, conditional*** Producing a result Personal characteristics*** Expectation*** Belief*** Relying*** Relationship and exchange Trust Commitment*** Willingness*** Promise keeping*** Confidence

Categories

Table 5.6

2 2 3 8 –

15 1 4 2

3

9

15 11 8 9

Absolute values

13.3 13.3 21.4 57.1 –

65.2 4.3 23.5 11.8

12.5

36.0

24.6 35.5 26.7 32.1

Per cent


15 15 14 14 11

23 23 17 17

24

25

61 31 30 28

Absolute values

Total

134

●

●

●


appears to be the set of definitions that sees trust mainly as a ‘belief in future actions’. The second group, with a lower occurrence (12.5 per cent) is mainly connoted by concepts of ‘expectation’, ‘personal features’, ‘subject’ and ‘commitment’. Unlike the previous case, here trust is conceptualized almost exclusively in terms of expectations. These are based mainly on the subject’s characteristics and on his/her alleged commitment and participation in the relationship. This case does not include the concepts of ‘future’, ‘reliance’, ‘willingness’ and ‘confidence’. The trust definition proposed by this cluster might be synthesized as ‘expectation founded mainly on the trustee’s personal characteristics’. The third set, which includes 38.9 per cent of definitions included in the sample, is undoubtedly the largest segment, revolving around the concepts of ‘subject’, ‘risk taking’ and ‘willingness’. In this case, trust generically coincides with the willingness to take a risk with third parties and being exposed to a vulnerable condition. Reliance (‘relying’, ‘trust’ and ‘belief’) in other parties’ actions depends, in some definitions within this group, on individual characteristics (nine quotations) and aims at obtaining a given result (nine quotations). This group, too, is short of the ‘expectation’ concept, thus providing a trust definition based almost exclusively on the ‘willingness to take risks’. The fourth cluster, representing 20.8 per cent of definitions, concentrates on the concepts of ‘subject’ and ‘expectation’ (both concepts found in 100 per cent of definitions within this cluster), ‘action’, ‘production of a result’, ‘future’, ‘risk taking’, ‘fulfilling promises’. It proposes a trust definition founded on the expectation that a subject will take actions (fulfilling his/her promises) that are expected to yield positive results for the trustor, who is thus risking exposure to the trustee’s opportunistic behaviours. It is interesting to note how this definition is articulated similarly to the ‘general’ one summarized in the previous section (Figure 5.2) that was configured as ‘an expectation of others’ actions producing favourable results in risky or vulnerable situations’. It should also be noted that, in this case, the concepts of ‘belief’ and ‘confidence’ are totally absent or very marginal.

A last phase in this process of trust definition analysis aims at linking the different definition typologies found in the literature to some descriptors of the analysed contributions, which are basically limited to the disciplinary domain and the year of publication. The goal of this approach is to pinpoint

135


Table 5.7 Cross-tabulation analysis between definition clusters and publishing time period Years 1960–79 1980–89 1990–95 1996–2000 Total

Cluster 1 (%)

Cluster 2 (%)

Cluster 3 (%)

Cluster 4 (%)

55.6 25.0 21.1 20.0 33.3 35.0 17.4 20.0 27.8 100.0

Total (%)

22.0 22.0 5.3 11.1 14.3 33.3 13.0 33.3

47.4 32.1 38.1 28.6 47.8 39.3

22.0 13.3 26.3 33.3 14.3 20.0 21.7 33.3

100.0 12.5 100.0 26.4 100.0 29.2 100.0 31.9

12.5 100.0

38.9 100.0

20.8 100.0

100.0 100.0

Note: percentages per column in italics

any possible effect of the descriptive variables presented by each contribution on the conceptual categories adopted to define trust. Cross-tabulation analysis was used, together with the calculation of some indicators targeted to explain the meaningfulness of possible differences evinced from descriptive elements. From a statistical standpoint, the above-mentioned procedures did not lead to any significant descriptor. Although there seems to be no statistical correspondence among single definitions and their descriptive elements, it seems useful to underline that there is a relative prevalence of dated studies (prior to 1979) in cluster 1 and a higher number of more recent contributions in cluster 3 (Table 5.7). The discriminating capability of the disciplinary domain is even lower, thus confirming the multidisciplinarity of trust studies and the transversal scope of disciplinary matrices encompassing the different definition clusters. Clusters 2 and 3 differentiate themselves due to the relative prevalence of organization and strategic management studies, whereas the other clusters do not seem to concentrate on any specific domain (Table 5.8). Up to this point, the analysis has been conducted considering the definition sample as a whole. The study will now focus on the applications of the trust concept to market relationships. Therefore, in order to grasp the peculiarities of this analytical domain, it seems appropriate to further examine a sample subset (thus performing an ex-post segmentation) of definitions drawn from marketing literature.

136


Table 5.8 Cross-tabulation analysis between different clusters and disciplinary domains Discipline Strategic management and organization Marketing Psychology Sociology Total

Cluster 1 (%)

Cluster 2 (%)

Cluster 3 (%)

Cluster 4 (%)

Total (%)

21.2 35.0

15.2 55.6

42.4 50.0

21.2 46.7

100.0 45.8

35.3 30.0 38.5 25.0 22.2 10.0

5.9 11.1 7.7 11.1 22.2 22.2

41.2 25.0 30.8 14.3 33.3 10.7

17.6 20.0 23.1 20.0 22.2 13.3

100.0 23.6 100.0 18.1 100.0 12.5

27.8 100.0

12.5 100.0

38.9 100.0

20.8 100.0

100.0 100.0

Note: percentages per column in italics

4. DEFINITIONS SUGGESTED BY MARKETING STUDIES Definitions found in marketing literature or related fields were isolated from the overall database. The first output, referring to lexical richness and amounting to 35.4 per cent, reveals the extreme heterogeneity of the analysed definitions (the total lexical richness index of the sample was 33.4 per cent). Out of a total of 217 terms used in the examined definitions, 77 different terms were found (Table 5.9). Bearing in mind that the subject of the definitions is trust, specifically in market relationships, this figure extends to marketing studies the extreme heterogeneity in definitions noted so far. Compared with the whole sample, significant differences appeared when analysing the occurrences of different terms used in definitions (Table 5.10). Among the less frequently quoted terms, the concept of expectation is seldom emphasized. Although it is a very common concept in marketing tradition and especially in customer satisfaction studies inspired by the confirmation/disconfirmation theory (for example, Oliver 1999), expectation is seldom used to define the construct’s typology.12 In marketing studies trust is, in fact, defined as willingness, reliance and belief. Less attention is paid to its behavioural dimension (action, behaviour), whereas more relevance is ascribed to the concept of positive or, at least non-negative,

137


Table 5.9 Lexical richness index (marketing definitions) Total number of definitions Total number of lemmata Number of different terms Lexical richness index

17 217 77 35.4%

Table 5.10 Most frequent terms found in trust definitions, drawn from marketing literature Term

Original term associated

Subject

Actor, Agent, Another, Company, Customer, Firm, Group, Individual, It, One, Other, Party, People, Person, Salesperson, Somebody, Trustee, Trustor Will

17

Willingness, Willing Outcome, Result, Performance, Perform Rely, Reliable, Reliance, Reliability, Relying Belief, Believe Trust, Trusting, Trustworthy Action, Act, Behaviour, Behave, Behavioural

14 10 10 9 7 6

Future auxiliary Willingness Result Relying Belief Trust Action, Behaviour Relationship Produce Confidence Fulfilment Negative Positive Exchange Obligation Taking Promise Expectation Risk Perception Attitude Goodwill Situation

Relationship Produce Confident, Confidence Fulfil, Fulfilment Negative Positive Exchange Obligation Take, accept Promise Expect, Expectation Risk, Risky Perceive Attitude Benevolent Situation

Frequency 50

5 4 4 3 3 3 3 2 3 2 2 2 2 2 2 2

138


outcome (both with a frequency of three quotations). Therefore, marketing studies seem to focus more on consequences – in terms of output and performance – of the actions performed by the counterpart, rather than on the mere fact that the other party exhibits generic cooperative behaviours. This is consistent with traditional marketing studies that are typically more interested in results (satisfaction, competitive performance, sales, market share, and profit) than in simple actions performed by the counterpart. Finally, by comparing the results of marketing definitions with the general sample, it appears that less emphasis is given to the concept of risk and vulnerability. The apparent conclusion is that, in market relationships, the concept of risk is considered an almost implicit element, related to the economic nature of the relationship and often envisaging a future fulfilment of present commitments, thus determining the postponement of performances until after the moment (choosing or buying) in which the decision to trust someone is made. As seen in the lexical correspondences map (Figure 5.3), content analysis of trust definitions in marketing studies shows that some concepts are more manifest here than at the sample as a whole. Most frequently used terms refer to: ● ● ●

the nature of the construct, mainly defined in terms of ‘belief’, ‘willingness to believe’ and ‘confidence’; the subjects (trustee), seldom featured by specific characteristics (competency, honesty, benevolence and so on); output or results produced by the trustee’s behaviour and actions.

The main constituting elements of trust definitions in marketing are shown in Figure 5.3. This figure allows a comparison with the general analysis represented in Figure 5.1.

NOTES 1. 2. 3. 4.

For an overview of the main definitions of trust proposed by socio-psychological studies, in addition to Mutti (1987), see Lewis and Weigert (1985), Roniger (1988) and Misztal (1996). In particular such an analysis has been widely used in mass media studies. For a thorough methodological study on content analysis see also Weber (1990). On quantitative methodologies applied to content analysis, refer to Weitzman and Miles’ broad overview (1995). The following management journals were considered: Academy of Management Journal, Academy of Management Review, Administrative Science Quarterly, Industrial Marketing Management, Journal of Interactive Marketing, Journal of Marketing, Journal of Marketing Research, Journal of Retailing, Organization Studies, Strategic Management Journal.

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Figure 5.3

RESULT

BELIEF

FULFIL

RISK 5. RISK

EXCHANGE

EXPECTATIONS

SITUATION

RELIES, BELIEVES

SUBJECT

PROMISE OBLIGATION

1A. CONSTRUCT

2A. SUBJECT

BENEVOLENT

CONFIDENT

2B. SUBJECT CHARACTERISTICS

1B. PROMISE KEEPING

WAY BE WILL

BEHAVIOURS RELATIONSHIP

Lexical association map of marketing definitions

3. ACTION

ACTION

TAKE

OUTCOME

POSITIVE NEGATIVE

PRODUCE

4. RESULTS

TRUST

PERCEIVE

140 5.

6.

7.

8.

9. 10.

11.

12.

The trust construct’s analytical boundaries Some significant essay collections (Gambetta 1989; Kramer and Tyler 1996; Lane and Bachmann 1998; Cook 2001; Lin et al. 2001; Nooteboom and Six 2003; Kramer 2006), and the special issues published in Academy of Management Review in 1998 and in Organization Studies in 2001. The excluded word list contains all terms considered not relevant to determining the meanings ascribed to the definition of trust by respondents. The list groups terms with low semantic significance, such as prepositions, articles, and so on. In this case the list includes 87 different terms out of 764 words. The alias list includes sets of words to be jointly considered because they constitute different declinations of the same terms (such as singular and plural nouns, concordances between verbs and subjects) or have similar meanings. The last three terms analysed (rely, confidence and willingness) have also been used to describe the behaviour of the counterpart who is willing to act in a reliable fashion, in order to gain the trustor’s trust. The content of these constructs will be expounded in Chapter 6 (section 2) where the different logical categories adopted to define the concept are detailed. The transformation of the data matrix in similarity maps is performed by means of metric and non-metric quantitative techniques. The former consider as input data the dyadic interactions existing between the different terms contained in the adjacency matrix. The latter, instead, are based only on hierarchy, in terms of similarity ranking. This study used the metric Multidimensional Scaling (MDS) contained in SPSS Text Smart 1.0. Vulnerability, as will be explained in the next chapter, is associated with the concept of risk. The software used allows the use of two main categorization typologies, namely the manual one employed in this analytical step and the automatic one. The former enables the configuration of categories functional to the researcher’s goals. The latter, instead, determines categories according to the occurrence of terms in each definition or according to cluster analysis. Cluster analysis is a multivariate analysis technique enabling the classification of a sample of objects, each described by some variables, into a given number of subsets featuring maximum internal homogeneity and external variability. This goal can be achieved by means of two types of algorithms, namely hierarchical and non-hierarchical classification. The former are characterized by an iterative procedure by subsequent phases, thus aggregating – in each phase – the two most homogeneous elements according to a selected characteristic. Non-hierarchical classification algorithms, instead, base the cluster formation process – with a number of clusters defined beforehand – on the minimization of an assigned target function. This study was conducted adopting the SPSS 7.0 quick cluster procedure that belongs to the second category of classification algorithms. Further studies on algorithms underlying cluster analysis may be found in Punj and Stewart (1983). Worthy of mention are contributions by Busacca (2000) and Costabile (2001). Both authors provide a definition of trust founded on the probability of fulfilling expectations. This conceptualization is consistent with customer satisfaction studies and the basic theoretical principles inspiring the very concept of expectations satisfaction.

6. Trust in market relationships: the main analytical dimensions 1.

INTRODUCTION

The content analysis performed in the previous chapter has highlighted some areas that require further discussion in order to fully understand trust. In particular, the nature of trust needs to be clarified, as well as the elements that determine its epistemological relevance, namely presence of risk, uncertainty and trustee’s vulnerability. The definition of boundaries and conceptual prerequisites will allow the exploration of the analytical dimensions that help to define the various typologies of the construct. In fact, the numerous definitions found in the literature often refer to different types of trust, showing its multidimensional essence. Also, to further clarify the construct contents, the need to compare trust with a set of bordering concepts emerges. These analytical goals inform the following chapter organization. An investigation of the construct contents helps to clarify various conceptual typologies of trust (section 2). Next, the role of risk, uncertainty and vulnerability in the trust content definition is analysed (sections 3 and 4). The construct’s multidimensional nature is then established and its various components configured (section 5); now several forms of trust can be identified, based on its prevailing analytical dimensions (section 6). Finally, limits and boundaries of the trust concept are evinced, comparing its similarities and differences with the bordering concepts of reputation, confidence and faith (section 7).

2. CONCEPTUAL REPRESENTATION OF TRUST AS A COGNITIVE SYNTHESIS Trust is such a difficult construct to define that it has acquired many meanings, as seen in the previous chapter. Before delving into the contents of trust and its antecedents, it is useful to explore the modes found in the literature to circumscribe its conceptual nature (item 1 in the definition diagram shown in the previous chapter as Figure 5.2), in order to clarify the metameaning of the phenomenon to be studied. Once more, as can be easily 141

142


surmised, opinions diverge. In fact, the trust construct has been mainly conceptualized in terms of expectation, belief, willingness and confidence. Other authors have used different theoretical approaches, relying on concepts of attitude, reliance or risk acceptance and vulnerability to counterparts’ actions. Occasionally conceptualizations define trust as a psychological state or construct, perception regarding a subject, cognitive scheme, subjective probability referring to a cooperative event or behaviour, feeling toward a specific party or situation, assumption about another party’s behaviour and willingness, judgement, and finally anticipated cooperation. A particularly original representation is provided by Good (1989: 43). In an extreme generalization attempt, the author defines trust as a ‘theory’ that a person develops regarding someone’s future behaviour. Good (ibid., note 2) also points out that the term theory has a general meaning and can be replaced by other albeit not so concise expressions such as ‘assumptions or commonly adopted concepts’, ‘belief set’, and so on. Table 6.1 summarizes the more common conceptualization modes and indicates the references (classified by discipline)1 in which they can be found. The construct’s meaning and its associated contents will be synthetically analysed, focusing on the most frequently adopted conceptualizations, namely the concepts of: 1. 2. 3. 4. 5.

expectation belief willingness confidence attitude.

According to Rotter (1967, 1971, 1980a), expectation (1) should be considered in general terms2 and mostly comes from the willingness shown by the trustee to keep his or her promises and fulfil his or her obligations (for example, Rotter 1967, 1971, 1980a; Barber 1983; Dwyer et al. 1987; Hagen and Choe 1998). The trustor expects from the other party a behaviour that is easily predictable (Zaheer et al. 1998), coordinated and cooperative (Dwyer et al. 1987; Hagen and Choe 1998), ethically correct (Hosmer 1995), with favourable outcomes for the trustor (Frost et al. 1978; Robinson 1996; Bhattacharya et al. 1998), and forestalling any action that could opportunistically exploit his or her vulnerable position (Bradach and Eccles 1989; Anderson and Narus 1990; Bromiley and Cummings 1995; Sako and Helper 1998). Expectation could not only be attached to the generic willingness to keep one’s promises as expressed by the counterpart, but can also be associated with what will be defined in the next chapter as ‘trust antecedents’, such as the competency level, honesty and goodwill

Trust in market relationships: the main analytical divisions

Table 6.1

143

Main conceptualizations of trust construct

Meaning

Marketing authors

Expectation

Garfinkel (1967); Dwyer et al. (1987); Blomqvist (1997)

Belief

Willingness

Confidence

Attitude

Reliance

Acceptance/ Incorporation of risk/ vulnerability

Organization and strategic management authors

Zucker (1986); Bradach and Eccles (1989); Hosmer (1995); Robinson (1996); Bhattacharya et al. (1998); Hagen and Choe (1998); Zaheer et al. (1998); Sako and Helper (1998) Schurr and Ozanne Sitkin and Roth (1993); (1985); Swan et al. Cummings and Bromiley (1985); Anderson (1996); Robinson and Weitz (1989); (1996); Brockner and Crosby et al. (1990); Siegel (1996); Uzzi Anderson and (1997); Lewicki et al. Narus (1990); (1998); McKnight Andaleeb (1995) et al. (1998) Andaleeb (1992); Zand (1972); Fells Moorman et al. (1993); McAllister (1992); Andaleeb (1995); Mayer et al. (1996) (1995); Mishra (1996); Doney et al. (1998); McKnight et al. (1998) Morgan and Hunt Lazarlere and Huston (1994); Kumar et al. (1980); Ring and Van (1995) de Ven (1992); Sabel (1993); Barney and Hansen (1994); McAllister (1995); Webb (1996) Bialaszewsky and Giallourakis (1985) Whitener et al. (1998) Curral and Judge (1995) Sheppard and Sherman (1998); Baier (1986)

Psychology and sociology authors Frost et al. (1978); Barber (1983); Boon and Holmes (1991); Rotter (1967, 1971, 1980a)

Misztal (1996); Kimmel et al. (1980); Pruitt (1981)

Deutsch (1973); JohnsonGeorge and Swap (1982); Lewis and Weigert (1985) Deutsch (1960); Rempel and Holmes (1986); Sabel (1993)

Luhmann (1989)

Glynn (1967); Schlenker et al. (1973) Coleman (1990)

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Table 6.1

(continued)

Meaning

Marketing authors

Psychological state Perception Anderson, et al. (1987); Doney and Cannon (1997). Subjective probability

Organization and strategic management authors

Psychology and sociology authors

Rousseau et al. (1998)

Gibb (1964)

Nooteboom (1996)

Gambetta (1988)

Feeling

Tyler and Degoey (1996)

Assumption

Robinson (1996)

Judgement

Webb (1996)

Anticipated cooperation

Burt and Knez (1996)

Psychological construct

Jones and George (1998)

shown by the other party (Barber 1983; Blomqvist 1997) or that party’s demonstration of non-opportunistic motivations to act.3 Recently Moellering (2006) has proposed a conceptualization of trust based on the notion of expectation. In particular, the author defines it as composed of three dimensions (see p. 9): 1. 2. 3.

Expectation that fits established rational choice models (reason); Expectation that reproduces well-known institutionalized patterns (routine); Expectation that emerges in a self-reinforcing process (reflexivity).

In order to better highlight its trust contents and differentiate it from more generic beliefs (Crosby et al. 1990), sometimes belief (point 2) has been qualified as confident as referring to the counterpart’s reliability in fulfilling promises (Swan et al. 1985; Schurr and Ozanne 1985) and obligations (Schurr and Ozanne 1985; Anderson and Weitz 1989), with highly predictable future behaviours (Brockner and Siegel 1996), exactly like expectation. These behaviours are assumed to naturally evolve into a longterm positive output, that the trustor would find beneficial (Anderson and


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Narus 1990; Crosby et al. 1990; Misztal 1996), and without negative consequences (Anderson and Narus 1990; Andaleeb 1995; Uzzi 1997).4 Contrary to those who support a definition of trust largely based on rational beliefs, authors such as Pruitt (1981) and Uzzi (1997: 43) indicate the need to go past the expediency of mere economic calculations and assume a more heuristic attitude, remaining well aware of what is positive in the other party’s actions. In other words, beliefs cannot refer to any particular skill or specific behaviour exhibited by the trustee. They are based instead on a general sense of confidence toward the trustee, who is assumed to be available and ready to act on behalf of the trustor, in any situation.5 Clearly, such a definition applies to a more ‘abstract’ type of trust, unlinked to any specific context, situation or behaviour. When it is time to define trust, each discipline is shown to accentuate different convictions, seen as core features of human behaviour. Proponents of rational choice theory focus on costs and benefits, psychologists mostly highlight goodwill and behavioural consistency, sociologists are concerned with specific aspects correlated with social relations and management scholars pay attention to elements linked to the output of another party’s actions or the trustee’s skills. Therefore, a high degree of consensus has developed around the conceptualization of trust as belief or expectation, but the disagreement on the contents of such beliefs or expectations is equally great, with variations based on the various disciplines of the definition proponents (Doney et al. 1998: 603). Willingness (point 3) is defined mostly as the availability to be vulnerable to the counterpart (Zand 1972; Lewis and Weigert 1985; Mayer et al. 1995; Mishra 1996) or, more generally, to face risky situations (Johnson-George and Swap 1982; Andaleeb 1992). In these cases, the concept is qualified as willingness to risk and willingness to be vulnerable,6 in order to accent the ‘enacted’ character of trust. In fact, as soon as the trustor decides to trust someone else, he or she immediately faces a risk, and is exposed to the trustee’s possible opportunistic behaviour. Some definitions focus on the generic willingness to rely on the other party (Moorman et al. 1992; Andaleeb 1996; Doney et al. 1998) and willingly ‘depend’ on him/her (Deutsch 1973; McKnight et al. 1998).7 Other authors have expounded the central role played by behaviour, viewing trust as the product of an explicit willingness to act on behalf of another party, in coordination with the latter. As will be seen below (section 5), it is often believed that the two key elements of the concept of trust are one’s beliefs about the counterpart and the willingness to act, embedding into the definition of trust a behavioural dimension (Moorman et al. 1992). In fact, some maintain that trust is something more than a simple belief concerning the reliability of others, because an explicit willingness to act upon that

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belief must be present as well.8 Without it there is only a generic conviction, which is not necessarily translated into trust (Doney et al. 1998: 604).9 Confidence (point 4) is mostly referred to as the reliability and integrity shown by the partner involved in a relationship (Morgan and Hunt 1994), his or her positive disposition and honesty (Larzelere and Huston 1980), his or her goodwill (Ring and Van de Ven 1992), intentions and skills (Deutsch 1962), without exploiting the trustor’s vulnerability (Sabel 1993). McAllister (1995) explicitly defined trust as the confidence in another subject’s words, actions and decisions, while Rempel et al. (1985) advanced a more general definition of trust as a generic level of confidence, perceived by an individual when he or she thinks about a certain relationship with another party.10 Even though infrequently, trust has been defined as an attitude (point 5) (for example, Bialeszewski and Gillaourakis 1985; Luhmann 1989; Whitener et al. 1998). In particular, Luhmann (1989) qualified it as a fundamental attitude toward the assumption of risky decisions. Without it, our capability to act in risky situations would be dramatically reduced. Whitener et al. (1998) suggested instead that it is an attitude specific to an individual (the trustor) toward another party (the trustee). This attitude derives from the perceptions, beliefs and attributions of the former toward the trustee, as developed observing the latter’s behaviour. This definition is particularly interesting, because it implies that the trust attitude derives from an individual’s perceptions and beliefs (developed in turn from past experiences and observations). Thus, Whitener and colleagues achieved a much more abstract and general conceptual frame that superordinates any single belief, perception and attribution. The latter factors now represent the basic units constituting an attitude.11 In fact, any attitude toward others (the trustees) is based on the trustor’s knowledge, beliefs, and feeling (Jones and George 1998). Such a construct has a ‘synthetic’ value unmatched by the previous conceptualizations and clear analogies to the theoretic developments in analysing the trust concept, and therefore deserves closer examination. Attitude is one of the main concepts in contemporary psychology. Originally, it was defined as the ‘amount of affect a person has for or against an object’ (Thurstone 1931, quoted by Peter and Olson 1990). Reviewing several definitions by psychologists of his time, Allport (1935) attempted to generalize this concept as a state of mental and neurological readiness to respond, organized by experience and capable of affecting one’s behaviour and responses to specific objects and faced situations. Generally, marketing studies, especially those focused on consumer behaviour, have considered attitude as an organized and relatively stable set of knowledge, beliefs, feelings and value orientations. This set synthetically superordinates all of its basic components. Nevertheless, it does not solve


147

the definitional problem presented by the relationship it forms with both its components – beliefs, feelings, values, and so on – and its consequences, especially in terms of individual behaviours. Many scholars have dealt with the construct–component relationship, interpreting attitude as a synthesis of beliefs on the specific characteristics of a given object/subject (for example, Fishbein and Ajzen 1975; Peter and Olson 1990). In particular, Fishbein and Ajzen (1975) followed Lancaster’s (1966) pioneering work and proposed to break down an object into a ‘bundle of attributes’, isolating those features that best define the attitude toward it and constitute its founding beliefs. Implicitly, Fishbein’s approach hypothesizes that not all features equally define an object’s trust image. Moreover, the overall attitude toward an object depends on the evaluation of the so-called salient beliefs. This methodology, generally known as the Multi-attribute Attitude Model, has been widely used in the literature to determine the attitude index toward a single object.12 To summarize, beliefs seem to constitute attitude’s fundamental components, together with feeling, values and personal knowledge. In turn, these beliefs shape all intentions to act and, consequently, people’s behaviour.13 Thus, beliefs, attitudes, intentions and behaviours are distinct but closely related concepts. They form the following sequence of cause–effect relationships: beliefs → attitudes → intentions → behaviours. According to this scheme, it is possible to represent the fundamental logical nexus between the various conceptual embodiments of trust – belief, attitude, willingness, confidence and behaviour – and summarize what has been discussed up to this point (Figure 6.1). In conclusion, as a first approximation, trust can be defined as a synthetic-type super-ordered construct that can be assimilated to attitude. It is naturally founded on beliefs about single characteristics of the counterpart and aspects of the situation framing the relationship. In turn, these beliefs are determined observing explicit or implicit signals and chunks of information sent by the other party and generally derived from past experiences. In particular and as will be more clearly seen later, within this interpretative scheme, beliefs pattern the ‘semantic network’ or nexus of individual attitudes, which are further articulated in terms of cogit and affit.14 The consequences of trust attitude are translated into an implicit intention to act (leap of faith) and then into behaviour consistent with the decision to extend trust, in full agreement with those (for example, Morgan and Hunt 1994) who believe that intention and behaviour are a natural consequence of the definition of trust and its constituting elements. In fact, as

148


Beliefs on X characteristic/element Beliefs on W characteristic/element

Beliefs on Y characteristic/element Global beliefs Trust as overall belief

Attitude Trust as attitude

Confidence Trust as confidence

Intentions – Willingness Trust as willingness to act or intention to act

Behaviour Trust as behaviour

Figure 6.1

The relations between various trust conceptualizations

has been seen earlier, without trust-based behaviour there is neither vulnerability nor exposure to opportunistic risks. This constitutes trust’s very prerequisites, and in its absence the construct would be empty.

3. RISK, UNCERTAINTY AND AMBIGUITY: THE PREREQUISITES OF TRUST SEEN AS CERTAINTY OF EXPECTATION Most trust definitions already discussed have the presence of risk as a prerequisite. Risk is generally considered a central aspect, determining the construct’s influence upon individual choices and behaviours. In fact, uncertainty is fundamental to the effective value of trust within an individual’s decisional process. If someone were omniscient, his or her selection among alternative behaviours would be performed in a situation of perfect certainty, and trust would be plainly useless (Lewis and Weigert 1985: 970). To the contrary, trust plays a very useful role every time a situation is uncertain. It reduces the inner


149

complexity of interaction systems, helping the interested parties establish specific expectations for their mutual future behaviour. Hence, trust has a role as ‘complexity absorber’, reducing the level of interactional uncertainty (Luhmann 1979, 1991; Mishra 1996: 282). In view of the centrality of risk as a gauge of the utility and relevance of trust, some authors conceptualize trust in terms of certainty of expectation about the trustee’s future actions. Because the presence of risk is the fundamental trigger activating trust, the latter is bound to have an attenuating function, generating certainty on the counterpart’s future responses. Thus, trust is used to reduce the risk level caused by the uncertainty associated with a given situation, which per se would induce the parties to remain inactive or, in any case, to delay a decision to a more certain future, when further information can be acquired. Paradoxically, trust itself requires information in order to grow and develop: ‘a trustor cannot trust a trustee with no information whatsoever’ (Huemer 1998: 101). Lacking information on the other party, it is possible to fall back on types of relationships similar to trust, but not directly overlapping it, such as hope, gambling or faith. Therefore, uncertainty and risk undoubtedly represent trust preconditions, but they do not imply a complete lack of information. Analysing the various definitions of trust presented in the previous chapter, trust emerges as a certainty to foresee future trustee’s behaviours. Thus, it concerns the reliability of an individual’s promises, or the guarantee that s/he will behave respecting his or her stated obligations. Indeed, scholars who have adopted the rational choice model have defined trust as a particular level of subjective probabilities, assigned by an agent to a given outcome of an action performed by one or more different agents, both before (or independently from) observing that action, and in a context in which said action affects the action of the first agent (Gambetta 1988: 281).15 Therefore trust represents that threshold of subjective probability distribution of someone else’s actions that, once crossed, supports an expectation of cooperation which induces us to cooperate in turn (Galeotti 1990: 120). In order to establish the theoretical relevance of the trust concept, the expectations for the actions of party B that influence A while achieving his or her goals cannot be verified before A’s decision (Williams 1989: 5–18). In fact, the clause about the impossibility of controlling someone else’s action is critical to the definition of trust: if we can control what others will do before we choose what to do, the word trust loses its power (Dasgupta 1989: 66). The fundamental prerequisite of trust is thus equated to the existence of an uncertainty situation, that is the facing of a risky circumstance in which

150


the possible damages could be greater than the hoped for advantages (Deutsch 1958: 266, 1962: 303; Golembiewski and McConkie 1975: 137; Luhmann 1989: 127; Andaleeb 1992: 4). Risk is revealed as the trustor accepts a situation of vulnerability in relation to the counterpart when, as a result of the trustee’s opportunistic behaviour, he or she runs the danger of suffering damages much greater than the advantages derived by choosing to trust. Thus risk, in situations that present a high need for trust, is generally associated to the trustor’s vulnerability or with the uncertainty about achieving a given outcome (Doney et al. 1998: 603). More precisely, the logical nexus that links risk to trust is conceptualized as follows (Rousseau et al. 1998: 395). On the one hand, risk existence fosters the opportunity to trust, giving to the latter concept some practical relevance. On the other hand, the existence of trust makes possible and cognitively acceptable risk taking decisions and behaviours. Therefore, there is a circular relationship between risk and trust. The former determines the need for trust, which in turn negatively affects the perceived risk level, establishing the prerequisites for the actors to develop behaviours that imply individual vulnerability (and thus the existence of risk) in cognitive situations of ‘apparent certainty’.16 As a result of the theory of risk taking behaviours (for example, Sitkin and Pablo 1992), a useful distinction has been introduced between two concepts that can be assimilated although they are clearly distinct:17 the concept of trust and that of trusting behaviour (for example, Moorman et al. 1993: 82; Mayer et al. 1995). The former evokes a willingness (or tendency) to take risks. To the contrary, trusting behaviour represents a concrete assumption of risks. On this issue, Mayer et al. (1995) present the concept of risk taking in relationship (or RTR), and consider it a direct consequence of trust in the presence of perceived risk. These authors point out the concept’s central role, showing that it is fundamental to the distinction between specific behaviours induced by the presence of trust, always translated to risk taking in relationship, and more general risk taking behaviours. In fact, if the latter behaviours can surface independently from specific relational situations, the former ones are specific to the context of a relationship with another party. In conclusion, the constructs of trust, risk perception and risk taking behaviours are always expressed in relationspecific terms and therefore are contextualized and refer to specific relational situations concerning single counterparts.18 After having clarified the intimate relationship that joins the concepts of relational risk and trust, it is useful to explore some fundamental aspects of the risk concept per se, because it assumes many configurations and conceptual representations, potentially corresponding to different trust typologies. To this effect, the following will now be discussed:


151

(a)

a general definition of risk, in order to distinguish it from other similar constructs; (b) the modes that allow risk to be quantified, because upon its magnitude depends the intensity of the trust need; (c) the possible existence of different risk typologies, that can induce the development of different types of trust. Regarding point (a), it should be remembered that risk, according to classical decision theory, is mainly referred to as a variation in the distribution of possible outcomes and their probability of happening. In particular, risk is associated with the variance of probability distribution of possible gains and losses associated with a series of alternatives (Arrow 1965). It is appropriate to distinguish the concept of risk from constructs that are analogous but not fully coincidental, in particular those of uncertainty and ambiguity or indeterminacy. Traditionally, risk is associated with a known probability distribution, whereas uncertainty appears when it is impossible to know the exact probability of expression of a phenomenon (Knight 1948; Mitchell 1999). Then, risk taking means to know ex ante the probability of the manifestation of different scenarios or the outcome of alternative decisions. Where uncertainty prevails, even when one is aware of the possible alternative scenarios, it is impossible to know the probability distribution of their enactment. Risk and uncertainty are often used together, sometimes as synonyms, probably because it is difficult for the trustor to know exactly the probability of specific consequences, although this type of knowledge can be developed and represented on a subjective level. That is why marketing scholars prefer the concept of perceived risk. This concept evokes a situation of consumers’ partial ignorance regarding both the possible negative consequences deriving from alternative choices (in terms of their physical, economic, psychological and social integrity) and their probability of materializing (Mitchell 1999: 167).19 The perceived risk intensity has been linked to both individual factors (for example, past experience with the product) and environmental elements (typically, the situation in which a product is used), and it directly influences the evaluation criteria adopted to select a purchasing alternative. In comparing and choosing activities, the importance given to trust in a brand or sign or, alternatively, the salespeople or other consumers has been interpreted according to different risk typologies to be discussed later. In a situation of ambiguity, the third type mentioned earlier, the subject finds it absolutely impossible to forecast the future, because he does not know the alternative tree: ‘not even an image of possible future realities exists’ (Johannisson 2001: 8). The urn analogy, proposed by Sarasvathy (2001), is useful to clarify and distinguish the aforesaid three situations. In a risk situation, an individual

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knows exactly the colours of the balls inside the urn and how many there are of each colour. Thus the probability (or risk) of extracting a ball of a given colour can be exactly defined. Uncertainty develops when, while the ball colours are known, no information is available about their numerousness. Therefore, it is impossible to establish the probability of specific events and, as a consequence, one cannot precisely quantify the risks taken by the parties. A situation of ambiguity develops when we do not know the number or the colour of the balls inside the urn. In this case, it becomes impossible to define even the simplest of scenarios. In a constructivist perspective, the only chance to ‘control reality’ in such a situation is to exercise a guiding function on the environment enactment process, imposing one’s own vision and insuring that it is shared by others. Going back to the previous analogy, this means the continuous insertion of new balls of one colour into the urn. If we constantly act this way, at the end this colour will prevail, regardless of the pre-existing balls’ colour.20 It should be noted that the situations of risk/uncertainty/ambiguity demand different trust typologies, characterized by a growing abstraction level or differentiated mechanisms of certainty production, capable of managing the different situational contexts. Contrary to what happens when the party experiences a simple risk, in cases of ambiguity, previous knowledge cannot be fundamental, and more abstract types of trust are needed, as will be shown in Chapter 8. Generally, risk has been quantified according to two fundamental components (as indicated by the previous point (b)): the probability of harmful events, and the amount of damage or loss faced by the trustor (for example, Kogan and Wallach 1964; Peter and Ryan 1976; Nooteboom et al. 1997: 312; Mitchell 1999). To be more precise, this concept has often been quantified as the product of these two factors. As Nooteboom et al. (1997) demonstrated by quantitative formalization, the growth of trust in someone can have a negative impact on the relational risk level viewed in the light of the above-mentioned two dimensions: size of loss and probability of loss, thus increasing one’s certainty in decisional situations referring to specific interdependent contexts. Referring to the last point mentioned above, (c), it should be noted that risk does not vary only in terms of consistency, requiring different amounts of trust, but it is modified even from the standpoint of its qualitative profile. In particular, Sheppard and Sherman (1998) suggest different risk typologies in association with as many types of relationship (already seen in Chapter 1 and summarized by the array depicted in Figure 1.2). Within the present context, a most useful implication is that trust elements vary in order to face various risk typologies. For example, as seen in Table 6.2, discretion, reliability and competency are the trust antecedents that best counteract


Table 6.2

153

Forms of dependence, typologies of risk and elements of trust

Forms of dependence

Typologies of risk

Trust antecedents

Market relationships

Indiscretion Unreliability

Discretion Reliability Competency

Authority relationships

Cheating Abuse Negligence Self-esteem

Integrity Interest Benevolence

Loosely coupled bilateral relationships

Poor coordination

Predictability Consistence

Tightly coupled bilateral relationships

Misanticipation

Second sight Intuition Empathy

Source: adapted from Sheppard and Sherman (1998: 427)

a risk of unreliability and indiscretion, typical of market relationships. Integrity, interest and goodwill are instead the elements needed to adequately face risks emerging from authority relationships, typically the risks of deceit, abuse, neglect, loss of self-esteem, and so on. This perspective shows that it is insufficient to generally examine the risk–trust relationship, where trust is directly proportioned to risk. A better understanding of the nature of this relationship is needed. In fact, only by identifying the different risk profiles related to each relationship typology can the trust drivers and, as a consequence, the trust typologies better suited to ‘balancing’ various ‘uncertainty’ situations be defined. Consumer behaviour studies and works focused on the relationship between companies and their final clients also conceptualize risk and classify it according to different typologies. These typologies are traditionally traced back to functional risk, or fear of an inadequate product performance; economic-financial risk, associated with the consequences of a wrong choice on income and/or property; and psycho-sociological risk, derived from the possible negative impact of the product on someone’s selfesteem and/or his or her social status.21 It is conceivable that the presence of different types of risk could induce the buyers to favour different types of trust. In particular, in dealing with economic risk, trust’s calculative dimension could have a more important role as compared with buying situations in which functional trust would prevail. In these situations, specific knowledge of the product and information about both its specification and

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the manufacturer’s skills play a fundamental role during the purchasing process, thus indicating the greater importance of knowledge-based trust types. When greater relevance is given to risk’s social and psychological dimensions, identification trust typologies based on values associated with the other party will become central (see section 6.2).

4. VULNERABILITY AND OPPORTUNISM THREAT: THE PREREQUISITES OF TRUST VIEWED AS A NON-OPPORTUNISTIC MOTIVATION TO ACT Some authors have emphasized that the central element of trust is not risk per se but rather the vulnerability situation created in deciding to trust others (for example, Bhattacharya et al. 1998). As a matter of fact, trust has often been defined as one’s willingness to become vulnerable to another party’s actions (for example, Mayer et al. 1995: 712). This willingness is often based on the expectation of a specific action, which the trustor considers relevant, independently of his or her capacity to monitor or control it. Therefore, vulnerability is generated by the deliberate concession by the trustor to a partner of an opportunity to abuse the trust in the latter (Luhmann 1979: 42). Thus, a kind of substitution takes place: the unmanageable ‘external’ risk – which exists before a trusting decision is made – is replaced by a ‘relational’ risk, defined as vulnerability. The latter, as a natural consequence of the trust decision, is cognitively more manageable. Thus, an implicit function of trust as risk relief emerges. According to Moellering (2006: 110) an essential feature of trust is the ‘leap of faith’, considered ‘as the process that enables actors to deal with irreducible uncertainty and vulnerability (suspension)’. Note that the relational risk is ‘enacted’ by the very trustor; this demonstrates the enacted nature of the trust concept. A second important meaning has been attached to vulnerability (initially in social psychology circles), as a motivation system determining the trustee’s behaviour. This meaning is expressed by a certainty not just that the counterpart shall take specific actions that are functional to the trustor’s goals – this element is embedded in the definition of trust as an expectation certainty – but also, and in more general terms, that the other party shall not manifest opportunistic behaviours, geared to abusing the trustor’s trust and, in any event, harmful to his or her interests. These opportunistic behaviours can be ascribed to actions taken by the trustee in order to exploit the trustor’s vulnerability for his or her own benefit. A few examples, related to typical market relationships, are included in Table 6.3. In particular, that table illustrates the mutuality of trust and opportunism, as shown by the exhibition of these constructs by both dyad components.


Table 6.3

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Cases of abuse of someone’s vulnerability

Relationship typology

Cases of opportunistic abuse of trust

Firm–salesperson

The salesperson ‘pads’ his/her expense account. The firm autonomously contacts customers within its agent’s territory. The wholesaler deliberately violates an explicit exclusive sale agreement. The manufacturer delivers to the distributor obsolete products to be discarded. The retailer receives materials and promotional contributions in order to promote a product, but reneges on agreements. The producer discriminates its sale conditions without just cause. The supplier makes false representations about real skills and resources before signing a supply contract. The customer does not accept a delivered lot, offering feeble justifications as an excuse. The franchisee does not conform to procedure established by the internal quality system. The franchisor introduces into the market a business format competing with the one assigned to existing franchisees. The shop-owner rips off a customer or promotes products to his/her own exclusive advantage. The customer does not purchase goods s/he requested and ordered. The doctor orders excessive quantities of drugs or useless diagnostic tests for a patient. The patient deceives his/her doctor in order to get a medical certification or note. The technician replaces car components in good condition or bills for services that were not provided. The customer abuses the benevolence of the car shop, claiming damages to his/her car which s/he incurred elsewhere.

Manufacturer–wholesaler

Manufacturer–retailer

Supplier–industrial customer

Franchisee–franchisor

Shopkeeper–customer

Doctor–patient

Car shop–customer

Source: adapted from Wathne and Heide (2000: 37)

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Actually, both seller and client can play the roles of trustor or trustee, according to the various relational situations. Therefore, if trust has to play a significant role, the counterpart must present a risk of opportunism.22 More precisely, the trustor places him or herself in a situation of vulnerability toward the trustee, who could find it convenient to assume behaviours maximizing his or her personal interest. On the contrary, the trust in the other party reduces that eventuality, lessening the opportunism. Risk and vulnerability are so important that some authors define trust as risk acceptance and incorporation or as availability to be in a situation of vulnerability (Sheppard and Sherman 1998; Baier 1986; Coleman 1990). Most socio-psychological contributions dealing with trust give exclusive privilege to one of the meanings earlier indicated. Thus, trust is defined as certainty of expectations or as trustee’s non-opportunistic motivations. Nevertheless, some authors propose models that join both aspects in a composite construct.23 Lindskold and Bennet (1973) elaborated a particularly meaningful synthetic conceptual scheme. They state that trust is based exactly on the above-mentioned components: the capacity to foresee the counterpart’s behaviour (and thus the opportunity to acquire an adequate level of expectation certainty), on the basis of an experience-based learning process, and the motivations behind that very behaviour. As shown by the previous contributions, in defining the content of trust within market relationships it is impossible to forgo these two aspects. Subjects who trust each other believe in both the possibility to foresee with adequate certainty the other’s behaviour and a lack of opportunistic motivations hidden behind the other’s actions. In any case, these two factors are intimately interconnected.

5.

CONSTRUCT MULTIDIMENSIONALITY

Trust’s different dimensions have been subject to an intense debate in the literature. Originally, the construct was almost consistently conceptualized in one-dimensional terms, as a synthetic concept super-ordered by its single determinants. More recently, after denouncing the limitations of a monodimensional approach, the construct’s multidimensional nature has been demonstrated both inductively and deductively, opening the door to diverse trust typologies. Somehow, the study of trust has followed a path similar to that of attitude. The latter concept, originally defined in a one-dimensional fashion, as a simple amount of affect toward a person or object, was later conceptualized according to its three basic analytical dimensions (Rosenberg and Hovland 1960): a cognitive aspect, which includes opinions and beliefs (knowledge) about the object; an affective component, which


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includes preferences (positive or negative evaluation of the object); and a third, conative dimension, which relates to behaviours and their related intentions (intention or actual behaviour toward the object).24 In general, the multidimensional nature of trust has been qualified using exactly the same cognitive, affective and conative dimensions.25 Trust’s cognitive dimension represents its rational element. Nevertheless it is not a mere economic calculation, the so-called calculus-based trust. This dimension encompasses the trust developed and is based on both the knowledge of the other party and its capabilities, and a joint learning process. Recognition of someone else’s skills and evaluation of his or her capability to optimally execute the task delegated to him or her is naturally within the rational sphere of individual mental processes. This dimension is more directly linked to the predictive nature of trust. The emotional component of trust is generally surmised as the mood felt by the parties and the strong mutual feeling upon which their relationship is based. This is also expressed as the affective dimension, essentially based on emotional links established by the dyadic actors. The behavioural dimension of trust refers to the willingness to act and the translation of trust into a behaviour that is coherent with what is elaborated at the mental (cognitive and/or emotional) level. This distinction between the emotional and cognitive dimensions of trust (Johnson-George and Swap 1982; McAllister 1995) is important because it identifies different determinants and development processes for each separate component. Thus, the assumption is that cognitive-type trust requires development paths and building strategies that are very different from those exhibited by emotional trust, with noteworthy differences in terms of managerial implications. Initially, trust conceptualizations were mostly bi-dimensional. Among them, the cognitive–emotional and cognitive–behavioural dichotomies are best known. Originally, Lewis and Weigert (1985) adopted the former to qualify different typologies of trust, while signalling some constructs that could be wrongly confused with it (Figure 6.2). Based on the two abovementioned dimensions, the authors define cognitive, ideological, emotional and routine trust (ibid.: 973).26 Cognitive trust naturally identifies a typology in which the rational dimension prevails and decision making is the product of rational mental processes. On the other hand, emotional trust is based on the prevalence of affective-type elements. Ideological trust shows the co-presence of both cognitive and emotional dimensions, while a limited level of those same components characterizes routine trust. As mentioned earlier, the usefulness of that classification consists in offering an opportunity to distinguish some concepts that ‘border’ with trust but cannot be assimilated to it. As will be seen in detail in section 7, these

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The trust construct’s analytical boundaries EMOTIONALITY High

R A T I O N A L I T Y

Low

Virtually absent

High

Ideological trust

Cognitive trust

Rational prediction

Low

Emotional trust

Routine trust

Probable expectation

Virtually absent

Faith

Fate

Uncertainty, panic

Source: Lewis and Weigert (1985: 973)

Figure 6.2 Different typologies of trust according to the intensity of its emotional and rational dimensions bordering concepts are faith and fate, characterized by the exclusive prevalence of the emotional component and the virtual absence of the rational dimension. Vice versa, the presence of the rational components and the absence of the emotional dimension produce rational predictions and probable anticipations. These should not be confused with the concept of trust, which therefore, negating Williamson’s vision, cannot be considered as merely calculative in nature. A cognitive–behavioural dichotomy lies at the core of a definition of trust proposed in 1985 by Swan and Nolan, and inspired by Scott (1980).27 Moorman et al.’s (1992) contribution is particularly relevant to this issue. In fact, these authors believe that trust can only be characterized by the simultaneous presence of both cognitive and behavioural dimensions. The first dimension – configuring the psychological component of trust – is based on beliefs about the counterpart’s reliability level. In line with prior contributions, these beliefs derive mostly from the other party’s motivations and knowledge. Trust’s behavioural dimension – representing its sociological component – is defined as the act of concretely trusting the other party, in order to face situations of uncertainty and vulnerability.28 Only the concomitance of both dimensions provides the foundation for trust’s existence. In fact, a subject who believes a partner reliable, but does not show any willingness to trust him/her, exhibits a poor level of trust. Similarly, if s/he counts on a counterpart, without believing that party’s reliability, the latter suffers the conditioning power of and the dependence


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on the subject, and this situation does not constitute a true trust relationship (Moorman et al. 1993: 82). Morgan and Hunt (1994: 23–4) disagree on the feasibility of distinguishing the cognitive component from the behavioural one. They suggest that the analysis of the cognitive dimension is sufficient, because trust’s behavioural aspects, defined by Moorman et al. as the ‘willingness to act’, are implicit in the very conceptualization of trust.29 In view of their definition of trust as cognitive synthesis, we agree with this vision, and consider action as the inevitable consequence of trust. More recent classifications are better articulated, in the attempt to conciliate the bi-dimensional categorizations already discussed with three fundamental analytical dimensions: the affective, cognitive and behavioural components. In addition to the already quoted contributions, it is possible to find in the literature several other classifications based on different criteria, often exhibiting some confusion between trust’s determinants and its analytical dimensions. For example, the other party’s perceived capabilities were referred to as a dimension of trust, the so-called trust ability and competency dimension (for example, Andaleeb 1992; Nooteboom 1996). Similarly, individual motivations and other subjects’ intentions were elevated to the rank of specific trust dimensions (for example, Andaleeb 1992). We believe that in reality these aspects are trust determinants (or rather cogit or supercogit, according to Bagozzi 1999) and not its analytic dimensions. Therefore, they should be considered as ‘external’ to the construct and will be discussed while we are dealing with trust antecedents (Chapter 7). Attempting to use these antecedents in order to define the diverse typologies of trust constructs could be useful to clarify the various manifestations of the phenomenon, but often leads to confusing trust’s antecedents and its real contents.

6.

TRUST TYPOLOGIES

As already seen in the previous section, in identifying the dimensions of trust it is possible to come up with several construct typologies. Their variety is not the exclusive outcome of trust’s constituent dimensions. On the contrary, such variety is articulated in various types, highlighting in turn the different drivers on which trust depends, the different analytical levels, or trust’s diverse consistency. A synthetic overview of these classification criteria will help to better appreciate the proposed conceptual range, and better qualify the concept. In addition to those referring to different analytical dimensions of trust (for example, Lewis and Weigert 1985), already discussed in the previous section, the most common distinctions essentially concern the following:

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1.

2. 3.


trust’s targets, leading to distinctions among the different relational levels in which the concept of trust finds application (for example, social, institutional, inter-organizational, interpersonal levels) (section 6.1); trust’s contents, which mainly depend on different variable antecedents of trust itself (section 6.2); trust’s diverse qualities and their different intensity, from fragile to strong trust (section 6.3).

In the following sections, the attention shifts to proposed classification modes pertaining to the previous three items which are undoubtedly recurring most often. Section 6.4 is dedicated to the exploration of the relationship between trust and its opposite by definition, distrust, while section 6.5 presents a few ‘residual’ classifications which cannot be classed together with any of the previously discussed types. 6.1

Different Relational Levels: Trust Targets

Considering the variety of existing relationship typologies according to the socio-economical level, trust emerges as an extremely ductile tool. Depending upon its abstraction level, this construct can be applied to various analytical contexts. The following analytical levels are most often quoted: institutional, business systems (for example, districts or interorganizational networks such as channel systems), inter-organizationaltype dyadic, and interpersonal trust.30 Institutional (and systemic) trust This trust typology is ‘external’ to the dyadic system and represents people’s beliefs and attitudes toward the social, political and economic institutions of a country, a region or any other economic and sociopolitical context. This is exemplified by expressions such as: trust in the monetary system (Simmel 1950); trust in the financial system and in the mechanisms devised to regulate and enforce the correct functioning of the Stock Exchange; trust in society and its values; trust in the judicial system or in the government and trust in the equity of its social programs.31 It corresponds to the reliance level acquired by institutions that impact the social and economic life of individuals. Mainly the subject of inquiries by sociology and political science scholars, institutional trust is the ultimate element capable of making society work in its most elementary aspects. The level of institutional trust naturally affects social exchanges and economic transactions. Consequently, it has a sizeable effect on consumption32 as well, attracting much deserved attention among market operators.


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A relevant dimension of institutional trust translates into a ‘feeling of security’ felt by both individuals and organizations. This feeling can be grievously compromised by financial scandals, instances of corruption or terrorist attacks. That increases a feeling of vulnerability among society and its individual members. In turn, the feeling of insecurity thus generated has extremely important consequences in terms of individual behaviours, covering the spectrum from declining to act – as happens in the case of personal consumption reduction or when the purchase of durable goods is delayed and basic staples are hoarded – to the much more momentous decision to seek alternative institutional systems. The meaningfulness of consequences generated by this typology of trust constitutes a significant indicator of its relevance, even in terms of strategic management and marketing decisions. Inter-organizational and inter-personal trust Institutional or systemic trust is usually differentiated from trust in specific organizations (in this context, in single firms) or in single individuals (the domain of trust in people).33 Undoubtedly, this analytic level is central to market relationships’ interpretation. To better understand the concept of trust articulation within these relationships, three specific connotations of inter-organizational or interpersonal relationships become particularly important: (a) the nature of the counterparts; (b) the existing reciprocity level; (c) the relational interface articulation. The diverse nature of the counterparts, as already seen in Chapter 1 (section 4), determines different typologies of relationships. These relationships can manifest themselves exclusively among organizations – for instance, as happens in industrial goods fields (inter-organizational relationships) – or among firms and individuals, as is the case in the traditional firm-end customer dyad (what here is defined as mixed relationships), or simply among single individuals, acting as buyers (on behalf of an organization or as simple final purchasers) and sellers or as colleagues within an organization (intra-organizational relationships). Such different analytical levels quite often coexist within the same relationship, determining significant interdependencies (for example, Zaheer et al. 1998). Table 6.4 presents an illustrative synthesis of some relational types particularly relevant to the marketing field. This table highlights both the existence of two levels, inter-organizational and interpersonal, and the relevance of the socalled ‘mixed’ situations, in which the dyad is composed of an individual and an organization (or its direct manifestations), as often happens with relationships formed in consumer markets. This is exemplified by the relationship existing between a final client and the product/brand of an industrial firm or an automatic service providing system.

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Table 6.4 Main relational types at the inter-organizational, interpersonal and mixed levels: a few examples Relational typology

Trustor

Trustee

Typical market relationships

Inter-organizational

Firm

Firm

Industrial markets (business to business) Supply relationships in industrial markets Supplier Industrial Supplier customer Distributive relationships Industrial company Distribution (wholesale or retail) Franchisor Franchisee Service supply relationships Research institute Customer firm Communication agency Customer firm Commercial joint venture or marketing partnership Firm Firm

Interpersonal

Individual

Individual

Consumer markets Distribution Store Manager Final customer Sales Assistant Final customer Direct or door-to-door sales Seller Customer Network marketing, virtual communities Customer Customer Industrial markets Seller Firm buyer Individual consultant Customer firm manager Company key account Product manager


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Table 6.4 (continued) Relational typology

Trustor

Trustee

Typical market relationships

Mixed

Individual

Firm

Consumer markets Final customer ----> Product brand Buyer -----> Retailing firm Final customer ----> Service firm (bank, insurance company, etc.) Industrial markets Firm buyer -----> Supplyer firm Product manager -----> Advertising firm Franchisee -----> Franchisor (Entrepreneur)

Mixed

Firm

Individual

Consumer markets Commercial firm -----> Final buyers Services firm -----> Final customers Industrial markets Purchasing firm -----> Firm seller Supplying firm -----> Buyer Franchisor firm -----> Franchisee (Entrepreneur)

In addition to the nature of the dyadic parties, for the purposes of this work it is important to explore a further distinction based on relationship reciprocity level (b). Thus the so-called two-way relationships are set apart from one-way relationships, in which an individual trusts another party who cannot reciprocate the trust. Basically, this happenstance can have two explanations: the object in which trust is put is not a cognitive system, capable in turn of trusting, or there is a significant ‘distance’ between the parties. In the latter case the trustee cannot know the other party’s identity or establish a relationship at the individual level. The first instance is typical of trust in institutions and abstract systems, not in individuals. The second case is expressed by the relationship between a customer and the manufacturer who cannot ‘directly’ trust the single customer, due to the significant

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cognitive distance existing between them. These cases, where it is impossible to establish a reciprocity-based trust relationship, we will generically refer to as one-way relationships.34 Two-way relations happen every time there is a possibility for the two subjects of the dyadic relationship to reciprocate the other party’s trust. Examples can be found in the normal relationships developed on a personal level between buyer and seller, or in inter-organizational relationships, such as alliances, joint ventures, and distribution or supply relationships. In this case, both parties have a (potential) opportunity to answer with adequate behaviours to the trust put in the counterpart. This distinction is particularly relevant to the use of reciprocity-based trust development strategies (Chapter 8, section 4), which are clearly available only in two-way relations. Finally, in regard to interpersonal and inter-organizational relationships, it is useful to consider, in addition to their uni- or bi-laterality, the features of the interface used to relate with the trustee (c). In fact, when a consumer puts his/her trust in a firm, a variety of situations can develop with important implications in terms of trust production processes. As a matter of fact, the interface can be a physical product, a brand, an individual, a point of sale or service delivery, an automatic system, a web page and so on, in addition to all combinations of the said elements. Market relationships avail themselves of a multiplicity of interfaces and this is a fundamental concern in devising adequate trust building strategies. A product brand and a retailer sign, for example, are clearly similar in their trust management implications. This is easily generalized, but these two ‘object’ typologies, because of their different relational interfaces, introduce noteworthy differences in terms of trust mimicry (see the last section of this chapter). 6.2

Different Contents of Trust

A distinction commonly found in the literature is based on trust contents or, more precisely, the nature of trust’s cognitive antecedents. This has allowed us to define three types of trust: the so-called calculus-based (or rational or deterrence-based) trust; knowledge-based trust (also defined by some authors as cognitive trust); and identification-based trust (sometimes referred to as normative trust and goodwill trust) (for example, Lewicki and Bunker 1996; Shapiro et al. 1992; Sheppard and Tuchinsky 1996; Lane 1998; Child 1998; Sako 1991, 1998; Sako and Helper 1998).35 Each of these three types will be discussed separately, in view of their different roles in reducing the triune typologies of perceived risk – economic, functional and socio-psychological risk – previously analysed while discussing buyer–seller relationships. The first typology refers to trust exclusively based on economic evaluation and rational calculations. In some cases, the trustor could find it con-


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venient to trust another party (even when s/he can only count on limited knowledge), because the potential losses induced by trusting are less than the potential advantages of behaviours based on giving trust. In sum, the trustor is pushed to trust the counterpart because this decision can generate future returns far greater than the possible damages. An alternative approach links trust less to one’s own personal convenience and more to the counterpart’s perceived convenience. In this variation, closer to the definition of deterrence-based trust, a person trusts mainly because the trustee’s potential losses in the case of unreliable behaviour (that is, a reputation loss as a consequence of dissatisfaction events) are equal or greater than the trustee’s advantages gained by exploiting one’s vulnerability. Calculus-based trust is typical of trust relationships in their first stages, when convenience calculus mitigates the lack of both information about and direct knowledge of the other party. As seen previously, in reality this situation could be defined as non-trust, because it is exclusively based on economic convenience and the product of a rational decision (Williamson 1993). Extrapolating further, this typology could be called proto-trust, because it is activated in the absence of personal experience and knowledge, as happens during the first stage of the relationship evolution. The second typology, the so-called knowledge-based trust (also, cognitive trust), is evident when the interactive experience of the parties allows them to develop specific knowledge of the counterpart’s characteristics, behaviours and, more importantly, competencies and skills. Before anything else, to trust means to recognize that the trustee has the needed knowledge to execute in a complete and satisfactory fashion the activities required by the trustor. Therefore, the awareness of the other party’s competency set as required by the task in hand allows a decision to trust not exclusively based on economic, rational processes, but grounded in more solid conceptual elements, namely the knowledge of the other party’s competencies profile. This task-specific type of trust is usually put in those who are believed competent in a given field and to whom the trustor delegates the execution of activities appropriate to their competencies, safeguarding a positive outcome. This trust typology is implicitly considered in the context of brand extension policies, which require a perceptual fit between the brand and the extension target category. In particular, this fit mostly concerns a verifiable compatibility between the competencies associated with the firm in its original field of endeavour and those that are considered fundamental in the new business arena for producing an offer qualitatively capable of satisfying demand.36 Finally, considered non-task-specific, the last typology of trust is more abstract and as such more easily transferable, because less burdened by performance specificity and based instead on identification and personal values. This value-based trust is normally acquired during the most

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advanced stages of the relationship, when the parties have built a consistent level of interdependence, to the point at which a single subject can know not only the trustee’s competencies but also his or her values and cultural orientations. This explains why this type of trust is freed from specific activities or relational contexts, widening the relationship’s potential bandwidth and extension opportunities. While knowledge-based trust implies a perception of the trustee as reliable with regard to specific activities associated with his or her recognized competency set, trust based on identification and personal values brings about a recognition of the counterpart’s reliability more abstractly categorized, that is to say without reference to a specific performance. For this reason, the activity and performance spectrum covered by this type of relationship is much wider, therefore increasing the relationship’s value and potential.37 Partly building on this distinction, Huemer (1998, 2000) proposed a differentiation between predictive trust (Sitkin and Roth 1993) and the so-called explorative trust. The former corresponds to calculative and knowledge-based trust and is based on certainty about the expectations raised by a subject. Thus, predictive trust stabilizes relationships, promotes exchanges and reduces the transaction governance costs. Nevertheless, when only the predictive dimension of trust is considered, we cannot appreciate trust’s true potential in terms of innovative activities and ambiguous relational contexts. By their very nature, these situations are undetermined and constantly changing, in clear contrast with the tendency of stabilization and inertia associated with trust’s predictive function. A type of trust less anchored in prior cognizance is needed to explore new boundaries beyond an individual’s or firm’s current knowledge and known options. Huemer (2000) suggested the introduction of explorative trust. Somewhat similar to the more abstract type of trust (the value-based typology), explorative trust is much more flexible than its predictive counterpart because much freed from the concept of risk. If the only trust developed is exclusively predictive – based on the capacity to duplicate activities undertaken in the past in order to reduce the exchange embedded risks – the inevitable result is a tendency to stabilize and reproduce the relationship; this behaviour is not functional to the management of uncertainties such as those typically generated by innovation processes (for example, Castaldo and Verona 2001). This indeterminancy can be managed by activating trust’s explorative dimension (March 1991). Only then is it possible to follow unknown development paths, enact new relationships, and fully value the complexity featuring the new scenarios of the connection economy (Vicari 2001). In turn, explorative mechanisms open up new opportunities to follow radically new learning vectors, eschewing simply incremental solutions based on prior knowledge development paths.


6.3

167

Trust Consistency: Fragile vs. Strong Trust

Opportunistic motivations + –

Trust has been qualified not only according to its different contents but also as a function of its intensity (or force) and, consequently, adequacy to face relational situations featuring various degrees of risk. In this regard, after indicating as fundamental components of trust the motivations that determine the counterpart’s actions and his or her ability to generate output contributing to the trustor’s satisfaction, Andaleeb (1992) proposed four typologies of trust based on crossing those dimensions (see Figure 6.3). These typologies constitute the so-called trust continuum between the two extremes of strong trust and distrust (Figure 6.4). Defined as full trust, the former presents a co-presence of non-opportunistic trustee’s motivations and a competency set consistent with the tasks. To the contrary, distrust is characterized by a scarce presence of both above-mentioned elements. The intermediate cases are represented by two typologies defined as hopeful trust and unstable trust. In the first situation, the trustor is convinced of the other party’s cooperative motivation, but is aware that the trustee does not possess the knowledge required to properly execute the task assigned to him or her. Nevertheless, the trustor hopes that the trustee will be able to increase his or her knowledge base and produce the expected output. On the other hand, in the case of unstable trust, the counterpart is perceived as capable of producing the expected results but moved by opportunistic motivations. This knowledge naturally reduces the long-term stability of the relationship. Starting with a definition of trust based on the mutual belief that none of the parties in an exchange will take advantage of the counterpart’s vulnerability, Barney and Hansen (1994: 176) defined trust in its weak form as a typology mainly expressed by situations in which the parties in a relationship are not exposed to significant vulnerability levels, and therefore do +

Capability of producing a given output

Strong trust

Hopeful trust

Unstable trust

Distrust

Source: Andaleeb (1992: 12)

Figure 6.3

Classification of different trust typologies

–

168

The trust construct’s analytical boundaries Strong trust

Hopeful trust

Unstable trust

Distrust

Source: Andaleeb (1992: 15)

Figure 6.4

Trust continuum

not require specific governance mechanisms or agreements to engender trust between them. The semi-strong form is associated with relations in which the parties are faced with situations of vulnerability and require appropriate transaction governance mechanisms in order to ensure their mutual trust. Strong trust is present when the vulnerability level is such that no economic, legal or social mechanism can warrant the transaction governance or defend the parties against possible opportunistic behaviours.38 One of the main peculiarities of these classifications is the modality by which trust intensity is qualified, going from an extreme of complete lack of trust, often enough defined in terms of distrust situations, to the opposite extreme of full or strong trust. What is needed is to clarify the relations in between the concept of trust, the absence of trust and distrust. 6.4

Is Distrust the Opposite of Trust?

As seen above, trust can be declined along a continuum that goes from an extreme, usually represented by ‘distrust’, to its opposite, the so-called ‘full’ or ‘strong’ trust. Generally, in these cases, the concept of distrust has been conceptualized as the mirror image of trust: once the latter is defined, the former concept is derived by negation. However, in all instances, distrust is recognized for its important predictive function. Exactly like trust, distrust represents a tool to manage uncertainty toward the other party (Luhmann 1979). A complete lack of trust/distrust, that is, the absolute absence of attitude toward the trustee, is much more problematic than the presence of distrust. After all, distrust can guide decision making in risk situations.39 In reality, although the most commonly shared view tends to hypothesize that ‘the more trust, the better’ and that distrust is an unfortunate reality that appears when trust fails, we believe that much greater attention should be given to distrust’s potential to contribute to economic order and relational efficiency (for example, Lewicki et al. 1998: 452; Wlagenbach 2001).40 Once a consensus is reached on the contribution of distrust in terms of (negative) expectation certainty, a few conceptualizations emerge. Sitkin and Roth (1993: 373) base theirs on the ‘belief that a person’s values or motives will lead them to approach all situations in an unacceptable manner’. Similarly, Lewicki et al. (1998: 439) define distrust as ‘confident

Trust in market relationships: the main analytical divisions LOW DISTRUST

HIGH DISTRUST

Characterized by: No fear Absence of scepticism Absence of cynicism Low monitoring No vigilance

Characterized by: Fear Scepticism Cynicism Wariness and watchfulness Vigilance

HIGH TRUST

2

3

Characterized by: Hope Faith Confidence Assurance Initiative

High value congruence Interdependence promoted Opportunities pursued New initiatives

Trust by verifying Relationships highly segmented and bounded Opportunities pursued and downside risks/vulnerabilities continuously monitored

LOW TRUST

1

4

Casual acquaintances Limited interdependence Bounded, arm’s-length transactions Professional courtesy

Undesirable eventualities expected and feared Harmful motives assumed Interdependence managed Pre-emption: best defence is a good offence Paranoia

Characterized by: No hope No faith No confidence Passivity Hesitation

169

Source: Lewicki et al. (1998: 445)

Figure 6.5 Different social realities derived by jointly considering trust and distrust negative expectations regarding another’s conduct’. The predictive capability associated with distrust induced these authors to base their social situation classification on the intensity of both trust and distrust. Thus they definitively establish that these two constructs do not constitute two extremes of the same continuum, as if they were substitute concepts, but are elements characterized by an orthogonal relationship and therefore capable of coexisting within the same relational context.41 This classification is summarized in Figure 6.5. In a condition of low trust/low distrust (cell 1) there is no reason to trust the counterpart or to be vigilant and careful. These are sporadic relations, featuring a very limited ‘spectrum width’. In a situation of high trust/low distrust (cell 2) the subject can comfortably trust the other party, lacking reasons to be suspicious or wary. In this case, the relationship is very intense, cooperative and based on a strong mutual interdependence. In situations of high trust/high distrust (cell 3), there are all the prerequisites to be very trusting toward the other party on some matters and, at the same time, very vigilant on other issues.

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In this case, the parties’ relational past is marked by many positive experiences about some performances and, simultaneously, by negative events in other domains. Finally, in situations expressed by cell 4, there is no reason at all to trust the counterpart, because a plethora of elements support the trustor’s need for prudence and vigilance. This model verifies that, as shown by a large body of empirical evidence, attitudes of trust and distrust can co-exist, shaping ambivalent attitudes according to different relational contents. For this reason we should avoid averaging out situations of high trust and high distrust, searching for a single synthetic construct. In fact, misleading interpretations are caused by reducing the simultaneous presence of trust and distrust to an average feeling, based on offsetting the two elements. Because they have different antecedents, these two concepts represent constructs that should be considered separately. Only this approach allows avoiding simplistic compensations, which inevitably become sources of reductionism.42 Trust and distrust’s co-existence sharpens one’s relationship perception and safeguards against the possible damages associated with absolute trust and absolute distrust. The former generates cognitive inertia and the risk of abuse by the other party, while the latter makes impossible both exchanges and opportunities activation. The value of distrust and its assimilation to the concept of trust depend upon the adopted perspective. From the trustor’s standpoint, we fully agree with those who affirm that the construct should be valued as much as trust as a predictor and knowledge resource, but this is not the case for the trustee. In fact, the trustee is damaged by the trustor’s distrust, generally suffering a loss of relational assets.43 Then, distrust is a resource for the trustor, but not for the trustee. On the other hand, trust is a common resource, available to both the trustor, who can simplify his/her decisional process (at the risk of transforming it into organizational or individual rigidity), and the trustee, who can extract value from a long-term relationship. Therefore, to understand the analytical value of distrust within market relationships, it is paramount to specify the roles of trustee and trustor and clarify the referenced relational typology, one- vs two-way relationships. A buyer’s distrust toward a potential supplier contributes to reducing the complexity of the decisional process associated with supplier selection, but can also induce rigidity, inhibiting the perception and exploitation of any innovation introduced later on by that supplier. Exactly like trust, distrust has a dark side as well, inhibiting relationships with individuals who are perceived as unreliable, even when they could present interesting opportunities instead. The very fact of considering a subject unreliable sets the stage for confirming that belief. Not being activated, the actor does not


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have any chance to counteract the trustor’s distrusting attitude, thus creating the prerequisites for a self-fulfilling prophecy of unreliability (Einhorn 1982).44 Such considerations seem to indicate that the saying ‘neither friends [strong trust] nor strangers [absence of trust]’, just acquaintances (Granovetter 1973; Lorenz 1989), could indeed represent for the client-trustor a ‘fair compromise’ in order to extract maximum value out of market relationships. The supplying firm, instead, needs to be fully committed to developing its client’s full trust, while avoiding the dangerous temptation to trigger inertial behaviours, thus sclerotizing the relationship and minimizing its innovative tension. In fact, once the client’s trust is gained, the firm could reduce its efforts to generate value, taking advantage instead of the trustor’s vulnerability. But as soon as the trustor verifies opportunistic behaviours bent on egotistically exploiting his or her trust (dark side), the relationship could appear to be irremediably compromised.45 6.5

Other Trust Typologies

The typologies of trust that have been studied so far do not exhaust the variety found in the literature. Among the extant classification, two constructs are particularly relevant and refer to different: ● ●

modalities of trust build-up typologies of relations and associated risks.

Found more often, the first type distinguishes trust based on the counterpart’s characteristics (characteristic-based) from both trust derived from a mutual interaction process (process-based) and trust with more institutional roots (institutionally-based) (Zucker 1986). The first case, characteristic-based trust, could constitute the output of a process of perception, analysis and interpretation of the trustee’s characteristics (in terms of competencies, skills, motivations, values and so on). The trustee’s reliability level is inferred on the basis of his or her characteristics. In this case, it is fundamental to verify how the subject is perceived from the outside and adequately governs the perceptual elements on which his or her trust representation depends. Trust can also be derived from the relational process developed in time by the parties (in which case it is labelled process-based trust), or by the presence of third (institutional) parties who provide, acting as a trust intermediary, the needed level of reliability in relation to the other party.46 The typologies belonging to the second category, those based on different relational situations, have been shown already to be linked to different types

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of risk or levels of opportunism, configuring in turn a need for different typologies of trust. For example, Sheppard and Sherman (1998) classify relations in four basic typologies – shallow dependence, deep dependence, shallow interdependence, deep interdependence – with which they associate different risk profiles in order to define as many types of trust characterized by different determinants, corresponding to the relational types already mentioned: deterrence, obligation, discovery and internalization.47 This section covers only a few of the trust typologies found in the literature in an enormous variety. Table 6.5 offers a partial synthesis of this variety, organized according to the classification criteria already explored. Owing to this proliferation of trust typologies, and the limited clarity of the very concept of trust, sometimes the proposed types, while similar to trust, should be kept well separated from it. Because of the confusion existing among the concepts of trust and their ‘bordering’ constructs, this chapter ends with a glance at these constructs, in order to further clarify, by contrast, the concept of trust itself.

7.

CONCEPTS CONTIGUOUS TO TRUST

As we have seen, trust represents a cognitive synthesis conceptually quite similar to that defining attitudes and indicating the other party’s capability of keeping his or her commitments toward a specific trustor. Thus, trust is configured as a construct that superordinates the elements that determine it (the antecedents). Therefore, trust represents a cognitive synthesis which superordinates its determinants, expressing the belief – characterized by distinctive elements such as competencies, motivations and values – that the counterpart will exhibit behaviours in line with expectations. Experience can undoubtedly be considered the most important antecedent. As will be discussed in the next chapter, the knowledge accrued by a subject on the counterpart’s behaviour represents one of the main prerequisites for trust building. Nevertheless, in the opinion of many scholars, experience is not a true determining element, but a condition needed for developing trust. Some have observed that it is possible to develop trust even without direct experience of the other party. In these cases, though, we cannot talk of trust per se, but only of constructs that, albeit similar, are better kept separate. Among them, most relevant to the building up of trust assets are reputation and the so-called unconditional trust, both discussed later. The quest to differentiate trust and its contiguous concepts is aided both by a useful distinction between trust, familiarity and confidence proposed by


Table 6.5

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The main trust classifications: a synthesis

Criterion

Typologies

Analytical dimensions

Ideological, cognitive, emotional and routine trust (Lewis and Weigert 1985) Affective, cognitive and behavioural trust (Cummings and Bromiley 1996) Behavioural and intentional trust (Nooteboom et al. 1997) Affect-based trust and cognition-based trust (McAllister 1995) Reliableness and emotional trust (Johnson-George and Swap 1982) Values, attitude, and mood and emotions (Jones and George, 1998) Institutionalization and habitualization dimension (Nooteboom et al. 1997) Competence and goodwill competence (Nooteboom 1996)

Relational level

Calculus-based, institutional (‘hyphenated’) and personal trust (Williamson 1993) Institutional-based, system-based and societal trust (Lane 1998) Individual, inter-personal, institutional (Lewicki and Bunker 1995) Calculus-based, relational and institutional trust (Rousseau et al. 1998) Dispositional, personal/interpersonal and system trust (McKnight and Chervany 1996)

Contents and analytical determinants

Calculus-based, knowledge-based and institutional trust (Lewicki and Bunker 1996) Deterrence-based, knowledge-based and identificationbased trust (Shapiro et al. 1992; Sheppard and Tuchinski 1996) Calculative, cognitive and normative trust (Lane 1998; Child 1998) Contractual, competence and goodwill trust (Sako 1991; Sako and Helpe, 1998) Predictability-based and value-based trust (Sitkin and Roth 1993) Predictability and explorative trust (Huemer 2000)

Strength/quality

Strong, unstable and hopeful trust (Andaleeb 1992) Thick or thin, weak or strong, fragile or resilient (Williams 1989; Meyerson et al. 1996)

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Table 6.5


(continued)

Criterion

Typologies Weak, semi-strong and strong (Barney and Hansen 1994) Trust vs. distrust

Development processes

Characteristic-based, process-based, institutionallybased (Zucker 1986) Calculus-based processes, predictive processes, intention-based processes, capability-based processes, transference-based processes (Doney and Cannon 1997; Doney et al. 1998)

Other classifications

Basic, guarded and extended trust (Brenkert 1998) Deterrence, obligation, discovery and internalization (Sheppard and Sherman 1998) Task-focused, fiduciary and relational forms of trust (Barber 1983)

Contiguous concepts

Spontaneous trust, generated trust, manipulation and capitulation (Hardy et al. 1998) Trust, faith, confidence and reputation (Luhmann 1989; Hart 1989) Trust, power and commitment (Gambetta 1988; Anderson and Weitz 1992) Prediction, rational, probable anticipation, uncertainty, panic, fate, faith (Lewis and Weigert 1985)

Luhmann (1989) and by the classification introduced by Hart (1989). For Hart, trust is a ‘suspended’ concept in between faith and confidence. In particular, he believes that these three constructs form a continuum that expresses different forms of credence, according to the intensity with which each is based upon sensorial experience. ‘Faith does not require evidence; trust is an expectation based on non-conclusive evidence, which tolerates uncertainty or risk; confidence is a strong belief based on solid evidence or logical deduction’ (ibid.: 241). Among the concepts that are similar to trust but which cannot be directly likened to it, Hardy et al. (1998) introduced an interesting distinction between spontaneous trust, generated trust, manipulation and capitulation. The first two typologies are directly referable to the concept of trust – either spontaneous or, on the contrary, derived from a deliberate development process – whereas manipulation and capitulation, while presenting a trust ‘facade’, hide a nature fully discordant with trust’s real meaning.


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Now it is time to revisit the already introduced concepts of reputation and unconditional trust. The former represents the reliability image that an actor (firm or individual) has created outside for him or herself. It is undoubtedly a trust determinant, but it has been shaped without needing a direct contact between the parties or a past relational experience.48 In fact, reputation development depends on signals mainly issued by third parties (trust mediators or opinion leaders). The way in which the said signals contribute to forming reputation depends mostly on the reliability of the information sources, namely their credibility. This situation underlies a ‘trust transfer’ from the trusted mediator to a potential trustee, achieving a trust extension of sorts (for example, Doney and Cannon 1997; Doney et al. 1998).49 Another situation in which it is possible to establish a trust-type relationship without direct experiences can be found when a subject puts an unconditional trust in others. This is not a direct manifestation of trust toward an individual, because it prescinds from a single relationship or a reference to a specific party. It exclusively depends instead on a generic individual propensity to trust others, without referring to a specific relational situation in which one must decide without the benefit of any certainty. Therefore, it is useful to discriminate between trust, a relation-specific type construct, and unconditional trust or trust propensity, which is instead a trustor’s characteristic (Luhmann 1989: 127). This propensity can not only be an individual characteristic but can also be generated (and learned) from the environment in which an actor operates. In this case, the focus is not on individual characteristics but on a systemic-type trust.50 It is beyond doubt that in some contexts there is a greater propensity to trust, due to a climate that is favourable to trust development. In these environments it is certainly easier to begin a cooperative relation. On this matter, it suffices to think about the cooperativism in Italian regions such as Emilia-Romagna, and compare it with some Southern Italian regions where trust absence or, more precisely, the ‘distrust pre-assumption’ greatly conditions interpersonal and particularly inter-organizational relationships.51 Also, it is important to consider the phenomenon of industrial districts that were developed in specific geographic contexts (network of places) and are mainly based on the collaborative efforts of several micro-firms. These actors’ decisions are very often dictated by the certainty that other subjects will behave in a reliable manner, reassured by the value system and culture shared by the whole entrepreneurial community. Thus, environment can also induce a propensity to trust others or, more precisely, this role can be played by a firm’s relational network. From this standpoint, the network of firms to which a given firm belongs becomes a double relational resource, because formal or social

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norms within the network-system52 promote trust behaviours’ perpetuation (the so-called systemic trust) and, concurrently, because the belonging to the network constitutes a trust signal shared outside and easily recognizable, ‘appropriated’ by the single subject. Firms that operate simultaneously on very different markets are well aware that in some contexts it is easier to build trust-based partnerships than in others. Conversely, diversified firms know that it is less difficult to cooperate with subjects in certain fields, where behaviour norms are clear. Naturally, these beliefs condition the diversification or internationalization strategies, especially when it is time to select the countries in which to expand, the channel policies and the integration level (direct investments vs. independent intermediaries) (for example, Anderson and Coughlan 1987; Klein et al. 1990).53

NOTES 1.

2.

3. 4.

5. 6.

7. 8. 9.

Classifying the sources by discipline (marketing, organization and strategic management, psychology and sociology), it was intended to verify the prevalence of a single conceptual typology within each field. This hypothesis has not been verified, with the limited exception of a slight prevalence of the belief concept within marketing studies, where it is traditionally considered one of the basic components of attitudes toward objects and people alike. Contrary to personality psychologists such as Rotter (1971, 1980a), who define trust as a ‘generalized expectation’ directly connected to a single person, social psychologists propose that trust is an expectation referring to a specific transaction and the single other party involved in it. Referring to what will be defined later on as systemic or institutional trust, expectation has been also defined in terms of more generic maintenance of the social order (Garfinkel 1967; Barber 1983). It is particularly interesting to consider the definition of belief proposed by Cummings and Bromiley (1996: 303). Attempting to circumscribe and isolate the construct’s main conceptual contents, these authors consider trust as a ‘common belief among a group of individuals that another individual or group (a) makes good-faith efforts to behave in accordance with any commitments both explicit or implicit, (b) is honest in whatever negotiations precede such commitments, and (c) does not take excessive advantage of another even when the opportunity is available’. McKnight et al. (1998) also define trust as a general ‘belief’ about the other party, without referring to its specific features. In their introduction to a special issue of the Academy of Management Review Rousseau et al. (1998) noted that Mayer et al.’s (1995) definition of trust as ‘willingness to be vulnerable’ was quoted most often in that special issue’s contributions, therefore supporting its centrality. This is another reference to the (dependent) situation deliberately created and thus ‘activated’ by the trustor. On this matter, Lewis and Weigert (1985) explicitly mention the behavioural enactment that induces the trustor to take actions based on a belief that the other party will behave according to expectations. In an attempt to conciliate the cognitive and behavioural dimensions of trust, these authors propose a definition of trust as ‘a willingness to rely on another party and to


10.

11.

12.

177

take action in circumstances where such action makes one vulnerable to the other party’ (Doney et al. 1998: 605). In contrast to those who conceptualize trust as confidence, Das and Teng (1998) maintain that these two constructs are markedly different. They define confidence as a perception of certain ‘satisfactory partner cooperation’. The true concept of trust is instead defined as expectation associated with individual motivations. In reality, some have suggested that the concept of belief is more general than that of attitude, because the latter is always specific to single objects. Sproull (1981, quoted by Jones and George 1998) discriminates between three belief typologies: descriptive beliefs, a quasi-objective statement of facts referring to a person or a situation; causal beliefs, which explain the reason behind the emergence of certain phenomena; and prescriptive beliefs, which express a preference for a mode of phenomena substantiation. This index, in its most simplified form, is calculated as the aggregate sum of the product of belief intensity (commonly called ‘importance’) times each feature’s evaluation. Quantitatively speaking, the formula is:

Ao

n

bi ei i1

where: Ao attitude toward the ‘o’ object; bi force of the belief that the ‘o’ object is characterized by the ith attribute; ei ith attribute evaluation; n numerousness of salient beliefs about the ‘o’ object.

13. 14.

15.

16.

James et al. (1976), Eagly and Chaiken (1993: 106 ff.) and others discuss in depth this methodology and its evolution. To learn more on attitude measuring methodologies, see also Eagly and Chaiken (1993: 23–83) and Bagozzi (1999). For more information about the complex relationship between attitude and behaviours, see also Rajecki (1990: 77–142) and Eagly and Chaiken (1993: 157–216). Hayes-Roth (1977: 261) defines each nexus (cogit) of the association network representing an individual’s knowledge as the smallest information structure that can be perceptively and cognitively defined, and linked to a discrete representation in memory. Thus inspired, Bagozzi (1999: 27) adopts the term cogit to indicate elements of attitude theory more cognitive in nature (that is, beliefs and convictions) and the term affit to define the basic affective units (that is, evaluations, intended as the outcome pleasantness degree of an action). According to Bagozzi (1999), cogit and affit constitute basic mental representations, corresponding to the elementary variables of attitude theory. The author defines plurimolecular or higher-level mental representations (equal to the aggregation of many cogit or affit) as sumcogit and sumaffit. Nooteboom (1996) also defines trust in terms of probability that is expressed at the individual level: X trusts Y when X decides to cooperate with Y on the basis of a subjective probability that Y will choose not to exploit possible defection opportunities that X considers harmful, even if they could be in Y’s own interest. Some scholars have highlighted that the circular relationship between risk and trust is the basis for a paradox that underlies the very concept of trust. While trust reduces the level of risk, ex post it loses its very utility, because it has neutralized the fundamental reason behind the need to trust, that is, risk itself. This consideration does not seem to have any conceptual value, for several reasons. First of all, these two aspects (trust and risk) represent facets of the same phenomenon. The possible conclusion of a trust relationship, and the subsequent lack of trust which it implies, would inevitably lead to a ‘reemersion’ of an external risk and to the interruption of individual behaviours owing to the high level of uncertainty that would develop. Only the presence of a potential risk (as perceived by a subject), together with the presence of trust, makes possible the activation of a trust-based behaviour. Moreover, as will be seen later on, trust implies almost a substitution of a hardly manageable external risk by a relational risk, which is more

178

17. 18.

19.

20.

21.

22.

23.

24.

25.

The trust construct’s analytical boundaries cognitively manageable, correlated with the situation of vulnerability felt by the trustor. Without trust, the latter would face again an external risk. For further analysis of that distinction, see the following section 6.5 dedicated to the various dimensions defining the concept of trust (naturally, behaviour included). Das and Teng (1998, 2001) also refer explicitly to the concept of relational risk within the context of inter-organizational alliances. Similarly, Nooteboom et al. (1997: 312), who support the subjective and relation-specific nature of risk and consequently trust, state ‘we treated trust in terms of relational risk with respect to a partner organization perceived by an individual who enacts the relation with the partner organization’. To further study the concept of risk in management literature, see Golinelli (2000: 143 ff.). He analyses different typologies of random risk (of events that can be reliably evaluated before they happen) and non-knowledge risk (of events which cannot be forecasted at all). Stem et al. (1977), Dowling (1986), Stone and Gronhaug (1993) and Mitchell (1999) have studied risk in marketing and its different configurations in that specific context. Mitchell and McGoldrick (1996) offer instead an interesting review of risk reduction strategies adopted by consumers in order to manage perceived high-risk purchasing decision processes. Following a careful literature analysis, these authors propose a total of 37 risk reduction strategies, classed in two basic categories: clarifying strategies and simplifying strategies. According to Johannisson (2001), this is the only mode left to new companies lacking a track record that signals to the market their competencies and reliability, allowing them to obtain trust from other economic subjects (financial institutions, suppliers, clients and so on) in situations of high environmental ambiguity. These different risk typologies naturally influence one’s decisional process, the information search and, as a consequence, the efficacy of the various information sources in orienting demand preferences. It is natural to hypothesize that the importance of interpersonal communications, and thus the trust placed in others, tends to be much more critical in the case of purchases of products featuring a prevalent psycho-sociological risk component, whereas when functional risk dominates, what counts is the trust placed in the so-called ‘institutional’ sources, which are best suited to provide reassurances about product integrity. Some recent works are focused on the concept of opportunism within market relationships. As an example see the recent study by Wathne and Heide (2000: 37). These authors propose a distinction between ‘blatant’ opportunism (also called ‘strong form’), corresponding to Williamson’s ‘self-interest seeking with guile’ (1975), and a less extreme form, the so-called lawful opportunism. According to them, various opportunism forms and their consequences are translated into a few fundamental forms of governance, defined as monitoring, incentives, selection and socialization. The last, geared to the internalization by the agent of the principal’s goals, is closest to the concept of identification trust that will be discussed later. In reality, many contributions have further broadened the conceptual meanings of trust. New dimensions have been added in addition to the two mentioned. Nevertheless, in most cases, they are factors that can be directly linked to the already quoted pair, either because their content is very similar or simply because they are antecedent or consequent logical constructs upon the concept of trust thus defined. Building upon Thurstone’s pioneering contribution, Fishbein stated that it is more useful to consider attitude as a one-dimensional concept, simply expressed by the intensity of one’s affection for an object. Currently, many scholars concur with that conceptualization, defining attitude as ‘a person’s overall evaluation of an object or concept’. Beliefs (or the cognitive facet) and the intentions to act – or the conative element – are undoubtedly correlated with attitude, contributing to its definition, but remain fully separated from it (Peter and Olson 1990: 137). Cummings and Bromiley’s contribution (1996) is particularly functional in the search for the conceptual nature of the trust construct and its links with the concept of attitude. In order to develop a reliable trust measuring system (the organizational trust inventory, O), these authors endeavour to understand the generalities of the concept as well as its


26.

27.

28.

29.

30.

31.

32.

33.

34.

179

single components. Such components are indeed articulated in terms of affective, cognitive and conative states (behavioural intentions). Naturally, Cummings and Bromiley’s (1996) measuring system reflects each of its three components. Lately, on the basis of Johnson-George and Swap’s original distinction (1982) between reliableness and emotional trust, McAllister (1995) has introduced a distinction quite similar to Lewis and Weigert’s one (1985). It is based on the concepts of affect-based trust and cognition-based trust. Similarly, within the framework of their model, Jones and George (1998) have referred to trust value, cognitive and emotional dimensions (values, attitude, mood and emotions), adding a value component to the other two already analysed. This classification requires a further articulation of each dimension. In particular, the cognitive component is composed by trust feeling (what has been previously defined as the emotional dimension) and the trustor’s awareness that s/he can trust the other party. The behavioural component is instead based on an intention of future behaviour, and concrete actual behaviour (Swan and Nolan 1985: 40). On the same matter, see Scott (1980). More recently, Nooteboom et al. (1997) similarly distinguish behavioural trust from what they define as intentional trust. The behavioural dimension relevance is evinced by the very definition of trust proposed by Moorman et al. (1992). They describe it as the willingness to rely on a subject that inspires confidence. At a glance, this definition could appear a tautology, but in reality it offers a novel element: the deliberate act (willingness) to trust another party, clearly expressing the need of a concrete behaviour in order for trust to exist. On this matter, the authors state the following: ‘just as behavioral intention is best viewed as an outcome of attitude and not as part of its definition . . ., “willingness to rely” should be viewed as an outcome (or, alternatively, a potential indicator) of trust and not as a part of how one defines it’ (Morgan and Hunt 1994: 23–4). Williamson (1993) distinguishes calculative trust from both the so-called ‘hyphenated’ trust (essentially institutional, social, network trust, and so on) and personal trust. Lane (1998) identifies institutional-based, system-based and societal trust. Lewicki and Bunker (1995) highlight the differences between trust as an individual trait, as a characterizing element of an interpersonal relationship, and as a more general institutional phenomenon. McKnight and Chervany (1996) specify three typologies: the so-called trust disposition, personal/interpersonal trust and system trust. The first typology refers to the personal characteristics of an individual; the second is represented by trust developed on a dyadic level between two subjects facing a specific relational situation; while system trust is based instead on the reliability of social and institutional structures, which remain external to specific rational contexts. This trust typology relevance has been fully confirmed by the institutional crisis triggered in Italy by Operation ‘Mani Pulite’ (Operation ‘Clean Hands’, a judicial investigation on political corruption, started in 1992). That initiative caused a severe loss of trust in the Italian system of political parties (some of which simply disappeared as such). The potential demand for trust developed by this operation was satisfied by new subjects and political alignments that have succeeded, with different degrees of effectiveness, to fill this ‘trust vacuum’, partly similar to the concept of structural hole proposed by Burt (1992). Many studies and researches have been conducted at various levels in order to detect and time monitor the institutional trust level of families and citizens. To that effect, true indicators have been developed. These so-called trust indexes correlate the level of trust shown in a market with the consumption propensity of individual agents, the customers’ intention to buy and the quantity of retail sales. This last typology is differentiated by trust disposition which, represents a trustee’s specific characteristic or attitude (the propensity of an individual or organization to trust others). This type of trust, which constitutes a personal profile descriptor, should be distinguished, as seen already in Chapter 3 (section 2), from the trust that develops in a specific interpersonal relationship. Today, thanks to the support offered by new information and communication technologies, many firms, including those operating in the consumer goods sectors, are trying to

180

35.

36.

37. 38.

39. 40.

41.

42.

43.

44. 45.

The trust construct’s analytical boundaries increase the cognitive proximity level to demand, transforming therefore one-way relationships into bilateral ones. To this end, they use micro-marketing tools (such as loyalty management programs), with the support of an adequate customer database. This classification further elaborates the distinction between reliability-based and valuebased trust, originally proposed by Sitkin and Roth (1993). Calculative trust and knowledge-based trust further discriminate the first type (based on predictability), even though they are quite different from each other. In fact the former is exclusively based on economic calculation, while the latter is based instead on perceptions of the other party’s competence. Contrarily, value-based trust coincides with trust based on identification and personal values. The tripartition now introduced is easily referenced to a distinction between calculative trust and relational trust proposed by Rousseau et al. (1998), where the second typology includes both knowledge-based and value-based trust. Actually, a correct perception of the trustee’s competence profile requires a certain level of trust also in one’s skill in recognizing someone else’s capabilities (a type of selfconfidence about one’s capacity to signal decoding), as much as the other party’s signalling transparency or assumed lack of wilful distortion of the latter’s competencies, thus acting as a clean player. Kramer et al. (1996: 373) further classify this last level of trust and, more generically, identity-based trust in four subcategories (reciprocity-based trust, elicitative trust, compensatory trust, non-contingent or moralistic trust). Similar classifications, analogous to those mentioned herein, distinguish thick from thin trust, weak from strong trust and fragile from resilient trust (for example, Williams 1989; Meyerson et al. 1996). Another interesting classification, distinguishing among various trust intensities, has been proposed by Brenkert (1998), who isolates basic trust from guarded trust and extended trust. We agree with Lewicki et al. (1998: 439), who maintain that both trust and distrust imply a tension toward certainty situations: trust refers to the expectation of hoped-for outcomes, while distrust concerns the expectation of threatening events. Naturally, as will be seen later on, this vision is conditioned by the observational perspective from which it is formulated. In fact, if from the trustor’s point of view distrust could indeed have a predictive value, this same conclusion does not apply to the trustee’s perspective. On this matter, Luhmann (1979: 71) stated: ‘trust and distrust are also complements for one another, because both function to reduce social complexity’. On the same issue, see also Mishra (1996: 282) and Kramer (1996). Kramer explicitly conceptualized the asymmetries between trust and distrust, basing his conclusion on the results of a qualitative empirical research. Building on Herzberg’s study (1966), it has been possible to verify the existence of specific determinants, the so-called motivators, upon which trust development is based, distinguishing them from another category of elements, the so-called hygienics (the absence of which causes dissatisfaction instead). Therefore, in some cases, the presence within an offer system of a given characteristic or specific element classed as motivator can help establish trust in an individual, while its absence can generate distrust. Vice versa, the absence of the hygienic factors (dissatisfactors) can generate distrust, while their presence eliminates the dissatisfaction state, albeit without generating trust. For a closer analysis, see Sirdeshmukh et al. (2002). These authors have empirically verified these factors’ impact on personal trust level within buyer–seller relations in the fields of retail and air transportation. An exception is the case in which a trustee deliberately avoids establishing relationships with specific subjects, voluntarily activating distrust. This happens, for instance, when one does not intend to establish a business relationship with some customers. In this case, we also need to check the effects on the trustee’s general reputation. This issue will further be discussed in Chapter 8 (section 4). As pointed out by Costabile (2001), during a relationship evolutionary course, after the first stage of satisfaction, there is a need to check the supplier-generated value. When such verification does not produce the hoped-for results, the trust relationship can


46.

47. 48. 49.

50. 51.

52.

53.

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dissolve quite rapidly. In order to clarify the evolutionary dynamics of the trust concept during the various phases of a relationship life cycle, some studies have focused on understanding the final stage of a trust relationship, analysing motivations and situations that foster trust betrayal and its transformation into distrust. Such works will be briefly discussed in Chapter 8. The above-mentioned criterion has led to the formulation of more analytical classifications attempting to highlight further typologies, such as that proposed by Doney and Cannon (1997). They suggest distinguishing between trust based on mere calculation of economic convenience (calculus-based trust); trust derived by predictivetype processes, trust founded on the other party’s perceived intentions (intention-based) or capabilities (knowledge-based trust), and finally trust developed by transferring it from an already known subject to another (trust extension). As seen in Chapter 1, Dwyer et al. (1987) and Ring and Van de Ven (1992) propose analogous classifications, geared to capturing the variety of relational types as a function of different degrees of risk and, therefore, a different trust need. As discussed in Chapter 4, some marketing studies consider reputation as one of the constituting elements of brand image. In this regard, it should suffice to think about the trust transposition from business firm to industrial brand that takes place when a consumer receives reassuring information on a product performance from the dealer who, in this situation, plays an important role as a source of information. The dealer’s credibility is transferred to the industrial product image. A similar process is assumed to take place, for example, in the case of new product diffusion mechanisms, based on the trust brokerage of a trusted opinion leader. This is the reason why so many firms invest significant resources to gain those subjects’ consensus. One of the first contributions to the concept of systemic trust is ascribable to Gibb (1964). For a closer examination, see Lane (1998) and what is stated here in the previous section. On this matter, Becattini (1989: 13) introduces the concept of ‘degree of business morality’, stating that whenever morality is highest, exchanges are faster or less costly, requiring less reliance on written contracts and other methods of protection against a contract breach. The specific issue of trust as the fundamental prerequisite of the Southern Italian economy was the main focus of a workshop held in 1998 at the Università della Calabria at Arcavacata (CS) and titled ‘Fiducia, risorse relazionali e sviluppo economico-imprenditoriale’ (Trust, relational resources and economic-entrepreneurial development). This theme is also well researched by Gambetta (1988), who was the guest speaker at the above-mentioned workshop. According to the definition offered by Heide and John (1992: 34), norms represent a set of expectations on the subjects’ behaviour, at least partially shared by a set of decisionmakers. On the conditioning effect of norms on market relationships, see also Kaufmann and Stern (1988). Intervening on internationalization policies, some intermediary institutions offer the exporting firm an opportunity to reduce the uncertainty associated with new markets. In so doing, these institutions act as uncertainty absorber and trust brokers.

PART FOUR

Trust development

7. 1.

A trust growth model INTRODUCTION

Once the complexity of trust concept has been investigated, it is useful to examine how trust relates to the other variables, within wider analytical frameworks. In fact, analysing the contributions which analysed this construct, there clearly emerge three main approach typologies: purely conceptual contributions; studies geared to defining the interpretative models; and empirical approaches. The first typology of contributions is mostly concerned with defining the construct’s conceptual contents, analytical dimensions and different types. Most of these works have already been presented in the previous chapters. The second group of contributions is aimed at defining theoretical models, linking trust – in its various dimensions and typologies – to other variables. These can be grouped in three main categories: antecedent, consequent and moderating variables. Essentially, the last of these variables have an attenuating or amplifying effect on the relationships that link antecedents or consequences to the trust construct, which generally plays the central role of ‘mediator’ (Baron and Kenny 1986). The main goal of these models is the identification of elements that can increase trust and its consequences, such as coordination level, relationship performance and trustor’s loyalty. These studies have a unique analytical value for management, allowing it both to identify trust’s main determinants – thus establishing the factors to be tweaked in order to implement trust development – and to appreciate the consequences and the advantages of trust for the whole socio-economic system, the single relational dyads and their actors. A wide array of contributions is included in this category. Essentially, these works can be split into two main subgroups: partial and general models. The former analyse only some dimensions of the relation, and especially the conceptual link between trust and some specific variables, antecedents or consequences. The latter consider the complex of variables associated with trust, and have been proposed in the attempt to concurrently consider the existing interdependence between trust, its antecedents, consequences and moderating variables. Many models proposed in managerial literature and 185

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considered in the previous chapters are structured in this way, conceptualizing the relationship between trust’s antecedents and its consequences. Finally, contributions of the third type are aimed at verifying the hypotheses of theoretical models by empirical analysis, quantifying the strength (weight) of the links between the variables surmised by those models and specifically referring to certain relationship typologies. These contributions are most often structured as follows: a first section formulates the hypothesis on the causal relationships that link the considered variables; a central section presenting a methodological description and the results of the empirical research follows; and a final part focuses on the managerial implications and research perspectives. Notwithstanding the diverse typologies of contributions, it is possible to verify almost everywhere a constant reference to trust antecedents and consequences. Actually, a construct’s theoretical relevance is undoubtedly linked to its consequences in terms of relational performances. At the same time, once that analytical level is established, it is paramount to understand the modes of that resource development, singling out its main drivers. This chapter is structured as follows. The main findings on trust’s antecedents (section 2) and its consequences (section 3) published so far are briefly summarized. Thus it will be possible to elaborate a general framework useful for defining a first interpretative model of trust development (section 4), and some early considerations for empirical research (section 5). Finally, we will analyse the semantic network that underlies the concept of trust and the relationships that link trust elements (section 6).

2.

TRUST ANTECEDENTS

Many models have focused on finding the main determinants of trust, thus establishing the factors to consider in order to implement trust development strategies. Still, to accomplish that task has been particularly difficult, especially in the absence of a clear and accepted definition of the trust construct. In fact, often enough trust’s conceptualizations are based on elements that other scholars simply consider as trust determinants.1 In our perspective, trust antecedents represent elements forming the cognitive scheme that underlies the synthetic construct. Among the determinants suggested by scholars who have studied the subject paying specific attention to market relationships, those more often quoted are: 1. 2.

past experience and relationship length the counterpart’s capabilities and competencies

A trust growth model

3. 4. 5. 6. 7. 8.

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motivations of an actor’s behaviour and, particularly, the absence of opportunistic behaviours the trustee’s personal characteristics fairness, distributive and procedural justice satisfaction cooperative behaviour communication.

Each of the above-mentioned antecedents will be briefly analysed in the following pages. 2.1

Past Experiences

Knowledge of the counterpart’s behaviour represents one of the main prerequisites for trust creation.2 Nevertheless, according to some authors, experience is not so much a true antecedent as a condition needed to form trust at all. In fact, the degree of certainty toward the counterpart’s behaviour is mostly a product of the ‘past record’ of the parties’ relationship and its duration. Indeed, in order to effectively foresee a trustee’s future behaviour, it is impossible to avoid considering the way he or she has behaved in similar situations in the past. When behaviours are consistent in time – that is, if the counterpart has always fulfilled the trustor’s expectations and kept his or her promises – the conditions for trust generation are satisfied.3 Thus, trust can be interpreted as a belief (assumption, expectation, and so on) that the trustor develops regarding the trustee’s future behaviour, according to the latter’s statements past and present, implicit or explicit (Good 1989: 43). Therefore, it is a decisively forward-looking construct (described as a shadow of the future),4 although derived from the relational past background. As will be seen later (section 2.6), this element is directly correlated with and partially overlaps another fundamental antecedent of trust, that is, the concept of satisfaction. 2.2

Capabilities and Competencies

The perception that the trustee is characterized by the skills, capabilities and competencies needed to perform in the best manner the actions delegated by the trustor, thus warranting the expected outcome, constitutes one of the main antecedents of trust. Up to now, the presence of trustee’s competencies has been mentioned several times as both a paramount antecedent of trust and a constituting element of the construct (for example, Andaleeb 1992). Every experience that strengthens the trustor’s beliefs in his or her knowledge of the trustee significantly contributes,

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together with the elements that will be discussed in the next paragraph, to shaping his or her cognitive underpinnings (for example, Swan and Nolan 1985; Swan et al. 1985; Crosby et al. 1990; Moorman et al. 1993; Mayer et al. 1995; Sirdeshmukh et al. 2002). Some contributions describe specific empirical researches demonstrating, for instance, the relevance of perceptions of a seller’s expertise as a determinant of trust in the insurance service field (Crosby et al. 1990) and the role of perceived capabilities of market research companies in the process of trust building towards their customers (Moorman et al. 1993). 2.3

Non-opportunistic Motivations

Opportunistic behaviours have obviously been interpreted as inversely correlated with trust level.5 Nevertheless, we believe that this antecedent could be included in the larger category of motivations determining the trustee’s actions. In situations in which an actor feels the existence of a significant amount of opportunism in the counterpart’s behaviours, it is natural that s/he does not extend trust. The relevance of such an antecedent stems directly from the very definition of trust that, as seen earlier, presumes the presence of vulnerability toward the trustee’s opportunistic behaviours.6 Usually the threat of opportunistic behaviours requires adequate safeguards, such as drafting extremely detailed contracts to efficiently manage any transactions. When situations are so complex that it is impossible to draft contracts capable of covering all hypothetical eventualities, exchanges can be regulated only by recourse to hierarchic mechanisms. Trust-inspired models hypothesize instead the possibility of establishing relational forms based on self-enforcing informal mechanisms, apt to manage the uncertainty produced by environmental and exchange complexity. In order to realize a network of trust relations that allows a firm to execute transactions with a manageable level of uncertainty, it is indispensable that the parties are perceived as motivated not by opportunistic considerations but by goodwill-based, positive ones. 2.4

Personal Characteristics

Many contributions highlight the relevance in determining trust levels of the trustee’s personal characteristics, such as honesty, sincerity, frankness, sympathy, reliability and affinity with the trustor. In particular, sociopsychological contributions strive for the identification of personal variables more directly associated with the individual’s propensity to be a reliable trustee (the so-called trustworthiness). This allows a significant predictive strengthening of the theory’s interpretative models and their practical


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usefulness. In fact, it becomes sufficient to define the socio-psychological profile of the individuals involved in the relationship to deduce its more likely evolution: cooperative (based on mutual trust) or conflictual.7 Actually, contributions focused on those antecedents refer to contexts in which the interaction among individuals prevails, such as the services industry and the buyer–seller relationship.8 Nevertheless, personal characteristics tend to become variables that cannot be ignored for two reasons. Firstly, often interorganizational relations are determined and managed by individuals playing the role of the firm’s ‘interface’ (boundary spanner or gatekeeper); moreover, personal relationships, especially in contexts that are more complex in terms of transactions (services, high tech, and so on), decisively contribute to the creation of an adequate inter-organizational trust level. Secondly, personal characteristics can be transferred, with due caution, to the firm. Thus they help define the firm image profile, especially when it is characterized by abstract contents.9 This is the so-called strategy of ‘personification’ of the company image. 2.5

Fairness and Distributive and Procedural Justice

Some authors (for example, Tyler and Degoey 1995, 1996; Brockner and Siegel 1996) consider fairness, distributive justice and procedural justice as the fundamental antecedents of trust. Therefore it seems appropriate to briefly clarify their meaning. Bagozzi (1975) underscores the relevance of perceived fairness within market relationships, surveying the characteristics of the so-called ‘equitable exchange’. Fairness is based on a mutual balancing of a relationship’s inputs and outputs, derived by the seller and the buyer respectively. This original concept is thus based on cost–benefit equivalence between the involved parties. Fairness is closely linked to the underlying meaning of distributive justice, sometimes called fairness as well (for example, Oliver and Swan 1989). Distributive justice was initially considered a cognitive antecedent of fairness, when the latter was applied to the results of decisions on resource allocation according to various criteria of distribution impartiality. Afterwards, it has been noted that perceived fairness is determined not only by the interplay of offered inputs and received outputs, but also by the mode chosen to reach a decision and implement the distribution. The relevance of both the individual’s involvement in the decision process ( process control ) and his or her opportunity to affect the final decision (decision control) is now evident. Two constructs are thus recognized as fundamental to perceived fairness and satisfaction: procedural justice and distributive justice.

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Trust development

PROCEDURAL JUSTICE (Future estimates)

TRUST

DISTRIBUTIVE JUSTICE (Fairness)

SATISFACTION

Figure 7.1 The relationship between variables referring to justice and trust: a synthesis Empirical research has verified the two constructs’ orthogonality. Specifically, it has been demonstrated that distributive justice has a more significant impact upon the satisfaction of individuals, whereas procedural justice assumes a critical role in defining the evaluation of the parties and institutions involved in the decision. More recent studies on the theme of fairness are aimed at defining the joint effects of these two typologies of justice on the individual’s reaction to a certain decision, investigating their interactions.10 To this purpose, the concept of trust was explicitly taken into account. In particular, it was established that there is no direct relationship between perceived justice at the process and distribution level, on one hand, and decision acceptance and consequently the interested parties’ satisfaction, on the other hand. To the contrary, it was verified that trust has a fundamental role as a mediation variable in the relationship, interlinking variables of justice and decisional process output. Mainly, procedural fairness was hypothesized as a direct antecedent of trust. The latter, in turn, interacts with the distributive justice level, and affects reactions to resource allocation decisions. Synthetically, trust is determined by the trustors’ estimates on the future level of procedural justice, of which it forms the main output.11 In turn, trust level constitutes an important antecedent of the perceived level of distributive justice. The latter, as illustrated in Figure 7.1, is the fundamental construct on which hinges the subject’s reaction (in terms of satisfaction or dissatisfaction) to the counterpart’s decision (Siegel et al. 1995; Brockner and Siegel 1996: 401). This brief review of fairness and procedural and distributive justice demonstrates that these concepts are linked to trust by non-univocal relationships, establishing relationships of a circular type, as depicted in Figure 7.1. 2.6

Satisfaction Level

According to some authors, the satisfaction derived from previous interactions with a firm is one of the main factors impacting trust creation,12


191

because it represents the clearest indicator of the firm’s capability of fulfilling its promises. In fact, a buyer’s satisfaction derives from achieving an output level in line with or even superior to the expectations the firm has raised. Thus, a firm is further motivated to be customer satisfaction oriented and consistently monitor its customers’ satisfaction level, promptly bridging any gaps between perceived quality and expected or desired quality. This is a way to increase the customer satisfaction level and, according to expectation confirmation theory, the firm’s trust. Satisfaction and trust are constructs linked not by a simple unidirectional cause–effect relation but, more precisely, by a circular causality. In fact, any phenomenon that promotes a strengthening of a trust relationship between the parties has an effect, albeit indirect, on satisfaction level, representing almost a self-fulfilling prophecy (Martin 1991). In support of this approach, Crosby et al. (1990) explicitly consider satisfaction and trust as constituting elements of a bi-dimensional construct, the so-called relational quality. This element has a central role within the model these authors propose and empirically verify. 2.7

Cooperative Behaviour

Cooperation presents the same uncertainties in terms of type of causality as was the case for fairness and satisfaction.13 At first glance, it seems indubitable that cooperative behaviour is a consequence of trust and not an antecedent as some authors have hypothesized.14 Nevertheless, thanks to some empirical tests based on the principles of game theory,15 it has been verified that cooperation is not a consequence of trust, but one of its antecedents.16 That result has led authors to hypothesize that customers’ perceptions of the seller’s intention to cooperate affect their trust in the latter (Crosby et al. 1990). In reality, while cooperation can be interpreted as a trust antecedent and although Axelrod (1984) affirms that it can evolve without trust, cooperation among human beings is not conceivable without at least a predisposition to trust (Gambetta 1989: 296).17 In the presence of distrust or unilateral trust, it is indeed impossible to achieve behaviours based on mutual cooperation. Once more, it appears that the causal relationship is circular because, while trust is the prerequisite of cooperative behaviour, it enhances in turn the firm’s trust resources.18 2.8

Communication

The relation between communication and trust is among the themes most analysed by those who study the trust dimension of market relationships.

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Trust development

It should be noted that authors have not always reached a univocal conclusion on this matter. In fact, some have considered trust, or more exactly the trust climate of a relationship, as an element that facilitates the parties’ communication, making it more believable (Zand 1972; Lorey 1980: 115–20). Mohr and Nevin (1990) conceptualized the communication types associated with various levels of trust and cooperation within the supply chain. More precisely, in high trust level channels, communication is characterized by greater frequency, greater bi-directionality, informality, and indirect-type contents.19 Vice versa, less frequent communication, unidirectional flows, formality and direct content messages are typical of a climate in which less trust and a more limited cooperation prevail.20 These conclusions are supported by the literature dedicated to organizational culture and climate (ibid.: 22). In addition to making communication more ‘fluid’, trust also increases the credibility of the information source and, consequently, its messages.21 Following this view, communication would be considered as a consequence of trust and not as one of its antecedents.22 Instead, most marketing scholars view the communication role as a fundamental determinant of the trust relationship creation process, considering it an antecedent of trust.23 In fact, when it is transparent and effective, communication contributes to solving relational conflicts by aligning the parties’ perceptions and expectations (Morgan and Hunt 1994: 25). Thus it affects in a mediated way both the customer satisfaction level and trust.24 Indeed, perceptions play a dominant role in the process of trust creation. Any divergences in the parties’ perceptions, caused by the subjects’ different ‘interpretations’ of their surrounding environment or external phenomena, can determine a reduction of trust. Thus, an actor’s behaviour is derived from the perception that s/he has of reality and his or her interpretation. As soon as there is a limited convergence in perceptions, it is likely to produce an inhomogeneous behaviour, which can create conflictual situations, which in turn ‘consume’ the trust upon which the relationship is based. Sometimes these perceptual divergences are ascribable to inadequate communication flows between the parties. Actually, it is correct to consider communication a trust antecedent as long as this phenomenon is considered in a static perspective. Some empirical researches have indeed shown that communication that has taken place between two parties in the past (at time t1) affects the trust level of the relationship in the present (at time t0). As will be seen in the next chapter, analysing the phenomenon in dynamic terms forces the assumption of a circular, recursive relationship between communication and trust. In fact, if past communication (at time t1) increases the level of actual trust (at time t0), it is impossible to avoid recognizing that the strengthening of the


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trust relationship determines an improvement in the quality and credibility of future communication, showing the strong interdependence between these two variables. In part, this is true as well for the constructs previously discussed, in particular fairness, satisfaction and co-operation, whose causality relation with the concept of trust can be better interpreted by longitudinal analysis. 2.9

Other Antecedents

In addition to the trust antecedents reviewed up to this point, management literature offers other elements, which are considered residual because they are both more rarely quoted than the above-mentioned factors and closely related to previously discussed elements. The following residual categories of antecedents deserve attention: the level of specific investments made in the relationship (for example, Ganesan 1994);25 the similarity between partners (for example, Crosby et al. 1990); the level of value sharing (for example, Heide and John 1992; Morgan and Hunt 1994); the reputation (for example, Ganesan 1994);26 the organizational structure and culture of the partners (for example, Moorman et al. 1993); the features of the transaction object, in particular the degree of its complexity and the difficulty found in soundly evaluating its qualitative level (ibid.); the brand value (for example, Schurr and Ozanne 1985); the partner’s degree of customer orientation (for example, Swan et al. 1985); and so on. Figure 7.2 synthetically illustrates the main antecedents analysed here. 2.10

A Synthesis

In concluding this overview the main trust’s determinants are: ● ● ● ●

past experiences with the counterpart (length of the relationship), and relative level of satisfaction, seen as a behavioural antecedent; the trustee’s perceived capabilities and competencies, allowing him or her to behave in line with expectations; the counterpart’s motivations to pursue joint goals without opportunistic behaviours (an aspect often defined as goodwill); the trustee’s perceived integrity and values.

According to the literature, these seem to be the fundamental antecedents of trust. In situations characterized by a high content of interpersonal contacts, these determinants are heavily influenced by behaviours and personal characteristics of the subjects involved in the relationship (for example,

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Main trust antecedents Experience The other party’s skills and competencies Non-opportunistic motivations and benevolence Subject’s personal characteristics Fairness and justice Satisfaction Cooperative behaviour Communication TRUST Other antecedents Level of specific investments Similarities between partners Value sharing Organizational structure and culture of the partners Features of the transaction object Brand value Partner’s degree of customer orientation

Note: Antecedents linked to trust by non-univocal causality relationships are shown in italics.

Figure 7.2

Trust antecedents: a synthesis

honesty and sympathy). This is not to say that the above-mentioned variables represent the exclusive or most important components of the trust cognitive scheme. Trust can configure itself in fully original fashion according to each individual and relational context. There are also some determinants that institute circular relations with trust. In particular, this seems to be the case for the counterpart’s perceived fairness and justice, communication transparency and intensity, past satisfaction level (this element is the most direct link with the behavioural-type determinants) and cooperative initiatives. These variables, undoubtedly representing some of the antecedents of trust, cannot be considered just as determinants. In fact, they determine the level of trust and, concurrently, are conditioned by it, thus dynamically generating circular causality relationships. Therefore, trust is a stock variable of the relationship that, if there were a system of detection and accounting of


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intangible resources, would be included among the patrimonial assets of a firm. Instead, in this metaphor, experiences of satisfaction, perceived fairness, cooperative initiatives and communication represent quantity flows, or dynamic capabilities (for example, Teece et al. 1997) or, in other words, processes enriching the patrimony of trust linked to the relationship (customers’ trust), which in turn can generate more consistent flows of fairness, satisfaction, cooperation and communication. Such greater flows further enhance the trust level, thus triggering a recursive process that self-generates the resources linked to the relationship (Vicari 1991: 75), along an autopoietic development path. Therefore, in a dynamic perspective, the variables linked by a circular causal relationship to trust represent the antecedents of trust at time t0, at the beginning of the relationship. In a more advanced stage, they can become trust consequences once the relation between the parties is better consolidated and it is trust itself (by now consolidated) that warrants the counterpart’s perceived fairness, the communication quality, and the partner’s satisfaction and cooperative propensity. This highlights the critical role of longitudinal analysis, because, distinguishing the different evolutionary stages of the relationship, it is possible to better understand the causality relations linking different variables.

3.

TRUST CONSEQUENCES

Having clarified the articulation of the antecedents that help in creating trust, it is fitting to understand trust’s main consequences or, more precisely, the variables or constructs upon which trust reveals its effects. This is particularly useful in order to further clarify trust-generated value in terms of relational activities.27 The analysis of the models that attempt to explain the cause–effect relations between trust and its correlated elements evinces the critical role played by this intangible resource. In fact, trust can: 1. 2. 3. 4. 5. 6. 7. 8.

reduce the degree of decisional uncertainty increase the degree of commitment shown by the interested actors contain the conflict level determine a greater use of non-coercive power sources develop fairness and justice enhance satisfaction level and relationship quality improve the communication efficiency facilitate cooperative behaviours.

We will briefly analyse each of the above-mentioned elements.

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3.1

Trust development

Uncertainty Reduction

The containment of decisional uncertainty is undoubtedly the most typical consequence of trust. As amply seen already, trust (as much as distrust) allows the trustor to foresee the trustee’s behaviour in risky situations, thus making more certain the decisional process of the actors involved in the relationship. Therefore, trust assumes a particular interpretative value in decisional situations characterized by uncertainty. It works as a risk ‘reducer’ and as an element apt to make more certain the expectations on others’ actions. In other words, trust is configured as a patrimony of certainty (Chapter 6, section 3) that fosters decision making in uncertain situations and allows inter-organizational groups and systems to be relationbased, acting as a relational lubricant. 3.2

Commitment Growth

Commitment indicates an individual’s undertaking and is shown when a relationship with an actor is considered so relevant that its maintenance justifies maximum effort.28 This requires a desire to build a stable relation with the counterpart and the propensity to make sacrifices in the short term in order to build the relationship (serial equity), counting on the stability of that relationship (for example, Ganesan 1994). In an attempt to understand the relation between trust and commitment the interpretative models proposed by Anderson and Weitz (1992), Morgan and Hunt (1994) and Garbarino and Johnson (1999) deserve special attention. In order to understand the ‘quality’ of market relationships, these authors highlighted the need to focus on the commitment of each interested party. In particular, they show that commitment mainly depends on the reputation of the parties and the level of mutual trust. Specifically, Anderson and Weitz (1992) demonstrate that the interaction between each party’s commitments triggers a process of mutual increase of trust, which cannot be fully understood without assuming the perspective of both members of the dyad. Once more, it seems evident that the two constructs of trust and commitment are based on reciprocity and, as such, are bound to follow development paths ruled by autopoietic mechanisms within the context of the dyadic relationship. 3.3

Containment of Relational Conflict Level

The effects of trust on conflict level derive from the fact that the latter is one of the main elements capable of negatively affecting possible cooperation. It has been hypothesized that the greater the conflict among the subjects

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A trust growth model (a) Performance

(b) Performance

Conflict level

Conflict level

Source: Lusch (1976: 5–6)

Figure 7.3 Possible relations between conflict level and relational performances (a and b) forming a system, the lower is the actors’ level of satisfaction and the results achieved by the system. This shows that conflict is one of the main causes of relationship break-ups. Actually, conflict configures a state derived from a situation in which a component of the dyad perceives the other’s behaviour as obstructing the achievement of his or her goals or inhibiting the efficient performance of his or her role within the system. This can produce a state of dissatisfaction and frustration that can lead to open conflict (for example, Stern and Gorman 1969; Perry 1991). Nevertheless, the effects of conflict are not always negative. Albeit most authors have represented the relation between conflict and relational performance in descending linear monotonous form, as shown in Figure 7.3a, it cannot be taken for granted that this is the case in every situation. In fact, some scholars have proposed considering a threshold level, postulating a positive relationship between conflict and performance up to a point, after which the correlation sign is inverted (Figure 7.3b) (for example, Rosenberg and Stern 1971; Rosenbloom 1973; Lusch 1976). This model has been validated by empirical experimentation. Thus, conflict is now qualified as functional or dysfunctional according to its consequences on the system performance, and its positive value if restrained is recognized (Robicheaux and El-Ansary 1976; Perry 1991). In cases in which there is a potential clash, trust is capable of transforming conflict from dysfunctional to functional. Thus, conflict becomes an element supporting the coordination of individual actions within a dyad or a network.29

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3.4

Trust development

Non-coercive Power

Martin (1991), and Morgan and Hunt (1994) advanced particularly noteworthy hypotheses on the relation between power and trust. These authors believe that trust induces the actors to exercise non-coercive power. This is essentially drawn from sources of power (such as those based on rewards) that allow offering to the counterpart contributions and prizes in order to achieve one’s goals. Coercive power sources represent instead potential punishments that, once imposed, make it harder to achieve those same goals.30 It has been verified that the existence of non-coercive power sources has a positive effect on the dyad’s satisfaction and performance, preventing possible conflicts. It is natural that a relationship based on trust and finalized to mutual cooperation leads the parties to make use of noncoercive power sources. Moreover, a positive correlation has been ascertained between the exercise of coercive power and the level of conflict, and this in turn negatively affects relational performance. Therefore, when someone resorts to coercive power sources, his or her relationship is naturally bound to decay and trust, though existing, refers to ‘unliked’ actions (such as inflicting punishments). When these events are recurring, they inevitably deteriorate the relationship and cause its ending. Now it is possible to conclude that there cannot be power without trust. Implicitly, power determines a demand for trust. Trust then has value as a resource in managing relational complexity, even when power is the main coordination mechanism (as is the case in some centred systems or networks). On this matter, Gambetta (1989) maintains that in the literature trust- and power-based coordination mechanisms are often considered to be alternatives, stating that power is a direct substitute for trust. In reality, these mechanisms are complementary. 3.5

Other Consequent Variables

Trust effects on fairness and justice, level of satisfaction, communication quality and opportunities to cooperate, viewed as (mostly) behavioural consequences, were seen in the previous section. Here it suffices to restate that trust and those variables are linked by circular causality. Other relevant consequences not yet discussed, especially from the standpoint of market relationships, can be found: greater probability to allocate dedicated resources on behalf of trusted subjects (for example, Anderson et al. 1987), longer time horizon of the relationship (for example, Jap 1999, 2001b), greater easiness to convince or influence the counterpart (for example, Swan and Nolan 1985; Swan et al. 1985); customer loyalty (for example, Chaudhuri and Holbrook 2001; Sirdeshmukh et al. 2002) and


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Main trust consequences Uncertainty reduction Commitment increase Conflict containment Non-coercive power Fairness and justice TRUST

Satisfaction Cooperative behaviour Communication Other consequences Probability to allocate resources Length of relationship Easiness to convince the other party Loyalty Greater sales

Note: Consequences linked to trust by non-univocal causality relationships are shown in italics.

Figure 7.4

Trust consequences: a synthesis

greater sales as the natural subsequent step. Figure 7.4 illustrates a synthesis of the consequences presented in this section.

4. TRUST INTERPRETATION: AN INITIAL SYNTHETIC MODEL Summarizing the analyses of the previous two sections, Figure 7.5 schematically illustrates antecedents and consequences of trust, as conceptualized by the main models proposed by market relationship studies (quoted below). On the whole, it can be said that the antecedents most often quoted in the literature mainly refer to past experiences and length of relationship, skills and competencies, individual variables, mutual power and dependence, and absence of opportunism. Looking instead at the consequences, those most often studied are commitment, sales performance, temporal horizon of relationship and, naturally, reduction of relational uncertainty.

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Figure 7.5

(+) GP 8

Relationship benefits Specific investments in the relationship Contingent variables

A B C D E F G H

I L M N O P Q R

Mohr and Nevin (’90) Martin (’91) Andaleeb (’92) Moorman et al. (’92) El-Ansary (’93) Hyvonen (’93) Moorman et al. (’93) Ganesan (’94) S T U V W X Y Z

Morgan and Hunt (’94) Mohr and Speckman (’94) Zaheer and Venkatraman (’95) Dion et al. (’95) Dahlstrom and Nygaard (’95) Andaleeb (’96) Kumar (’96) Rich (’97)

TRUST

1 2 3 4 5 6 7 8 9 10

Relationship continuity

Loyalty

Resources allocated to the relationship Transaction costs

Conditioning possibility

Non-coercive power

Doney and Cannon (’97) Smith and Barclay (’97) Fletcher and Peters (’97) Geyskens et al. (’98) Selnes (’98) Jap (’99, ’01a and ’01b) Garbarino and Johnson (’99) Chaudhuri and Holbrook (’01) Rindfleisch and Moorman (’01) Sirdeshmukh et al. (’02)

Gounaris and Venetis (’02) Friman et al. (’02) Sirdeshmukh et al. (’02) Coulter and Coulter (’03) Nijssen et al. (’03) Ranaweera and Prabhu (’03) Johnston et al. (’04) Miyamoto and Rexha (’04) Casielles et al. (’05)

12 13 14 15 16 17 18 19 20

(+) I Communication (+) GLNQXZ 2 4 18 Satisfaction/quality (+) AFGLMOSY Cooperation

(+) 14 16

(–) U

(+) D 12

(+) BC

(+) LS

(+) CHVWYZ 1 2 6 8 14 16 Sales–profit–performance

(+) EHRTY 4 5 7 12 13 17

Uncertainty

Commitment

(+) NOQSXY 3 5 7 13 (–) LQSW

Conflict

(–) AGLS 5

CONSEQUENCES

Trust antecedents and consequences in market relationships: an overview

Schurr and Ozanne (’85) Swan and Nolan (’85) Swan et al. (’85) Anderson et al. (’87) Anderson and Weitz (’89) Young and Wilkinson (’89) Anderson and Narus (’90) Crosby et al. (’90)

Communication (+) DEFGHIOPS 4 5 13 20 Satisfaction/quality (+) GLR 5 7 12 16 19 20 Cooperation (+) FGL 18

(+) BFQ 7

(+) R 6 19

(–) EFOSWXY 4 12

Power/dependency

(+) BCHLQVW 1 15 18

Individual variables

(+) ESV 1 13

(+) BMQ

Motivations

(+) ELR 1 15 20

(–) LMSUZ 13

Opportunistic behaviours

Reputation of reliability

(+) CFHQ 15

Customer orientation

Goal/value/culture sharing

(+) ABEFHPR 1 12

Past experiences and relationship length

Skills/competencies (+) BCEHOQ 1 5 14 15 19

ANTECEDENTS


201

Up to now, this analysis allows the definition of a first interpretative model of trust build-up in bilateral market relationships (see Figure 7.6). This model highlights the main components of the cognitive scheme underlying the concept of trust and their relationships, operating a clear distinction between cognitive-affective and behavioural constructs. More precisely, it focuses on the role of past experiences as the main determinant of behavioural origin, and the counterpart’s perceived competencies, motivations and value characteristics (integrity) as cognitive determinants. According to literature analysis, these are the elements that most contribute to creating trust in market relationships. Regarding the consequences, this model shows that the main cognitive effects of trust are essentially decisional uncertainty reduction, commitment increase, lessening a dysfunctional conflictual climate and increasing the likelihood of using non-coercive power sources. In such a relational context, it is easily hypothesized that the main behavioural consequence, in two-way relations, is a greater likelihood of bilateral cooperation and loyalty. This model also shows the circular nature of relations connecting trust and other variables, such as satisfaction level, which represents the consequent variable of cooperative behaviour and the ‘stratified’ content of experiences to be remembered in the future. Also, communication quality and perceived fairness level represent variables linked directly and circularly to trust, emphasizing trust’s character as a self-generating resource. Finally, the model underlines some moderating variables. Trustee’s reputation and trustor’s trust propensity strengthen or attenuate the relations between antecedents (experience, skills, motivations and individual profile) and trust. The perceived risk negatively impacts the relation between trust and its behavioural and cognitive consequences. In other words, the greater the trustor’s propensity to trust and the trustee’s reputation, the greater the impact of cognitive antecedents on trust, which is thus amplified. Alternatively, the greater the risk level as perceived by the trustor in a given situation, the more consistent is the level of trust needed to affect its behavioural and cognitive consequences. Obviously, conceptual relations such as these suffer an inevitable generalization, which has to be contextualized referring to single relational typologies and situations. We believe that this model can be applied, with limited adaptations, both to bilateral relations between manufacturers and retailers and, more generally, to buyer and seller on industrial markets. No doubt, adjustments have to become more significant when the model is to be applied to relations between a final customer (as the trustor) and a retailer- or manufacturer-brand (as the trustees). In the first case, albeit relationships between antecedents, mediating variables and circular relations with fairness and communication could remain valid at a general

202

Figure 7.6

Trustee’s reputation

(+)

(+)

(+)

Trustor’s trust propensity

Integrity and value identity

Nonopportunistic motivations

Skills/ competences

Cognitive antecedents

Trust interpretative model: a synthesis

Past experience/ satisfaction

Behavioural antecedents

Communication

Perceived fairness

Trust

Satisfaction

(+)

(–)

(+) (–)

Perceived risk

Non-coercive power

Conflict

Uncertainty

Commitment

Cognitive consequences

(+)

(+)

(–)

(–)

Cooperation

Behavioural consequences


203

level, significant modifications are needed with reference to the consequences. Here, in fact, the customer-trustor is most sensitive to a relational uncertainty reduction. Such a reduction allows purchasing decisions to take place in perceived high-risk situations. Then, the behavioural consequence is represented not just by the trustor’s cooperation (for example, offering suggestions and information improving the offer) but also by his purchasing intention and the purchasing act per se. This act may produce adequate levels of satisfaction and loyalty, and eventually a positive wordof-mouth, which in turns affects the firm-trustee’s reputation level. Naturally, up to now, it has been considered only a first, obviously simplified, version of trust building model. Other elements have not yet been considered, although they inevitably influence the paths of trust growth. Some examples follow: the impact of time flow on the relationship, namely the previously conceptualized longitudinal dimension of trust; the possible presence of a dyadic interdependence, requiring a joint consideration of diverse perspectives, and therefore a significant level of reciprocity of trust behaviours; the multiplicity of inter-organizational and interpersonal interaction levels, and the interdependence relations linking them; the environmental context’s influence and, more specifically, the characteristics of the network that includes the single dyadic relationship under analysis. These elements, and especially those referring to trust evolving dynamics and behaviour reciprocity, will be scrutinized in the next chapter. Before considering the elements referring to the dynamic and interactive dimension of trust relationships, we will review the fundamental elements of the empirical methodologies that have been adopted by scholars.

5. e-TRUST: ANTECEDENTS AND CONSEQUENCES31 Many of the off-line trust antecedents and consequences can also be found in the virtual setting (Shankar et al. 2002). Indeed, some empirical researches (for example, Javarpaa et al. 2000; Yoon 2002) of e-trust frameworks include antecedents – such as firm’s reputation and size, user’s past experience, communication – and consequences – such as commitment, long-term interaction, satisfaction, uncertainty reduction, loyalty – which have been identified in the off-line literature. Although trust in the online setting is similar to the off-line one, there is an important distinction from which derive some peculiar e-trust antecedents and consequences. In fact, while in the traditional environment the object of trust is typically an individual or an organization, in the virtual setting the absence of a physical relationship implies that the objects

204

Trust development

of trust are basically the technology (mainly Internet) and the firm’s web site (Shankar et al. 2002). In this section we will briefly survey the main peculiar e-trust antecedents, which represent the elements of novelty beside what has been discussed in the previous pages. To develop a synthetic framework (illustrated in Table 7.1), we can categorize e-trust antecedents into three main classes, based on what they refer to: firm, user and web site characteristics. Actually, firm’s characteristics basically include trust antecedents that emerged in the off-line environment (such as size, trustworthiness, reputation). Though user’s characteristics are essentially the same as in the off-line setting, in the e-trust studies they are linked to the virtual medium and the technology involved. Indeed authors refer to IT-related individual characteristics (such as predisposition towards technology and past experience with online transaction) as e-trust antecedents. The truly peculiar antecedents of e-trust are those that can be classified as web site characteristics. They appear to be the most important elements leading to trust in the virtual setting, since the site is the medium between the firm and the customers. The site represents more than a shop; it is the tool (especially for firms which do not operate in the off-line setting) through which the organization communicates its value and therefore its trustworthiness. Hence navigation, user-friendliness, error-freeness, presentation, links to other relevant sites and the selection of items are important elements in developing trust. As we have seen in Chapter 6 (section 4), an important issue inhibiting online transactions is the high level of uncertainty deriving from the lack of direct contact with the firm and other customers. Therefore online firms are trying to overcome the virtual impersonality by including in their web sites e-advisors and by encouraging the development of online communities of customers. Finally, to reduce customers’ perception of risk, privacy and security policies (certified by trustworthy parties), refund systems and the longevity of the site are crucial elements. Considering the consequences, the most relevant e-trust effects emerging in the literature are the adoption of new technologies and the conclusion of online transactions, especially at the beginning of the relationship (Gefen et al. 2003; Jarvenpaa et al. 2000). To sum up, studies on antecedents and consequences, like other research streams within e-trust, developed from off-line literature and adapted its constructs to the peculiarities of the virtual setting. In particular, the most important difference has to be identified as the importance of trust developed in the web site, which represents the only point of contact between the firm and its customers.

205


Table 7.1

e-trust antecedents: main contributions

Typology

Antecedents

Authors

Firm characteristics

Perceived size

Jarvenpaa et al. 2000 Pavlou 2003

Perceived reputation

Jarvenpaa et al. 2000 Yoon 2002 Pavlou 2003 Hee-Woong et al. 2004 Koufaris and HamptonSosa 2004 McKnight et al. 2004b Newholm et al. 2004

Communication

Jarvenpaa et al. 2000

User characteristics

Past experience/ Gefen et al. 2003 familiarity with Internet Yoon 2002 shopping/web site Predisposition to technology

Web site characteristics

Navigation and userfriendliness

Gefen et al. 2003 Koufaris and HamptonSosa 2004 Koufaris and HamptonSosa 2004 Newholm et al. 2004 Bart et al. 2005

Error-freeness

Newholm et al. 2004 Bart et al. 2005

Selection of items

Smith et al. 2000

Site design

Shneiderman 2000

Virtual advisor/ information

Urban et al. 2000 Hee-Woong et al. 2004 Bart et al. 2005

Community

Smith et al. 2000 Luo 2002 Newholm et al. 2004

Privacy and security

Dayal et al. 1999 Hoffman et al. 1999a Palmer et al. 2000 Smith et al. 2000 Luo 2002 Gefen et al. 2003 Koufaris and HamptonSosa 2004

206

Trust development

Table 7.1 Typology

(continued) Antecedents

Authors Newholm et al. 2004 Bart et al. 2005

6.

Refund policies

McKnight et al. 2002a, b Suh and Han 2003

Site longevity

Jarvenpaa et al. 2000 Smith et al. 2000

EMPIRICAL RESEARCH ON TRUST

Trust measuring exceeds the goals of this work, analysing the basic elements of the trust construct. This analysis represents, however, a fundamental prerequisite of measurement. No doubt, the concept’s poor clarity constitutes one of the main reasons behind the difficulties found in empirical researches. In fact, a clear construct definition and a precise distinction of its antecedents and constituent dimensions represent the conceptual foundation of a fully valid and reliable measuring process. However, even when the construct is conceptually clear enough, its measuring activity raises various problems, able to invalidate the whole analytical process. 6.1

Trust Measurement: A Summary of the Main Critical Aspects

Without pretending to exhaust this complex issue, the most problematic areas of trust measuring encompass the following important aspects: (a) (b) (c) (d)

variable operationalization perspective to favour in the empirical analysis key informant detection data processing methodologies.

Each of these problems will be briefly analysed. Variable operationalization (point a) refers to the difficulties encountered while determining the items and scales to be used for measuring the construct, its antecedents and consequences. It is easy to imagine the relevance of this phase in terms of experimental verification plausibility. The problem is particularly evident with some constructs, such as trust, which are as complex as they are evanescent and difficult to define (Appendix B shows some of the scales used in the literature to measure trust).32


207

Referring to the perspective of the analysis (b) it is important to notice that some investigated variables, though they clearly concern the trustee, depend instead on the trustor’s perceptions (this is the case with trust and its main analytical antecedents, namely capacity/capability and nonopportunistic motivations). Conversely, there are other elements that are ‘trustor-specific’ (for instance, propensity to trust and perceived risk). Finally, there are variables that can only refer to the relationship as a whole, for example, some variables associated with performance and cooperation climate, or those referring to the environment (for example, the external uncertainty level), and should be measured as they are perceived by both parties. In empirical research, trust and its antecedents are usually measured focusing on the trustor’s perspective, which in a buyer–seller relationship coincides with the customer. The trustor’s perspective can be accepted for trust-related constructs, but raises difficulties in terms of detection of the relationship defining variables. Albeit determined by both parties’ perceptions, these constructs generally refer to the relationship and not to a single subject. Therefore, it seems appropriate to measure both perceptions separately. Unilateral perspectives have the risk of providing a partial picture of the relational context. To the contrary, the reciprocity characterizing the construct should stimulate studies of both analytical perspectives, the trustor’s and the trustee’s, as demonstrated by some studies on two-way relations. Once the research perspective is established, another problem emerges, especially when measuring inter-organizational trust, namely the finding of key informants (c). They are the subjects within the organization who own the information researchers are looking for. In inter-organizational relations, key informants are often found in an interfacing position or role (buyer, salesman, key account, category manager and so on). Nevertheless, this statement assumes that the organizational structures of the sampled firm are uniform and that all of the subjects playing specific roles have the same functions. Clearly, this hypothesis is not realistic, especially for firm samples very heterogeneous in structure. To overcome this obstacle, scholars must perform an organizational analysis of each of the sampled firms, thus significantly complicating the research. In the absence of this precaution, it is not unlikely that needed data would be provided by subjects who are not adequately informed on the theme upon which the research is focused.33 The last critical element is the methodology and data treatment techniques (d). An exhaustive analysis of this issue would require too lengthy a discussion, and the reader is better served by other specialized works. In this context, it should suffice to note the critiques of some authors who have

208

Trust development

expressed their perplexities with regard to the suitability of methodologies (more in reference to lab experiments on cooperative behaviours than trust per se) and techniques of quantitative analysis used to represent the phenomenon and analyse the collected data. Not infrequently, in order to avoid some of the pitfalls of traditional quantitative methodologies (correlation analysis, regression, ANOVA and so on) and quantitatively estimate the links between the single elements of a given model, researchers have adopted methodologies based on structural equation models (SEMs). This versatile approach allows modifying in progress, during data analysis, the model defined prior to the survey, and verifying the reliability of its configurations. For instance, SEM methodology has been used to verify the explicative and predictive value of various competitive and alternative models, more or less centred on trust (for example, Morgan and Hunt 1994; Garbarino and Johnson 1999). Remarkable progress has ensued in the way in which empirical verification begets new knowledge. In fact, traditional methods required one or more hypotheses to be confirmed or refuted. In the latter event only one road was left open: a renewed formulation of hypotheses to be verified by a new empirical research. Now, using structural equation models, collected data can originate novel constructs and relations, marking the dawn of the ‘theoretical empiricism’ conceptualized by Bagozzi (1994b) and Bagozzi and Yi (1994). In synthesis, SEM estimated indicators are derived from observing correlations between the errors of the measured variables, in order to detect latent constructs. This is the added value of this methodology: catching simultaneous interdependences or causal connections between the observed variables missed by classical regression parameters, as well as obviating the absence of important variables (omitted variables) in the definition of the phenomenon to be measured. To be sure, these events are far from unlikely when studying trust, especially in view of the many difficulties found in defining such a complex and evanescent construct. 6.2 A Comparative Empirical Analysis: Trust as a Situation-specific Construct We have explored typologies of buyer–seller relations referring to various categories of goods and services, offering a cross-sectional synthesis of trust determinants in various relational contexts. In particular, empirical researches were conducted upon three relational typologies at work in the service and consumer good markets, presumably needing substantial trust. Firstly, a category of grocery products was selected, namely beef, a good under the spotlight in terms of trust, even before (as in this case) the recent

209


Table 7.2

The research samples

Industry

Financial services

Educational services

Consumer goods

Numerousness

203

118

274

Relational context

Customer of a specialized firm

Senior college students (4th year)

Final purchasers of fresh meat

Average age

47 years

23 years

36% in the range 41–50 years

Sex

58% males

60% females

75% females

Profession

24% entrepreneurs

100% students

80% homemakers

BSE outbreak. Secondly, buyer–provider relations have been analysed with regard to two typologies of high trust intensity services: financial and college education services, with specific attention to student–college institution relationships. Table 7.2 presents information on the sample and structure of each survey. Thus three sample surveys were conducted, adopting the SEM methodological approach. The methodology of these studies required the use of direct interviews. Data analysis and hypotheses verification were based upon a structural equation model in order to exploit the advantages of such an analytical approach (Bagozzi 1994a; Bagozzi and Yi 1994). The main results of these surveys are shown in Table 7.3, which summarizes the main cognitive antecedents of trust referring to the different relation typologies empirically verified. A quick analysis of these results shows that, varying the reference relational contexts, trust drivers vary as well. Therefore, although the reference latent construct – trust – remains the same, what significantly changes is the semantic network of its underlying variables. This verifies the previously advanced hypothesis on trust situationality in terms of its cognitive structures, highlighting the situation-specific dimension of trust’s cognitive antecedents. In particular, while the two fundamental antecedents of trust in financial services are perceived competencies and shared values, in the case of universities the teachers’ competency has slightly less leverage impact on trust than the (non-opportunistic) motivations of the faculty’s behaviours. In the case of meat purchases – a typical experience product (Nelson 1970) – when sales is based on assisted and personal interaction, there prevail sympathy and the feeling established with the sales staff, together with their perceived abilities.34 These results have several managerial implications, including but not limited to the following examples.

210

Table 7.3

Trust development

Main findings: Trust determinants Financial services

Perceived competences (professionalism) Value sharing Non opportunistic motivations Emotional variables Brand image Satisfaction AGFI (adjusted goodness of fit index) TCDE (total coefficient of determination for structural equation)

Educational services

Consumer goods

0.518*

0.644*

0.233*

0.399* 0.240*

0.828*

0.865

0.586** 0.748

0.923

0.964

0.844

0.835

0.597*

Note: * Significant ** This relationship shows that trust is the brand image determinant (IMAGE ← TRUST)

The results derived from the survey on financial services should induce a firm, and especially its consultants,35 to pay greater attention to competency development and consolidation of their perceived integrity. Furthermore, the survey has shown the central role assumed by communications with customers. Increasing the contact frequency (especially those reaffirming individual competencies), the firm increases customers’ trust and, as a further consequence, the amount of personal patrimony entrusted to the consultant. The teaching body and the trust it inspires in students play a central role in educational services. In particular, the fundamental antecedents of trust are the centrality of instructors’ perceived competencies and the transparency of their motivations. The continuing development of the faculty’s competencies and the possible establishment of incentive mechanisms apt to minimize opportunistic behaviours constitute fundamental actions toward increasing students’ trust, especially among those with whom the relationship is well established.36 In regard to the grocery product, the research established the criticality of the interpersonal dimension of relationships and, in particular, the role of affective variables. Where it is impossible to form an interpersonal relationship (for example, in full self-service supermarkets), brand image prevails. In this situation, it could be useful to exploit any potential synergies between the trust image of the brand and the retailer’s one.


211

These brief considerations on managerial applications of the abovementioned researches are just a glimpse of the potential benefits of studying trust and its semantic network in order to increase a firm’s performance and economic value in a trust management perspective.

7. STRUCTURAL ANALYSIS OF THE ‘SEMANTIC NETWORK’ SUBTENDING THE CONCEPT OF TRUST Within the horizon of this work, as it was observed in the previous chapter, ‘trust’ is seen as synthetic information that helps a subject to manage uncertainty. Whether or not this mental representation depends on the individual’s motivations and perceived knowledge, his or her reputation or behaviour in situations similar to the current one, or on other antecedents, the construct’s deep meaning (that is, the certainty about the counterpart’s behaviour) remains the same, whereas its determinants can change. As such, these determinants should be considered external to the construct, even though they exercise a decisive conditioning on it.37 More precisely, we believe that trust determinants represent elements of the cognitive network underlying trust, which are linked to one another by interdependence of varying intensity. Trust, as a synthetic construct, becomes now the superordinate element of the set of connections and nexus (cogit and supercogit, affit and superaffit) that helps to form trust’s semantic network (Bagozzi 1999). This network can have various and varying configurations according to the individuals and the situations, with different determinants linked to one another by connective systems that are different every time. Despite such articulation and variability of determinants and connections, the nature of trust as a cognitive network does not change, although its morphology can vary. In turn, antecedents depend on perceptive elements, often defined as chunks of information, from which it is possible to infer the beliefs on the single antecedents of trust.38 To understand the semantic network concerning the other party’s features, the trustor’s cognitive structures should be detected. These structures constitute the modalities by which individuals mentally represent alternative relationships, on the basis of their perceptions of a varying series of distinctive elements. The concepts of perceptual centrality and leverage become now particularly important,39 because they describe the type of interconnection existing between perceived trustee features (Nicosia 1978). Consequently, the perceptions of different antecedents can be classed as central or peripheral. The former ones are at the centre of a complex connective network that highlights their link with a relatively high number of

212

Trust development

perceptions pertaining to other antecedents; the latter ones occupy an offcentre position within that semantic network, and appear to basically be isolated from most of the remaining components. Analysing these connections it is possible to find the characteristics that most affect the trustee’s global perception. These features, and the beliefs associated with them, deserve full attention in order to improve a subject’s trust profile. This way, it would be possible to concentrate all efforts on elements that have greater perceptual leverage (and thus higher centrality in the cognitive structure) and that resonate on the whole semantic network subtending the very concept of trust. On this basis, it is possible to assign to each antecedent a role that is coherent with the cognitive processes regulating the establishment of trust’s semantic network. Until now, the discussion has been focused on the main relations linking the concept of trust and its determinants. In view of the findings presented in the previous chapter, dedicated to the analytical dimensions of trust and its different typologies, it seems natural to associate the antecedents of trust with its various analytical dimensions (for example, Wilson 1995). Following Lewicki and Bunker’s (1996) distinction, it is quite easy to imagine, for example, the direct relation linking individual capabilities and the knowledge-based or cognitive dimension of trust. Vice versa, values and integrity are undoubtedly the antecedents with greater perceptual leverage within the value- or identification-based dimension of trust. We agree with those authors who suggest a direct relationship between trust’s various antecedents and its diverse analytical dimensions (for example, Wilson 1995), with the caveat that the hypothetical unambiguousness of that relation is just the first interpretation of the problem. In fact, because trust is a latent construct that superordinates the semantic network upon which it is built, the presence of antecedents can vary case by case, without any need to define an unambiguous and exclusive relationship between the construct’s determinants and its components. Taking what has been stated to the limit, it is possible to hypothesize that different antecedents have a different level of centrality and thus of perceptual leverage as a function of trust typologies and constituting dimensions. This is not to say that some of trust’s analytical dimensions are exclusive or that some antecedents have no relationship with the construct. Returning to the above-mentioned example, it is impossible to maintain that individual competencies have no relationship with the identification-based trust. In this regard, as a hypothesis, it seems more correct to assign a greater perceptual centrality to the trustee’s value profile than, for example, to individual competencies. This interpretation of the relations between antecedents and trust allows us to better understand the essence of the phenomenon under study.


213

NOTES 1.

2. 3. 4.

5. 6.

7. 8. 9.

10. 11.

12. 13.

In this regard, Mayer et al. (1995: 711) state: ‘One of the difficulties that has hindered previous research on trust has been a lack of clear differentiation among factors that contribute to trust, trust itself, and outcome of trust’. As seen already in the previous chapter (section 5), this has caused a good deal of confusion even about the definition of trust. Among others, Schurr and Ozanne (1985), Swan and Nolan (1985) and Ganesan (1994) underscore the role played by experience within the trust building process. Implementing some simulations based on game theory, Evans (1964) showed that if an actor fulfils his or her promises, then s/he gets more trust from the counterpart than when this does not happen or when no promises were made. Many authors confirm the decisive orientation to the future of the trust construct. As an example, Thorelli (1986: 38) maintains: ‘While solidly based in the past, trust is really a future-oriented concept.’ To the contrary, Ganesan (1994: 1) states that because of its orientation to the future, trust is a construct complementary to that of specific transaction investments, which form a concept mostly oriented to the present. This correlation, referring to market relationships, has been explicitly hypothesized, for example, within the framework proposed by Martin (1991) and Morgan and Hunt (1994). To consider the counterpart’s perceived opportunism tendency as a fundamental (negative) antecedent of trust has a particularly significant theoretical impact. In fact, as seen earlier, it questions one of the basic hypotheses underlying the conceptual scheme of transactional cost analysis. On this matter, as seen already in Chapter 3 (section 3), Rotter (1967, 1980a) found some significant correlations between the propensity to trust individuals and specific personal profile identifying variables. In particular, Swan and Nolan (1985), Swan et al. (1985), Crosby et al. (1990), Martin (1991), Moorman et al. (1993) highlight the importance of individual components as trust antecedents. In fact, a firm can be perceived exactly as an individual, as characterized by a certain degree of honesty and reliability (it suffices to think about the weight given to such a valuation by banks or suppliers when it is the time to extend credit to their customers), sincerity (impacting the credibility of messages not received from the firm itself), sympathy and affinity (for example, Martineau 1958). On this matter, some in-depth marketing studies on image (linked to the so-called self theory) have shown that, for some product categories and in well-defined purchasing situations, consumers choose to buy a brand or shop at a store the image of which is closer to their individual self-perception. This theme will be further discussed in the next chapter, dedicated to image abstraction strategies. Brockner and Siegel (1996) offer an overview of studies on the relation between decision acceptance and perceived justice. Actually Tyler and Degoey (1996: 334) also conceptualized an inverted relation between procedural justice constructs and trust. More precisely, these authors established that an authority’s attitude toward procedural justice and the belief in its legitimacy are a consequence of the trust bestowed on that authority, who is considered fair for that reason. Furthermore, Tyler (1994, cited by Tyler and Degoey 1996: 334) showed that trust influences counterparts’ fairness evaluation within the context of legal procedures and managerial situations. Tyler and Degoey (1995) also verified that trust influences perceptions of authority legitimacy in various (legal, managerial and family) contexts. The relationship between the two constructs is thus demonstrated as circular. On the role of satisfaction within the context of trust building between buyer and seller, see among others Anderson and Narus (1990), Martin (1991) and Ganesan (1994). On the relation between cooperation and trust in market relationships, see also Anderson and Narus (1990), Martin (1991), Weitz and Jap (1995) and Jap (1999, 2001a, 2001b).

214 14. 15. 16.

17.

18. 19.

20. 21. 22.

23.

24. 25. 26. 27. 28.

29.

Trust development Most psychological and sociological contributions lean toward this type of relationship. For an in-depth analysis see also Loomis (1959) and Sacconi (1990). Axelrod (1984) showed that, sometimes, cooperation among the parties can arise in the absence of trust, in the presence of very weak trust relationships and even in situations in which the parties cannot communicate. The orientation to cooperation, according to Deutsch (1962: 307), automatically induces a subject to build positive expectations toward the counterpart and his/her intentions. Similarly, a competitive orientation determines (or, better, enacts) a negative attitude toward the other party. Deutsch (1962: 302) is perhaps clearer on this issue. He states: ‘The initiation of cooperation requires trust whenever the individual, by his choice to cooperate, places his fate partly in the hands of others.’ Galeotti (1990: 122) affirms that, even if trust were just a spontaneous emergence of cooperative relations, it could later work toward reinforcing cooperation, thus replacing more costly initial conditions. The complex relationship between trust and cooperation has been discussed in Chapter 3 with reference to the studies inspired by rational decision theory. Martin (1991) indicates that the cooperation–trust linkage exhibits spiral reinforcement, in that successive successful (unsuccessful) cooperative episodes in the relationship lead to higher (lower) levels of trust in the relationship. Indirect communications are mostly finalized to influence the recipient’s beliefs and attitudes, in order to achieve the behaviour desired by the sender. The latter does not present specific requests, but tries to convince the recipient about the appropriateness of a given line of action. Direct content communications attempt to modify the recipient’s behaviour, asking him/her both explicitly and implicitly to perform the action desired by the sender. On this topic see Frazier and Summers (1984). Mellinger (1956: 309) has experimentally verified that an actor who does not trust his or her communication recipient is induced to communicate in an evasive manner, hiding his/her real convictions about the message object. A vast literature is available on the modes by which the trust in information sources impacts the message reliability. In particular, see Hovland and Weiss (1951), Schulman and Worrall (1970), Heesacker et al. (1983). Among scholars who, within the context of buyer–seller relationships, consider communications a variable determined by trust, see the contributions of Dwyer et al. (1987) and Mohr and Nevin (1990). Several sociologists and psychologists hypothesize various cause–effect relations between communications and trust, proposing some experimental tests. A synthesis of these studies has been presented by Loomis (1959). In marketing literature, the ways in which communication impacts trust resources building are discussed, among others, by Bialeszewski and Gillaourakis (1985), Anderson et al. (1987), Anderson and Narus (1990), El-Ansary (1993) and Morgan and Hunt (1994). The ambiguity and manipulability of communications and interpretations symbolic frame can often inhibit the building and conferring of trust (Roniger 1988: 385). The connection between specific investments and trust has been analysed in-depth by Dyer (1997). For a closer examination, see Chapter 3, section 7, presenting the integration of the economic and social dimensions of relationships. Reputation has been discussed in Chapter 6, section 7, dedicated to the exploration of concepts similar to trust. In reality, this theme has been already scrutinized in Chapter 2, section 4, within the limited context of trust effects in management and economics. See Morgan and Hunt (1994: 23). Moorman et al. (1992: 316) offer an analogous definition. They state: ‘Commitment to a relationship is defined as an enduring desire to maintain a valued relationship.’ For a closer examination of the relationship between the concepts of commitment and loyalty in the service industry, see Pritchard et al. (1999). ‘However, we posit that it is trust that leads a partner to perceive that future conflictual episodes will be functional’ (Morgan and Hunt 1994: 26). ‘Another posited consequence of trust is functionality of conflict, which can be defined as an evaluative appraisal of the


30.

31. 32.

33. 34. 35.

36. 37. 38.

39.

215

results of recent efforts to resolve disagreements’ (Anderson and Narus 1990: 45). Martin (1991) holds a similar position. In the relationship between power and trust, thanks to an experiment based on game theory, Solomon (1960: 229) demonstrated that the probability of a subject trusting someone increases proportionately with the subject’s power upon the said individual. On this same theme, see also Hunt and Nevin (1974) and Gambetta (1989). This section has been co-authored by Monica Grosso. Sometimes, operationalizational difficulties are so relevant that some studies seem to select the variables not on the basis of their analytical relevance but of the simplicity with which they can be translated into measurements and the ease with which data can be acquired. For example, Gulati (1995), in verifying familiarity within alliances, adopts a particular mode of construct operationalization that allows him to use secondary data. Naturally, this limits the originality potential of such researches. For a closer look at the key informant problem referring to behavioural constructs measurement; see in particular Phillips (1981) and John and Reve (1982). Further customer base analysis has shown the prevalence of various antecedents in different typologies of customers, involved in different evolutionary stages of their relationship. Further studies have indeed highlighted how personal relations prevail over organizational ones. Thus, according to the perception of long-term customers, trusting the consultant is more important than trusting the bank. Therefore, in this case and for that consumer segment, sales management and salesforce empowerment play a critical role. The students involved in the research were characterized by a long relationship with the University (fourth year of their study program). The evident conditioning of antecedents on the trust concept induced Andaleeb (1992) to use them as qualifiers of the different trust typologies. On this matter see also section 2 of this chapter. The (individual) trustee’s perceived capabilities – in this case the antecedent cogit – can depend, for example, on the trustee’s past experiences, as certified by his or her curriculum; the courses of specialization attended and the diplomas achieved; his or her professional role or, simply, the certainty of his or her behaviour in dealing with solving the problem assigned to him/her. The perceptual centrality of a construct depends on the number of mutual interrelations that bind it to the other attributes of a cognitive structure. Thus it is possible to define the central constructs (characterized by a high number of interconnections) and the peripheral ones (poor quantity of interconnections). An attribute’s perceptive leverage depends on the extent of its interconnection network. The greater the perceptive leverage of a construct, the smaller is the probability that the said construct (because of external stimuli) will vary in terms of perception and the greater its probability to influence the remaining cognitive structure. Methods based on experiments could be useful in measuring the level of perceptive leverage (for example, Busacca 1994: 128 ff.).

8. The evolutionary and interactive dynamics of trust 1.

INTRODUCTION

A first interpretative model of trust has emerged from the clarification of its analytical boundaries, constituting dimensions, main typologies and relations with antecedents, consequences and moderating variables. In order to fully understand the phenomenon a few more issues need further exploration. First, in line with what was stated earlier, we believe that further exploration is needed of trust’s longitudinal dimension, that is, its dynamics within the overall evolutionary cycle of the relationship, as discussed in Chapter 1 (section 5). Secondly, the reciprocity present in various aspects of the construct is certainly another relevant theme that requires further investigation. Up to now, in most cases the analytical perspective has been unilateral, concentrating on just one of the parties (mainly the trustor). To comprehend the true nature of the concept, a bilateral and interactive vision of the relationship it is needed. Finally, we will be able to represent the phenomenon under study in all its facets mentioned thus far by means of a general model. This concluding chapter is structured as follows. An insight into the longitudinal dimension of trust and a synthetic model encompassing the fundamental evolutionary stages of trust dynamics are described (section 2). This model also allows for individuating the mechanisms that drive both abstraction processes (section 3) and trust development (section 4). A bilateral vision of the phenomenon is then provided (section 5). Finally a synthetic general model (section 6) and some analytical cues on the managerial applications of this work (section 7) are discussed. This should trace the overall logical path to the understanding of the analytical dimensions and most relevant elements of trust management system design.

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The evolutionary and interactive dynamics of trust

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2. THE LONGITUDINAL ANALYSIS: TRUST’S EVOLUTIONARY CYCLE As shown by many contributors, individuals base their trust on their experience and the quality of past interdependences with their counterpart. This is an implicit acknowledgment of the significant impact of relationship duration on trust. More precisely, as time goes by and the relational experiences stratify, there is a change not just in the quantity of trust but also in its quality and features, determining the prevalence of specific analytical dimensions of the construct according to the stage of the relationship. As we have seen in Chapter 1, this is the reason for the inclusion in some recent interpretative models (for example, Wilson 1995; Iacobucci and Zerrillo 1997; Costabile 2001, Chapter 3; Jap 2001b) of specific variables linked to time and stage of the relationship life cycle. 2.1 Analytical Models of the Construct’s Evolution During the Relationship As seen while investigating the different typologies of trust, one of the first distinctions that explicitly considers the construct content is between deterrence-based trust, knowledge-based trust and identification-based trust (Shapiro et al. 1992). The first is based on the consistency of behaviour visà-vis the expectations (behavioural consistency), and is supported by threats of punishment for actions that do not match expectations. The second type of trust is rooted in knowledge that causes the counterpart’s behavioural predictability. The third typology, defined as identification-based trust, is founded on the complete alignment of the parties’ values. This type of trust produces a strong, sometimes emotional, bond between the parties and allows the trustee to act as an ‘agent’ of the trustor, substituting for him or her in managing relationships. On the basis of this classification, Lewicki and Bunker (1995, 1996)1 proposed a dynamic trust model that organizes these three typologies in a sequential iteration, hypothesizing that only after reaching the previous level of trust is it possible to move to the next stage (Figure 8.1).2 Assuming that the two parties are starting a new relationship and therefore that they do not yet know each other, the authors developed an evolutionary model based on the same trust categories already indicated by Shapiro et al. (1992). The first stage is defined as calculus-based trust (instead of deterrence-based trust), showing that the incentive to behave reliably is not just a matter of punishment when behaviours threaten trust (deterrence). Actually, the rewards derived from preserving trust are as important. In this perspective, trust is seen as an ongoing economic calculation, the

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Trust development IBT develops Stable identification-based trust KBT develops

J2

A few relationships Stable knowledge-based trust

CBT develops

Many relationships

J1 Stable calculus-based trust TIME

Some relationships Identification-based trust

Notes: J1 At this point, some calculus-based trust relationships become knowledge-based trust relationships. J2 At this juncture, a few knowledge-based trust relationships where positive affect is present go on to become identification-based trust relationships. Source: Lewicki and Bunker (1996: 124)

Figure 8.1

Trust’s evolutionary dynamics

value of which is established by comparing the results derived from a continuing relationship and the costs of maintaining it.3 In this phase, trust is quite fragile and a metaphor useful to describe it is the game of the goose. The relationship, evolves gradually, step by step, as a consequence of single relational events. As soon as an ‘inconsistent’ event takes place, the relationship can take a few steps back or even return to the starting point. The second evolutionary stage is knowledge-based trust (behaviour predictability), which relies upon information acquired on the counterpart, and interaction continuity, based on a regular communication flow.4 The authors derive the metaphor from agriculture, comparing this stage of developmental modality to ‘gardening’.5 The last stage is the identification-based trust, which appears when the parties reach a full mutual identification with each other’s desires and intention, to the point that a party can act on behalf of the other with greater zeal than the other would show him/herself. In this phase, the so-called ‘second order learning’ takes place. This peculiar learning process enables one party to understand, even when precise information is missing, what really interests the counterpart and attribute equal importance to behaviours considered


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relevant by the latter (Lewicki and Bunker 1996). In order to develop identification-based trust, in addition to the modalities already applied to trust typologies of the previous stages, it is possible to focus on (Lewicki and Bunker 1996; Shapiro et al. 1992): 1.

2.

3.

4.

Collective identity development (for example, through co-branding); this is the case of partners who offer a brand association on the market, leveraging their common values to increase customers’ identification and trust. Location in common buildings (co-location); for instance, when P&G and Wal-Mart developed a strategic partnership to implement their well-known category management project, the interested portion of P&G management moved into Wal-Mart headquarters. This often happens when complex supply processes are managed, such as consulting services. Joint creation of products or definition of integrated goals, as shown by some partnership between manufacturers and retailers (see the Efficient Consumer Response, an association of FMCG retailers and manufacturers, born to valorize channel synergies within the supply chain). Commitment to share the same values, to the point where the parties are perfect substitutes in terms of permanent relationships; this is exemplified by the relationship between consumers and firms that are firmly committed to fair trade.

The metaphor for this stage is the musical harmony achieved by orchestras, when the individual components ‘think like’ the other, ‘feel like’ the other and ‘respond like’ the other, merge with part of the counterpart’s psyche and develop a common identity. Strongly embedded in a symbolic-interaction perspective, Jones and George (1998) introduce a partially different trust evolutionary model. Their model is structured in three fundamental stages – initial distrust, conditioned trust and unconditioned trust – and proposes an analysis of events leading to the dissolution of the relationship. The hypothesis behind this model is that individuals mostly act according to meanings learned while interacting with other subjects, forming in time a common definition of the social context (collective sense making). More specifically, in every interaction, the interested parties develop and negotiate a mutual definition of their interdependent situation. This contextual co-generation requires from each actor an effort to interpret the other’s expectations, needs and goals, while gradually adapting all reciprocal interpretative schemes to the specific social situation. The likelihood of such an adaptation depends on

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Trust development

the degree of similarities in values, attitudes, mood and feelings of each party. At the beginning of the relationship, the parties act according to a certain judgement suspension regarding the counterpart’s alleged unreliability, and behave as if there were identity of values and mutual trust, fulfilling the initial essential condition for interaction development. Subsequently, conditioned trust develops according to the evolution of the joint learning process. In this relational state the parties are willing to interact with each other, but only if each behaves appropriately, adopting similar interpretational schemes in order to define the situation at hand. This type of trust is similar to the knowledge-based trust conceptualized by Lewicki and Bunker (1995, 1996) insofar as it allows the development of positive expectations toward the counterpart (Sitkin and Roth 1993). Next, unconditioned trust represents a phase of the relationship in which the parties fully abandon that ‘judgement suspension’ which characterized the previous stages, because the social situation is now based on shared values, learned by successive iterations. Finally, when the mutual expectations are no longer satisfied and the promises of the parties no longer fulfilled, the spiral of trust is inverted, and the relation degenerates into distrust. To better compare these last two models, two elements should be noted. First, it seems that Jones and George (1998) conceptualize initial distrust, conditioned trust and unconditioned trust as different states of the same construct and not as separate concepts, as implied by the first model and, for example, Sitkin and Roth (1993). Second, as a direct consequence of the first observation, Jones and George distance themselves once more from scholars who support the existence of different and univocal determinants for each trust typology (for example, Shapiro et al. 1992; Wilson 1995). The latter, as seen before, hypothesize instead that there is a direct correspondence between specific antecedents and several trust types. Thus they establish that deterrence-based trust is determined mostly by sanction threats; knowledge-based trust is based on knowing the counterpart’s capabilities and predicting his/her future behaviours; while identification-based trust depends on the fine tuning of the parties’ values, desires and needs (a position similar to Lewicki and Bunker’s (1996)).6 2.2

Starting a Trust Relationship: the Initial Trust Paradox

In view of the critical role of trust’s longitudinal dimension, it seems appropriate to briefly review the initial stages of a building trust relationship as well as its decline and final dissolution. In particular, those who have paid distinct attention to this phase have highlighted the almost paradoxical effect of trust, noting that, at the very start of a relationship, when the


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parties do not know each other, trust can be strong and deep. Among the models focusing on this specific stage of trust dynamics, it should suffice to recall: Whitener et al.’s (1998), dealing with the starting of a trust relationship between managers and their associates; Blomqvist’s model (2001, 2002), focused on the starting and shaping of asymmetrical technological partnerships in the hi-tech industry; Tan and Santosa’s (2001) contribution to a better understanding of factors activating the very first e-commerce transaction; and the model of McKnight et al. (1998), specifically geared to clarifying trust’s paradoxical initial effect. To achieve such clarity, the ‘hidden’ factors and processes that foster a trust relationship between actors who have never met each other before has to be identified. In particular, analytical importance is acquired by behaviours based on trust assumptions about the counterpart’s goodwill, competency, honesty and predictability. Such assumptions can be generated by the activation of some fundamental cognitive mechanisms. First of all, an actor can perform ‘institutional transfers’, extending his/her trust toward external institutions to subjects who belong or are influenced by them (institution-based trust). Further, it is possible to apply cognitive elements, referring to individual categorization processes based, for example, on reputation or the illusion of control. Finally, in activating initial trust, an actor can exploit elements related to his/her own predisposition to trust, derived in turn from economic advantage (trusting stance) or more generic individual propensities (that is, generalized trust or, better, faith in humanity and other people). These categories define the main mechanisms and the fundamental initial motivations of relationships that are based on a trust prerequisite, without any previous sharing of knowledge or values.7 2.3

The End of the Relationship: Trust Betrayal

Hoping to better understand trust’s evolutionary cycle, some scholars have delved into the relationship’s final stage (termination) and, especially, the identification of events determining trust violation and betrayal. Contrary to more popular models on this topic, some works have focused on the perspective of the betraying party (avoiding the almost trite victim’s point of view). See for example Elangovan and Shapiro (1998) and their analysis of the cognitive processes and motivations that trigger the creation of distrust. The authors concentrate their attention on opportunistic betrayals,8 showing how these behaviours are essentially determined by both a series of elements defining the interaction context and, especially, the satisfaction level associated with the relationship. Such a level is based in turn and foremost on the benefit of the trust relationship’s continuation vs. its betrayal (namely the betrayal’s calculus-based dimension) and, secondly,

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Trust development

on the perceived level of exchange fairness, the relationship perspective continuity and the possible availability of relational alternatives.9 Differently from the previous model, Lewicki and Bunker (1996) proposed a classification of various violation typologies corresponding to specific typologies of trust betrayed. Thus they differentiate betrayals of calculusbased trust from those of knowledge-based trust and from the violations of identification-based trust.10 For each typology, their classification highlights the heterogeneity of violation mechanisms when referring to diverse stages of trust’s evolutionary dynamics and different salvage strategies. In fact, events leading to the decline of a calculus-based trust relationship have features quite different and less relevant in importance as perceived by the parties (owing to the fact that they refer to thin trust) than those determining the end of an identification-based trust relationship, which are considered much more grievous because of their association with thick trust. Although the former events can offer salvage paths based on an explicit rebalancing of economic values and mutual cost–benefit relationship (fairness), the latter require much more complex interventions, often implicit in nature. Having defined the triggering mechanisms and the diverse typologies of violation that can take place, it is useful to understand betrayal’s consequences for both the firm-trustee, which inevitably loses intangible and economic assets, and the trustor, the customer or partner. To this effect, in addition to the consequences analysed in the previous chapter (section 3), it is useful to focus on that peculiar ‘feeling of revenge’ typically felt by those whose trust is betrayed. A content analysis of data collected during a qualitative survey has shown that the answers to a trust violation can be basically classed as follows (Bies and Tripp 1996): ‘revenge fantasies’, ‘do nothing’, ‘private confrontation’, ‘identity restoration’, ‘social withdrawal’, ‘feuding’, ‘forgiveness’. 2.4

Evolutionary Dynamics of Trust Relationships: a Synthetic Model

According to the contributions found in the literature, it is possible to suggest a general model of trust development, structured in four basic stages (Figure 8.2), which closely mirror the phases of trust’s evolutionary dynamics (Chapter 1, section 5): 1. 2. 3. 4.

convenience stage (early contacts) knowledge stage (development and learning) value sharing (expansion) termination of the relationship.

Each of these stages will be briefly discussed.

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A b s t r a c t i o n

TRUST STAGE

Early contacts

Convenience

Calculus

Relationship pros and cons

Contact acquisition

Development and learning

Knowledge

Prediction

Capability to satisfy needs Perceived value and motivations (fairness)

Relationship development

Expansion

Sharing

Identification

Values and integrity

Termination

Ending

Disconfirmation

Betrayal of any of the above-mentioned determinants

Relational bandwidth expansion Relationship salvage

Figure 8.2

TRUST MECHANISM TRUST’S CENTRAL DRIVERS (HIGH PERCEPTIVE LEVERAGE)

FIRM’S MAIN GOALS

PHASE

A suggested synthetic dynamic model

In the convenience stage (1) trust is extended on the basis of a simple economic calculation centred on personal convenience, because the parties establish that the benefits of trust development exceed the risks of trust betrayal. This calculus extends to determining the value of the exchange by comparing the relationship inputs and outputs. Thus, it is possible to define and project an expected future satisfaction level. At the same time, the evaluation can include the damages that a possible betrayal can cause. For example, a supplier can lose reputation if it does not keep the promises made to its customers. During the knowledge phase (2) trust is a function of adequate knowledge that leads a customer or partner to evaluate the trustee’s capability of acting according to expectations or, in any case, exhibit behaviours in line with the trustor’s goals. Loyalty management programs started by some firms represent, in this context, true channels of knowledge exchange. Analysing its customer database, containing information on the customers and their past purchasing and consumption behaviours, a firm can develop a better customer knowledge. Knowing demand’s purchasing habits, needs and preferences, the firm can tailor its offer and therefore increase its competency as perceived by the customer. Positive (in terms of satisfaction) and reiterated experiences increase the customer’s capability of predicting the counterpart’s behaviours, further strengthening their trust relationship. The third stage is when the so-called value sharing takes place. At this time, the interaction between customer and firm is so strong that it is based on common values and identities. As will be seen later, in this case trust can reach high abstraction levels, allowing the firm to free the relationship from specific goals and performances, and increasing the relationship’s

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Trust development

‘bandwidth’. This trust typology is the best to be extended, with due caution, to new businesses, because – fully free from specific contents and performances – the trustee can act on behalf of the trustor in very different environments. The modalities used by firms to develop this type of trust often include a social dimension, such as the establishment of clubs or communities, characterized by value positioning (for example, Cova 1997; Oliver 1999; Bagozzi and Dholakia 2002; Munitz and O’Guinn 2001) allowing a more immediate extension of the offer scope to businesses which are not directly related to the original firms’ ones. Actually, the termination (4) of the relationship can take place immediately after any of the aforementioned stages. In this case, the customer, who has experienced one or more betrayals of his/her trust in the firm, is forced – eventually after attempting sometimes to signal his/her dissatisfaction (the voice option, according to Hirschman) – to stop the relationship with a supplier, exercising the exit option. In turn, this determines the firm’s need to salvage this relation, according to modalities that significantly vary as a function of the trust stage reached by the customer before entering into this phase. In general, the betrayal’s grievousness is increased by the evolution of both relationship and trust from situations solely based on convenience (thin trust) to realities shaped by value sharing (thick trust). In order to correctly manage this phase, loyalty management tools and programs referring to each of the previous stages must supply appropriate mechanisms geared to facilitating and supporting the customer’s voice option (delaying his/her exit from the relationship), as well as immediate processes that allow timely and adequate salvage actions (Costabile 2001). In fact, it has been clearly proven that when the salvaging is immediate and satisfactory, the resulting trust in the firm can even be strengthened. Thus, small betrayals become opportunities to further consolidate a relationship, as long as it is supported from the beginning by adequate identification mechanisms, and then salvaged by appropriate interventions, rebuilding the relationship.11

3.

TRUST ABSTRACTION PROCESS

Within a relationship’s evolutionary dynamics, trust evolves from a situation of convenience to shared values and customer identification with the trusted firm, brand or sign, with a clear abstraction from its contents. To better understand this phenomenon’s peculiarities, the means–ends chain model, a scheme originally developed in marketing studies to conceptualize image, seems useful. According to that model, the image of an object or relationship can be described at several levels, hierarchically linked in a means–ends type


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Terminal VALUES

TRUSTOR’S KNOWLEDGE Instrumental

ABSTRACTION LEVEL

Symbolic BENEFITS Experiential/emotional

BENEFITS

Functional

RELATIONSHIPS PRODUCT

SERVICE

ATTRIBUTES

ATTRIBUTES

Intangible TRUSTEE’S KNOWLEDGE Tangible

Source: adapted from Gutman and Alden (1985)

Figure 8.3

Means–ends chain diagram

relationship. In that perspective, the object or the relationship represents a means to a specific end that, at the highest abstraction levels, is constituted by the individual’s own values (Reynolds and Jamieson 1985). In general and as a consequence thereof, individuals mentally represent their perceived stimuli as a series of cognitive associations, which can be classed in levels of increasing abstraction (see Figure 8.3).12 At the lower level, there are associations related to (and relationships established with) the object/subject’s perceived contents and their tangible (trustee’s characteristics or functional elements of a product/service) and immaterial (honesty, motivations, capabilities) features. This level, which represents a very concrete aspect of trust, can be linked to a second abstraction plane that concerns associations referring to the consequences of those feature sets, that is, the advantages offered by the relationship. These benefits can be grouped in three fundamental typologies: the first and most concrete includes functional advantages; the second consists of benefits attached to the individual’s experience within the relationship and with its emotional content; finally, the third category concerns symbolic benefits linked to the relationship’s perceived meanings in social and psychological currency (status, role assertion, self-gratification). Associations with the

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Trust development

values the relationship has evoked constitute the pinnacle of the means– ends hierarchy. These values can be defined as ‘mental representations of important goals that the consumer wants to achieve in life’ in terms of behaviours, social standing (instrumental values) and self-esteem and living conditions (terminal values) (Busacca 1995).13 With the means–ends chain model, the abstraction vector of the relationship content can be pursued by developing specific cognitive associations with symbolic and experiential benefits or, at the upper level, with values.14 In our view, the means–ends chain constitutes a cognitive link between the subject (trustee) with whom the relationship is established and the image the trustor has of him/herself. In fact, existing connections between an individual’s characteristics and contents and their functional consequences define the trustee’s knowledge area, whereas more abstract links, binding experiential and psycho-social benefits and individual values, identify the trustor’s (self-)knowledge area (Busacca and Castaldo 2000). To understand the connections at the lower level, namely the level concerning the counterpart’s characteristics (referring to the trustee’s knowledge), we should consider the trustor’s cognitive structures and related concepts such as centrality and perceptive leverage.15 In fact, these concepts describe the type of interconnection that exists between the perceived elements, and underscore the characteristics most apt to influence the trustee’s global image. The trustor’s self-concept can be found at the opposite extreme of the means–ends chain. The said concept has a determinant role in choosing the various relational alternatives. In particular, proponents of the so-called self theory define the basic criterion regulating the evaluative system of an individual as the degree of resemblance between the trustee’s image and the individual’s self-image, essentially shaped by personal values.16 Empirical tests have shown the existence of a significant correlation between the consumers’ personality and the product they purchase, the store they patronize, their preferred salesperson profile and so on (for example, Bellenger et al. 1976). As previously indicated, abstract trust is based on relationship perceptions, characterized by value sharing. At the other extreme, there can be a very ‘concrete’ trust, based on the capability to produce value and perform specific functional tasks. Therefore, trust’s degree of abstraction depends on the level reached along the means–ends chain. The amount of trust abstraction defines the opportunities available in terms of relationship extension. In fact, it has been proven that a stimulus can be extended in direct proportion to the level of abstraction of trust value valences (Busacca and Troilo 1992).17 Thus, prerequisites can be established and it


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is possible to extend customers’ trust to businesses that are somewhat correlated. The retail corporation Coop Italia, for instance, has been able to build with its partners-consumers a trust relationship mainly based on shared values. This trust, in turn, has allowed them to successfully extend the relationship with the demand, such as the extension of the retailer brand to products. Furthermore, in Italy, Coop is the chain with the highest index of private label penetration. The firm has leveraged the trust patrimony and extended its service range to some typologies of experience products perceived as high risk, such as financial and travel services. Therefore, trust extension policies determine the possibility of widening the needs satisfied by a firm and, consequently, its market scope. Thus, trust abstraction process generates a widening of the competitive arenas. Such expansion, when specifically referring to relationships based on a high level of trust abstraction, demands new analytical perspectives in order to understand competitive interdependencies (Chapter 1, section 6). These interdependencies are becoming more relation-specific and trustbased than in the past. To reconstruct them, we need new interpretative tools capable of tracing the relational grid and the specific trust typologies that imbue it.

4.

TRUST BUILDING STRATEGIES

The previous section has examined the implications of trust’s gradual development and the abstraction of its contents. Now we will focus on the identification of strategies and behaviours that allow a firm to develop such a resource. However, before doing that, we must clarify the actual possibility and, consequently, opportunity of performing deliberate actions of trust development. Some scholars believe that this is not an adequate strategy, because as soon as one deliberately chooses behaviours of this type, the resulting trust is ‘artificial’, finalized to the (egotistical) goals of the individual trustees and therefore fully alien to the ‘pure’ concept of trust. To the contrary, we believe that trust management is not only feasible but also represents a functional orientation of economic system development. Naturally, this statement refers to the development of true trust, not the so-called ‘trust façade’, which hides opportunistic behaviours (for example, Hardy et al. 1998). A trust façade is not true trust, because the trustee risks a quick termination of the relationship with the trustors s/he has duped, as soon as they identify his/her true intentions (as is inevitable after the first checks so typical of the vigilant trust that characterizes the relationship’s first developmental stages). To the contrary, trust development allows the establishment of long-run relationships, based on transparency, honesty,

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Trust development

competencies, personal values, lack of opportunism, fairness, integrity and mutual satisfaction. This very demanding goal heralds positive implications for economic systems, organizations and individuals alike. Indeed, it is difficult to find a good reason why a firm should not adopt such ‘trust policies’ and enjoy their positive effects both at the ambience level – diffusing a trust climate favourable to exchanges and characterized by greater transparency – and for the parties to the relationship (as seen earlier, ‘true’ trust benefits both trustee and trustor). We believe that trust is a resource advantageous to firms, consumers, markets and society at large and that, as such, it needs to be deliberately developed by everyone who can contribute to its growth, even when this contribution is limited to the definition of trust’s developmental prerequisites. Public institutions, governments, private organizations, firms, citizenry, customers and sellers have a joint ethical responsibility to realize an economy of relationships and connections based on trust. As a first step toward promoting the development of true trust, there is a need to identify and harshly punish behaviours that are deliberately geared to deceivingly and opportunistically exploiting such trust. This would favour the selection of high trust content behaviours and attitudes, producing a context more conducive to true trust development.18 Having established the importance of trust building as an element that helps organize the growing complexity of individual choices and reduce their uncertainty, it is important to review the modalities of its effective realization. In fact, trust management researches underline the critical role played, at the individual level, by the development of trust expectations toward the counterpart. To this effect, it is possible to isolate three basic approaches, which should not be considered alternative or exclusive: 1. 2. 3.

those based on antecedent activation those intended to analyse in depth the cognitive mechanisms underlying trust production those that identify growth strategies integrating the simple drivers’ leverage.

The first approach requires first of all the identification of the most central drivers, namely those having the most consistent perceptive leverage within the semantic network that defines the concept of trust. Subsequently, firms need to take appropriate actions in order to ‘stimulate’ the said drivers, with clear comprehension of their role as hygienic factors or, to the contrary, as motivators.19 In this regard, it seems useful to review the example referring to the process by which new trust relationships are forged with subjects never known before, whom an actor initially contacts only in a virtual environment


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(McKnight et al. 1998; Tan and Santosa 2001). In this case, relational uncertainty is considerable and, as a consequence, the need for trust is quite high. For this reason, the parties must find the operational modalities that work best in activating the appropriate trust drivers. Naturally, the partner’s newness presents an inevitable gap with reference to both past experiences and satisfaction, two of the fundamental elements needed to build a trust relationship. To bridge that gap alternative mechanisms must be found, producing the trusting climate needed to establish online relationships and enact the connection potential offered by virtual environments. Some of these actions are illustrated in Table 8.1. See, for example, the use of rating modalities and participant pre-selection to mitigate the problematic lack of previous contacts with the counterpart; or the organization of a forum in which to exchange information and generate that level of mutual knowledge so Table 8.1

Trust drivers in e-commerce: a few examples

Driver

Examples of trust driver activation mechanisms

Satisfaction

Customers’ rating

Capabilities and competencies

Certification and selection of marketplace players Detailed information on a firm’s competencies

Motivations and absence of opportunism

Objective advice In some conditions, ‘Do not buy’ and ‘Buy later’ suggestions

Collaboration

Opening of two-way communication channels (forum) Starting of a partnership online (e.g. a link exchange) and co-branding

Cultural and value overlap

Value-based virtual communities Value definition freed from local community affiliation

Communication transparency

Communication frequency, clarity and customization Reporting the competitors’ offers

Specific investments in the relationship

Costs and structures referring to the customer’s acquisition process and relationship tailoring

Source: translated from Castaldo and Ordanini (2000)

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vital to building a collaborative climate. The following represent further positive modalities of impact on trust antecedents: signalling the competitors’ offers, a strict selection process of participants in marketplace and virtual communities, advise to postpone the purchase of the firm’s products and showing the risks in performing a given transaction (for example, Reichheld and Schefter 2000; Urban et al. 2000; Prandelli and Verona 2001; Tan and Santosa 2001). These behaviours establish the prerequisites of a recursive trust production process, bound to territorially defined markets, which allows the creation of wider, trust-based ‘virtual markets’. According to the contents of the previous chapters, the second type of trust development mechanism is characterized by the following five basic trust building processes (Doney and Cannon 1997; Doney et al. 1998): ●

●

●

●

●

Calculus-based processes The trustor is induced to calculate costs and benefits of the trustee’s possible opportunistic behaviour. These mechanisms are most studied by those who adopt an economic perspective (for example, Dasgupta 1989; Williamson 1993) and who postulate as a basic tenet that human behaviour is dictated by mainly opportunistic demands of self-interest maximization. Predictive processes The trustor can count on his/her forecasting of the trustee’s behaviour within a good approximation margin. These mechanisms are in line with the social psychology tradition (Deutsch 1962, 1973; Good 1989; Lewicki and Bunker 1995, 1996; Huemer 1998), and assume that human behaviour is consistent and predictable. Intention-based processes The trustor is mostly interested in verifying and evaluating the trustee’s motivations to collaborate (which have been previously shown to be one of trust’s main determinants). These processes also derive from social psychology tenets (for example, Lindskold and Bennet 1973; Rempel et al. 1985) and assume a natural inclination of individuals toward others and the will to achieve results not only autonomously but also as a consequence of joint and collaborative actions. Capability-based processes These induce the trustor to evaluate the trustee’s capability of fulfilling his/her promises. This mechanism has sociological roots (Barber 1983) and assumes the existence of significant differences among individuals as to their competencies, abilities, experience and, therefore, capabilities of fulfilling expectations. Transference-based processes The trustor transfers trust from a known subject or entity to an unknown subject (the trustee). This is a trust extension mechanism with sociological roots (Granovetter 1985), assuming that interpersonal connections within social networks are consistent and reliable.


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Finally, the third approach includes several strategies of trust enhancement, well beyond a simple activation of trust drivers and trust development processes as presented in the first two processes. These strategies can be classified as follows: (a) (b) (c) (d) (e)

use of trust itself frequent communication between the parties starting with a trust prerequisite trusting oneself trusting the counterpart.

Trust is a moral resource that is not consumed but rather enhanced by use (Dasgupta 1989; Gambetta 1989; Nooteboom et al. 1997). In fact, succeeding confirmations of trust in someone simply strengthen the trust in this subject, increasing the multiplicity of positive experiences (a). As a consequence, trust is fed by the continuous creation of new expectations toward the counterpart (namely, making new promises) and the adoption of behaviours capable of continuously satisfying the expectations thus created. As shown in the previous chapter, communication facilitates trust establishment and helps reduce the relationship uncertainty (b). On this matter, Deutsch (1958, 1962) has demonstrated that clear and complete communication flows have a positive impact on the possibilities of trust enhancement within a dyadic relationship, facilitating negotiations. Clarity and effectiveness of a given communication depend on the language used. Therefore, sharing the codes and values that underlie communication flows contributes to trust building, making communication more effective and efficient. When the parties share a culture, trust resources are enhanced. As already seen, communication transparency contributes to trust building and is influenced in turn by the mutual trust level of the parties, linking the two variables in a circular loop. Trust depends as well on the expectations that an actor formulates a priori (c).20 If an enterprise is supposed to be scarcely reliable, it is likely that this hypothesis will be confirmed, even when it is not objectively tested. A peculiar and already discussed quality of trust is its growth by autopoietic mechanisms.21 In fact, it is most likely that organizations or individuals share experiences with subjects they trust more. Subsequent positive experiences deepen that very trust. Firms that are not trusted, and therefore with which no experience has been shared, have no chance to modify such initial negative perceptions (whether or not motivated), which are strengthened instead.22 Also distrust, as much as trust, is characterized by a self-realizing property, generating a congruent reality (Gambetta 1989: 305). An initial

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Trust development

belief, as hypothesized by an individual or firm, affects trust growth paths.23 In fact, as long as the relationship evolves positively, namely as long as a party does not betray the other’s trust, each partner is induced to continue interacting with the counterpart, whose behaviour is easily predicted, being constantly aligned with his/her promises. Lacking the same learning level, relationships with other subjects are thus avoided. This also explains the difficulties encountered in entering a market or expanding the market share in industries characterized by strongly consolidated trust relationships, because these relations make it difficult to bridge the gap between a firm’s partners and those who would like to be its new counterparts. In these contexts, trust plays a decisive role in attenuating competitive interdependencies. This function is particularly significant when the relationship concerns especially complex tasks which demand a consistent learning effort from the actors involved. In these cases, it is much more economical, as a cognitive shortcut, to continue trusting those who were trusted in the past than to start new relationships that would require a significant effort in terms of learning and building what we defined as knowledge-based trust. Further, trust put in a firm by others depends on the trust the said firm places in itself (d) and, in particular, on its capability of performing tasks of interest to external subjects (Lehrer 1997). As seen before, capabilities and knowledge are a main component of trust: if the trustee does not trust his/her own capabilities, it seems likely that external actors would sense an ability gap, opening the way to distrust or, at best, hopeful trust as defined by Andaleeb (1992) (Chapter 6, section 6.3). Finally, as will be better shown in the section below, trust is a reciprocitybased resource (e): the enhancement of trust in a party facilitates trust bestowing in the opposite direction (Gambetta 1989). Consequently, in order to increase the trust in an actor, the latter needs to trust the trustor (although this step by itself is not sufficient to achieve that goal).24 Triggering this virtuous cycle is paramount to trust relationship consolidation and its translation into collaborative behaviours. In situations in which an actor shows preset distrust toward the counterpart, the process of mutual trust building might be stillborn.25

5. TRUST’S INTERACTIVE DIMENSION: THE DIALOGUE BETWEEN COGNITIVE REPRESENTATIONS Trust is the outcome of a developmental process based on behaviour reciprocity (for example, Anderson and Weitz 1992). Therefore the points of view of the two actors should be examined jointly. Thus far, the parties to


233

POINT OF VIEW A – Trustor (Enacted)

B – Trustee (Virtual)

Enacted self

Virtual self

Enacted other

Virtual other

A – Trustor (self) OBSERVED SUBJECT

B – Trustee (other)

Figure 8.4

Subjects’ interaction from the point of view of the trustor (self)

the relationship have been considered as if they were linked by a mainly unidirectional relation within the processes of trust building. The trustee has been seen as the first mover of trust creation process in the trustor, who passively receives and interprets the signals sent by the former. Actually, one of the fundamental signals is exactly the trust of the trustee in the trustor. This is why the one who generates trust (trustee) becomes at the same time the subject who places it (trustor), forging a relationship based on reciprocity. Market relationships between buyer and seller can only be understood by considering the interaction between their different perspectives or, better still, their respective cognitive schemes. Trust, as much as other social variables, is in fact a construct that gains true interpretative value only when plunged into a reality made of different points of view. Trust enhancement paths are based on reciprocity: the trust that A puts in B depends on A’s perceptions of the trust that B puts in A in turn. Therefore, the actors involved in the relationship interpret and enact a reality built by the counterpart, as seen through the latter’s eyes. To this effect, different cognitive representations can be isolated; in particular, the representation of the enacted other and those defined by Braten (1988), albeit with different purposes, as virtual other and, in this context, virtual self. As shown in Figure 8.4, constantly maintaining the trustor’s perspective (subject A), the enacted other identifies the way A perceives the other ‘enacted’26 party B (trustee) and figures the latter’s reliability level. The virtual self represents the way in which A (trustor) believes that B perceives A (the self, considering that the main observing perspective is indeed A’s). The virtual other is the cognitive representation27 of the way, as A perceives it, in which B (the other) sees him or herself. In these last two cases (labelled as virtual), because it is A who walks in the shoes of B and tries to understand B’s reality, this reality becomes ‘virtuality’. B’s perspective is under scrutiny, even when it is observed from A’s vantage point (it is unthinkable, in fact,

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Trust development

to fully disregard the observing subject’s experiences). When a person has to decide whether to conclude an agreement with someonelse, s/he should consider the world from the latter’s point of view, as it should be when the counterpart has to fulfil his/her obligations (Dasgupta 1989: 65).28 As an individual cognitive construct, trust is the result of the interaction, observed from the trustor’s perspective, between enacted (A) and virtual (B) representations. In fact, the decision to trust a counterpart derives from the trustor’s perception of: (A1) his/her own trust profile (enacted self) (A2) antecedents and behaviours of the other party (enacted other) (B1) her/himself as perceived by the trustee (virtual self) (B2) trustee self-perceptions (virtual other). These constructs’ interaction represents the configuration modality of the relationship at the cognitive level. Naturally, the interaction process that takes place within the so-called two-way relations expects that those representations – which reside and interact within the cognitive system of each party (a combination of interdependences between enacted other, virtual self, virtual other and, in some instances, even enacted self) – interact in turn, generating a true social relation. This is simply the result of a dialogue between the representations that reside within the cognitive systems of both dyadic members (for example, Pruvost 2001). One of the main problems raised by such a theoretical representation is how to detect single cognitive constructs and their interaction, especially when the relational network includes a large number of actors. A possible solution can be found in connectivist theory and, in particular, in its principal tool: neural networks. They represent an attempt to reproduce on computers the way the brain operates, simulating its structure, made out of neurons (nexuses) and synapses (connections). In this context, some scholars have concentrated their studies on problems linked to perception.29 In particular, a methodology developed by Buscema and Massini (1993), labelled model MQ, applies neural network technology to the representation of interpersonal perceptions and, more precisely, the modalities used by individuals to represent their own relational network at the cognitive level.30 That model hypothesizes that each actor involved in a relational network is an organism that builds, in parallel, both its own identity and the identity of the other from the point of view of the latter, within the spatial domain of its existence. . . . Therefore, each actor is a stable spatial-temporal locus that elaborates virtual and concrete images of its own and others’ identities. (Buscema and Massini 1993: 27–8)


235

After measuring each actor’s perceptions via a questionnaire-simulator, the model – based on a particular neural network, called self-reflecting – accounts for the interaction of the various subjects’ perceptive constructs. Thus, each actor’s perceptive network is the product of the interaction between his/her perspective and those of the subjects to whom s/he relates. This is what stimulates the social and cognitive interaction among representations from which the relationship and its trust contents derive.

6. SOME CONSIDERATIONS ON AN INTERPRETATIVE MODEL OF TRUST In concluding this analysis of trust and its development mechanisms, it seems useful to process the remarks made so far within a synthetic scheme that partially ends this analytical journey while acting as a starting point for future close examinations. Such a scheme (shown in Figure 8.5) includes the following elements: ●

●

●

●

●

the relation between the concept of trust, its determinants, consequences and moderating variables, according to the exploration made in the previous chapter, and taking into account the structure of the semantic network that underlies the trust concept; the construct multidimensionality, namely the nature of the different analytical (mostly cognitive and emotional) dimensions of trust, which determine diverse typologies and are differently impacted by various antecedents, as seen in Chapter 6; the longitudinal dimension of the relationship, explicitly considering the evolution of trust (in stages, from convenience, knowledge and sharing to termination) and its abstraction process, as seen in the early sections of this chapter (point A in Figure 8.5);31 the points of view of both trustee and trustor, who interact according to their respective representations of virtual self, virtual other and enacted other (point B). The first analytical level requires that trust’s interpretative models be surveyed at the individual level. In subsequent analytical steps, these models need to be studied while interacting among themselves, because the trustor’s trust in the trustee also depends on the (perceived) trust that the latter puts in the former, implicitly verifying the quid pro quo hypothesis. the relational stratification of the dyad, explicitly considering the interpersonal and inter-organizational levels and, especially, the interaction existing between these two layers (point C). At the same time, the problems derived by a possible cognitive dissonance are

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Trust development

A. Evolutionary cycle

B. Reciprocity

Start, development,Ł expansion

Enacted other,Ł virtual other,Ł virtual self

TRUST Antecedents

CognitiveŁ dimension

Consequences

EmotionalŁ dimension

Moderating variables C. Multi-layer

D. Network

InterorganizationalŁ level, interpersonalŁ level and interactions

Reliability,Ł structureŁ and position

Institutional trust

Figure 8.5

●

●

Synthesis of trust interpretation

easy to guess. This dissonance can appear when a perceptive alignment between these two levels is missing, creating a consonance gap. the influence of the network in which the dyad is embedded upon its own functions as both a generator and conditioner of dyadic trust, as seen in Chapter 1 (point D). Particular attention should be paid to both the effect on trust in the network (systemic trust) and his or her position within that network. Some of the elements that can create reliability at the individual level are the actor’s centrality, his or her capability of filling the so-called structural holes (Burt 1992, 2005) and belonging to the same clique. the role of the so-called institutional trust and the modalities by which it biases the trust building processes within the dyad (point E).

A general interpretative scheme should include, albeit at a high level of abstraction, all of the above-mentioned aspects. Then it could become a useful reference, unifying future and better-defined specific models, as required by the evolving knowledge of the construct. In fact, as already seen in the previous chapter, in order to perform adequate empirical researches it is impossible to focus on any but partial aspects of the phenomenon. This allows setting the analytical boundaries and isolating some variables, assumed as more relevant, in order to further study their interconnections. This advantage is countered by the problems caused by partiality and the associated need to ‘neutralize’ the impact of external


237

variables on those of the model. The relation of two constructs, even when correctly identified from the empirical standpoint, could in fact hide the influence of other factors that were not considered but which can amplify or attenuate empirically verified relationships. In parallel with in-depth studies on trust’s specific elements, based on empirical researches, this limitation will prompt future generalizing attempts in order to define models suitable to account for, at a higher abstraction level, the categories of variables that are crucial to interpreting the phenomenon and its constituent dimensions.

7. CONCLUSION: TOWARD ‘TRUST MANAGEMENT’ The synthetic scheme illustrated in the previous section is a useful reference for the managerial implications of this work and the definition of guidelines for trust management. In particular, it is suggested that be structured in two fundamental stages (Figure 8.6): (a) an analytical phase, aimed at measuring trust and the connections with its related variables; (b) a phase of definition of trust development strategies. Trust measuring systems (a) need to be developed beforehand. They need to assess the construct’s consistency and quality (typologies) according to the various interaction levels: dyadic, systemic, institutional and so on. As expressed before, it is crucial to clarify the concept meaning and its analytical dimensions in a way that well defines the object to be measured, and develop solid detection systems, especially (see Chapter 7, section 5) in terms of variable operationalization, scope of research, key informants’ identification, empirical survey methodologies, and data treatment systems. Subsequently, in a managerial perspective, it is appropriate to verify the logical link connecting the construct and its consequences, in terms of both functional implications and economic value. To this effect, managers need to be aware of trust’s economic impact in addition to its benefits, both cognitive (uncertainty reduction, conflict control, commitment enhancement) and behavioural (collaboration, partnership and loyalty). In fact, only a full understanding of trust’s ‘real’ benefits makes it possible to reach that fundamental level of commitment that is needed to implement effective development strategies and to make accountable and control the single operational units involved in the innovative process of trust production. Finally, in order to fully measure the phenomenon, managers need to quantify both the relation between the construct and its cognitive and behavioural antecedents (that is, the weight of the constructs that contribute to the semantic network creation), and the impact of the

238

Trust development ANALYSIS Level measurement/typology definition Relationships with consequences Antecedents and semantic network structure

DEVELOPMENT STRATEGIES Internal External Driver-based Process-based Trust mimicry Evolutionary dynamics and abstraction processes Multi-layer interventions

Figure 8.6

Network-based (semantic trust) Institution-based (institutional trust)

Trust management analytical and strategic stages

so-called moderating/amplifying variables (for example, Baron and Kenny 1986). With regard to this and in line with the approach already described, it seems appropriate to reconstruct the semantic network structure underlying the concept, as well as detecting the leverage values and perceptive centrality of the single antecedents. In dealing with trust development policies (b), it is advisable, for simplicity’s sake, to distinguish between the relationship’s ‘internal’ elements and ‘external’ factors. As seen already, policies promoting internal factors can be focused on the activation of drivers, the corresponding development processes (predictive, or based on intentionality, capabilities or transfer), and the strategies previously defined as ‘transversal’ (continuous use of trust, communication transparency, starting from a trust prerequisite, trusting oneself and the counterpart). In marketing, particular relevance should be attributed to managing the various relational interfaces and the so-called trust mimicry. For example, a manufacturer of consumer goods marketed through self-service formats relates to his or her customers only with the support of the product itself and through advertising campaigns or other forms of communication, direct type included. To the contrary, a retailer interacts with the customers through variety (single brands, even private labels), stores (space, layout, equipment, and so on), salespeople (adding an interpersonal dimension to the relational interface) and various in-store and out-of-store means of communication. In the end, it is easy to note that the relational interface available to the retailer is generally much


239

richer and more varied than that of a brand. The retailer can count on elements of personal, firm, product trust, and so on, which increase his or her trust mimicry tools. Nevertheless, this potential is also more complex to manage, in view of both the possible poor integration of messages signalled by the various interfacing elements, and the equally possible opportunistic exploitation by salespeople of the personal trust they have developed with the customers. These remarks highlight the radical change in relational interfaces caused in e-commerce, lacking instances of physical contact (product-support, point of sale, sales personnel, and so on), their virtual reproduction notwithstanding. It seems relatively simple to foresee the changes thus introduced into trust production mechanisms. As illustrated in Chapter 4 (section 6), in e-commerce the interface is much richer on a virtual plane but, owing to its ‘unreality’, demands a much greater amount of trust (Hoffman et al. 1999a, 1999b). In fact, there is a reliability gap between the signals conveyed by the firm through its site and their factual representation and expression of reality, especially with unknown interlocutors. This problem lies on a different plane and becomes a second-level game (trust in signs) (Bacharach and Gambetta 1997, 2001), as indicated in Chapter 3 (section 3). This topic is critical to trust management and its exploration should produce interesting future results. Naturally, trust development processes and strategies should be designed paying explicit attention to the relationship’s life cycle and the different constructs associated with its phases (trust based on calculus, knowledge and values), gradually increasing the abstraction of trust contents. These processes underlie the policies of trust extension, focused on widening the relationship scope. An interesting example of trust abstraction policy is offered by Migros, the largest retail group in Switzerland. That firm, since its beginning, has sought to build trust characterized by a high level of abstraction. The firm has always been synonymous with a socially (that is, ethically and environmentally) responsible and consumerist firm, always on the side of the consumers, whose interests it promotes and defends (similarly to the French retailer Leclerc). For instance, in several product divisions, Migros has developed strict codes of conduct that suppliers must subscribe and adhere to. In order to fulfil these goals, the firm usually collaborates with institution-partners (mostly non-profit), who also act as guarantors, vouching for the credibility of the firm’s commitment toward the public. At the same time, Migros has deliberately decided not to market products considered harmful for its customers’ health, such as cigarettes and hard liquor. The strong trust connection felt by customers toward the firm allows Migros to satisfy wide and highly structured clusters of needs. It suffices to say that, in addition to distributing only private-labelled products (some well-known industrial brands are present thanks to co-branding), Migros offers its

240

Trust development

customers financial services, insurance coverage and tour packages, as well as training and educational services for younger people and baby-care activities. Within the domain of trust development policies, special consideration should be reserved for the multi-layer nature of relationships and the interdependencies that can be established between those levels. For example, when a customer-trustor faces an unknown salesperson, his/her trust in the organization-brand naturally prevails, producing a trust transfer from the inter-organizational to the interpersonal level (and vice versa in a mirror situation). Obviously, even in this case perceptive weight and leverage should be considered. In fact, there are mutual interdependences between antecedents as referring to the individuals and as related to the organization. These interdependences determine a more structured and complex multi-layered semantic network that, when the relation is characterized by a significant personal presence, needs to be very carefully managed. To avoid such problems, some retailers have recently proposed ‘counter-trendy’ sale solutions. While they seem to be less effective in terms of mere customer satisfaction, these solutions tend to minimize the contact with the customer in ‘fresh food’ departments. Thus the firms try to avoid becoming ‘hostages’ of salespeople, capable of managing at a personal level the relationship with the customer in relation to a series of products the sale of which requires significant amounts of trust. Reducing the salesperson’s presence in managing the relationship with customers, the trust guarantor role is transferred to a large extent to the ‘retailer brand’. Conversely, an evolutionary trend of opposite valence seems to characterize the world of manufactured brands. Many firms are increasingly trying to personalize the relationship with their customers, associating their brands with that of personal profiles considered reliable (testimonials sometimes fully identified with the entrepreneur). In this fashion, a firm attempts to virtually spread the relational interface width and enhance its trust mimicry tools, personifying its image profile and thus drawing from trust determinants normally associated with personal value and characteristics. Finally, looking at ‘external’ policies of trust production, it is essential for the firm to join or even create networks capable of obtaining an external image of reliability, on which its trust profile can depend. At the same time, it is worth monitoring the level of institutional trust, properly activating the environments most favourable from the standpoint of trust. In our perspective, one topic seems particularly relevant, namely the possibility for a single firm, in the presence of a significant level of institutional distrust, to exhibit behaviours that foster a ‘compensatory’ type of trust or induce the creation of a favourable climate within a more limited environmental network (the so-called systemic trust). This will ‘insulate’


241

the firm from phenomena that undermine, with serious effects, the much wider institutional trust. The realization of this possibility presents difficulties directly correlated to the magnitude of institutional instability and requires long-term interventions, in order to create more cohesive relational environments, characterized by a trust value profile. The extended time span of this intervention does not make it possible to wait for the instability causing event, but requires anticipatory actions, in the context of a deliberate strategy of continuous production of a trust environment both favourable and redundant. As shown by these brief remarks, the theme of trust management, although significantly complex to analyse, represents, together with the definition of general models, an exciting vector of deeper knowledge about trust, providing the fundamental input needed to implement truly trustbased behaviours and firm policies. Therefore, the conclusion of this work is just the beginning of new pathways of research on a construct so articulated and stimulating as trust.

NOTES 1.

2. 3.

4. 5. 6.

Defining their model of trust, Lewicki and Bunker (1995) were inspired, among others, by Boon and Holmes’ contribution (1991) on romantic relationships. The latter authors proposed an evolutionary model featuring three stages. The initial stage referenced to romantic love is followed by an ‘evaluational stage’ and then an ‘accommodation stage’. During the first stage, the parties experience a rush of positive feelings that induce mutual idealization; in this phase it is impossible to differentiate trust from love, because both parties hope for a prosperous relationship, overcoming any difficulties. During the evaluation stage, the parties’ interaction highlights the counterpart’s possible imperfections. This is the phase in which the relationship’s pros and cons are weighted, establishing the prerequisites of ‘true’ trust. Now the parties are in fact committed to a mutual self-disclosure that allows the verification of the authenticity of their own reaction. The accommodation stage is characterized by negotiation on conflicting goals, perceived incompatibilities and non-aligned expectations. In this phase, the parties consolidate their mutual trust, and make a leap of faith, implicitly deciding that, while it is impossible to know exactly everything about the partner, their ability to share compatible traits and solve incompatibilities will ensure a long-term relationship. These authors assert also that a deep understanding of trust dynamics allows a better interpretation of the relationship’s evolution. While highlighting the benefits associated with keeping a trust relationship, the authors agree with Shapiro et al. (1992), maintaining that, in this stage, the deterring elements prevail over the awarding ones as an incentive to continue the relationship. In particular, they underscore that ‘ “trust calculus” is made effective, therefore, by the adequacy and costs of deterrence’ (Lewicki and Bunker 1996). The authors state: ‘. . . in knowledge-based trust, regular communication and courtship are key processes’ (ibid.: 121; Shapiro et al. 1992). ‘In relationships, the parties cultivate their knowledge of each other by gathering data, seeing each other in different contexts, and noticing reactions to different situations’ (Lewicki and Bunker 1996: 122). On this matter, it is useful to refer to the same authors:

242

Trust development Thus, rather than asserting that different determinants lead to different types of trust, our interactionist model conceptualizes trust as a changing or evolving experience, in which values, attitudes, and moods and emotions operate simultaneously to produce an overall state of trust or distrust. Hence, we view trust as a more dynamic kind of experience – one that can shift or change, sometimes quickly, among trust states. (Jones and George 1998: 537)

7.

8.

9. 10. 11.

On this issue, the contribution of Meyerson et al. (1996) is particularly noteworthy. They hypothesize the existence of a particular trust typology, the so-called swift trust, the only one that allows the quick functioning of temporary teams. These groups are formed by subjects without a common relational background. The theme criticality, linked to the reasons that determine the starting of the relationship, and the complexity of the mechanisms that underlie the passage from a situation characterized by a complete absence of judgement toward the counterpart to a relationship based on trust require further study and, above all, empirical researches on what represents the relationship’s fundamental transformation from a previous absence of trust to its genesis. The authors define trust betrayal as follows: ‘We . . . define betrayal as a voluntary violation of mutually known pivotal expectations of the trustor by the trusted party (trustee), which has the potential to threaten the well-being of the trustor’ (Elangovan and Shapiro 1998: 548). The model also illustrates the process underlying the motivations of betrayal, the attenuation effect of punishments following the decision to violate trust and the role of variables associated with culture and organizing routines. On this issue, thanks to an empirical qualitative research, Bies and Tripp (1996) have found the different typologies of trust-violating actions, classed in two main macro categories, essentially the ‘damage to the sense of civic order ‘ and ‘damage to one’s identity’. The mechanisms that allow reconstructing the relationship can be articulated as a function of four fundamental analytical steps, synthesized as follows (Lewicki and Bunker 1996): ● ● ● ●

12. 13.

14.

15. 16.

to recognize and share the emerging violation, transparently communicating with the betrayed trustor; to clarify the nature of the violation and the behaviours that caused it, thus showing a willingness to understand its reasons and avoid its future reoccurrence; to admit that the event has been ‘destructive’ of the trust relationship without minimizing its impact, as is often done in order to avoid a confrontation; to assume full responsibility for the violation and its consequences.

Some applications of the means–ends chain to the reality of business firms are offered by Gutman and Alden (1985) and Reynolds and Jamieson (1985), as indicated by Jacoby and Olson (1985). Terminal values are represented by the ultimate states of existence to which individuals aspire (for example, a desire to live comfortably, to be happy, free and so on). Instrumental values are instead linked more to ‘doing’ than ‘being’, as in the case of terminal values, and comprise values such as integrity and sociality (Peter and Olson 1990: 75–6). An example of abstraction of a trust relationship based on symbolic benefits and shared values is given by retailers (such as Altromercato and Botteghe del Mondo in Italy) that exclusively offer additional solidarity and fair-trade products. Coherently with the value based trust positioning of these firms, they offer activities such as organized tours in developing countries with international solidarity goals, or forms of individual/collective investments geared to financing productive projects in those countries. In this case, the instrumental values underlying the business proposal are indeed solidarity, social justice, and fairness. See Chapter 7 (section 4). Romano (1988: 226) stated that the most easily transferred image meanings are:

The evolutionary and interactive dynamics of trust ● ●

243

those which express reliability and reassurance (trust dimension) those which grant status and belonging (connotative-type evaluational dimension).

Aaker and Keller (1990) hypothesized as well that the image abstract attributes area can be transferred to a wider set of product categories than concrete ones, because the latter are generally more closely associated with specific classes of products. To better understand the concept of brand extension, see Aaker and Keller (1990), Keller (1998) and Busacca (2000). 17. Self-image means the way in which an actor perceives and evaluates himself. Nevertheless, this evaluation is not a strictly individual process, but the result of articulated social interaction processes. The products and brands consumed, the stores in which purchases are made and the suppliers with whom one does business, in their symbolic acceptation, represent the subject’s exteriorized signals. To fulfil this communication function, products, stores and suppliers must be associated with a meaning clearly recognized by the individual’s social group (Grubb and Grathwohl 1967). 18. Those who believe it is impossible to deliberately develop trust and justify their position by saying that trust building results anyway in a ‘trust façade’ paradoxically determine a situation even more favourable to opportunism. Actually, by not investing cognitive and material resources in understanding the mechanisms of trust growth and promoting trust, one implicitly undermines trusting in the very concept of trust. This determines the insurgence of greater difficulties in managing situations in which choices have a perceived high risk, and this indeed is a worse consequence than those associated with sporadic opportunistic behaviours based on ‘trust façades’ (see also Chapter 14, section 7). 19. As already seen in Chapter 6 (note 42), motivators are elements whose presence is paramount to the development of trust, while hygienics are factors whose absence creates distrust. See also Sirdeshmukh et al. (2002). 20. Einhorn and Hogarth (1978) offered an empirical confirmation of that statement. 21. In this regard, the considerations on image of Berger and Luckmann (1967) are particularly interesting and can be easily extended to the concept of trust. Actually trust, owing to its synthetic nature and its reference to a cognitive scheme notwithstanding, presents many analogies to image. Image is characterized by its tendency to further strengthening and, once consolidated, even to self-realization. Indeed, it generates a finalized behaviour that, if successful, tends first to justify and then to strengthen itself. Images that generate a strong, visible and successful action have a prophetic allure; they ‘self-realize’. See Berger and Luckmann (1967, quoted by Normann 1984: 129). 22. Einhorn’s example (1982: 282) about a waiter working in a crowded restaurant helps to clarify this matter. Not having the time to offer a good service to all his customers, the waiter tries to foresee (prophesies) which ones are more likely to leave a good tip. For them he reserves his best service to the detriment of the rest. If tip amount depends on the rendered service quality, the customers’ behaviour cannot but confirm the waiter’s initial assessment. 23. On the subject’s capability to self-determine events, see also Watzlawick (1988), Luhmann (1989), Gambetta (1989), Einhorn and Hogarth (1978). 24. In a series of experiments on interpersonal relationships, based on the prisoner’s dilemma, Boyle and Bonacich (1970) have verified that cooperative behaviour is always characterized by ‘mutuality’. 25. Interesting empirical research performed by Kelley and Stahelski (1970) has demonstrated that competitive individuals act most often assuming that the counterpart’s behaviour is hostile. This assumption leads these individuals to be distrustful, thus making it impossible to have a relationship based on cooperation. Vice versa, more cooperative personalities see others in a more balanced light, distinguishing cooperative from competitive people. This attitude greatly facilitates the triggering of a trust relationship based on cooperative behaviour. 26. On the origins of the enactment concept see, among others, Aldrich (1979), Aldrich and Pfeffer (1976), Benson (1975), Pfeffer and Salancik (1978) and Weick (1979b).

244 27. 28.

29. 30.

31.

Trust development This is different from enacted self. The latter refers to the way in which the observing subject represents him or herself. It is a different way of defining what was previously described as self-image. If A believes that B shall do a certain future action C, at a simple level A trusts B, because to achieve its goal A needs for B to do C and not some other action that could jeopardize A’s interests. This way, it is B and not A who is cooperative implementing action C and, therefore, B does not deploy its trust in A. Nevertheless, at a different level, this asymmetry is reversed: B shows trust in A’s representation of the conditions requiring C and, similarly, A cooperates in producing that representation. Further, the behaviour of both A and B in a single episode can form the basis of future trust and cooperation. A trust needing exchange rarely is a unique event, excluded from a historic sequence. (Good 1989: 43–4) For a review of these authors’ contribution, see Quinlan (1991: 125 ff.). To this end, the authors assumed that the individual is an autopoietic cognitive system, whose perceptions are considered as ‘restructuring strategies (enacted by the individual) on a portion of the world to internalize it in his or her own organizational structure. Therefore, perception is a subject-enacted process, based on an internal imbalance that the subject is trying to compensate’ (Buscema and Massini 1993: 151). Naturally, as previously indicated, a different weight should be hypothesized for the different drivers according to each trust stage/typology, thus excluding that the single determinants have a univocal correspondence with the various types of trust. This happens because trust evolves by stratification, whereby each level realized in every stage is added to the previous ones, becoming the basis for the levels that will follow.

APPENDIX A

TRUST DEFINITIONS

Authors

Year

Definition

Deutsch

1960

An individual’s confidence in the intentions and capabilities of a relationship partner and the belief that a relationship partner would behave as one hoped

Gibb

1964

A state of psychological confidence resulting from a climate of support

Garfinkel

1967

Expectation of the persistence of the moral social order

Giffin

1967

Reliance upon the characteristics of an object, or the occurrence of an event, or the behaviour of a person in order to achieve a desired but uncertain objective in a risky situation

Rotter

1967

A generalized expectancy held by an individual that the word of another can be relied on

Rotter

1971; 1980

A generalized expectancy held by an individual that the word, promise, oral or written statement of another individual or group can be relied upon

Zand

1972

The willingness to increase one’s vulnerability to another whose behaviour is not under one’s control

Deutsch

1973

A party’s willingness to be dependent on another party in the belief that the party will not let it down intentionally

Schlenker et al.

1973

Reliance upon information received from another person about uncertain environmental states and their accompanying outcomes in a risky situation

Frost et al.

1978

An expectancy held by an individual that the behaviour of another person or group would be altruistic and personally beneficial

Kimmel et al.

1980

A belief that the other negotiator has a problemsolving orientation or is generally unselfish, or both

Larzelere and Huston

1980

Reciprocal confidence that the other party would be well disposed to us and honest

Pruitt

1981

A belief that the other party is ready for coordination, is open-minded, and prepared to engage in problem solving if one shows a like readiness

Johnson-George and Swap

1982

Willingness to take risks may be one of the few characteristics common to all trust situations 245

246

Appendix A: Trust definitions

Authors

Year

Definition

Barber

1983

The most general (meaning of trust) is expectation of the persistence and fulfilment of the natural and the moral social order. Second is expectation of technically competent role performance from those involved with us in social relationships and systems. And third is expectation that partners in interaction will carry out their fiduciary obligations and responsibility, that is their duties in certain situations to place others’ interest before their own

Bialaszewski and Gillaourakis

1985

An attitude displayed in situations where a person relying on another person is risking something of value

Lewis and Weigert

1985

A willingness to be vulnerable to others, based on the prior belief that those others are trustworthy

Schurr and Ozanne

1985

The belief that a party’s word or promise is reliable and a party will fulfil his obligations in an exchange relationship

Swan et al.

1985

The customer believes that what the salesperson says or promises to do can be relied upon in a situation where the failure of the salesperson to be reliable will cause problems for the customer

Baier

1986

Accepted vulnerability to another’s possible but not expected ill will (or lack of goodwill) toward one

Rempel and Holmes

1986

The degree of confidence one feels when thinking of a relationship

Zucker

1986

A set of expectations shared by all those involved in an exchange

Anderson et al.

1987

The degree to which the channel member perceives that its relationship with the supplier is based upon mutual trust and thus is willing to accept shortterm dislocation because it is confident that such dislocation will balance out in the long term

Dwyer et al.

1987

A party’s expectation that another desires coordination, will fulfil its obligations, and will pull its weight in the relationship

Gambetta

1988

A particular level of the subjective probability with which an agent assesses that another agent or group of agents will perform a particular action, both before he can monitor such action (or

Appendix A: Trust definitions Authors

Year

247

Definition independently of his capacity ever to be able to monitor it) and in a context in which it affects his own action

Anderson and Weitz

1989

A party’s belief that its need will be fulfilled in the future by actions taken by the other party

Bradach and Eccles

1989

A type of expectation that alleviates the fear that one’s exchange partner will act opportunistically

Luhmann

1989

Attitude that allows for a risk-taking decision

Anderson and Narus

1990

The belief that another company will perform actions that will result in positive outcomes for the firm, as well as not take actions that would result in negative outcomes for the firm

Coleman

1990

An incorporation of risk into the decision of whether or not to engage in the action

Crosby et al.

1990

A confident belief that the salesperson can be relied upon to behave in such a manner that the longterm interest of the customer will be served

Boon and Holmes

1991

A state involving confident positive expectations about another’s motives with respect to oneself in situations entailing risk

Martin

1991

The belief that another party (a) will not act in a way that is harmful to the trusting firm, (b) will act in such a way that it is beneficial to the trusting firm, and (c) will act reliably

Andaleeb

1992

Trust of A in B represents A’s willingness to risk involvement in a relationship with B, in which responsibility is vested in B to act in the belief that the decision will produce positive outcomes or not produce negative outcomes for A

Moorman et al.

1992

Willingness to rely on an exchange partner in whom one has confidence

Ring and Van de Ven

1992

Confidence in the other’s goodwill

Fells

1993

A willingness to take unilateral action which might lead to exploitation but which anticipates a nonexploitative response from another person. In other words, I trust you when I expect you to cooperate and not exploit me

Sabel

1993

Trust is the mutual confidence that no party to an exchange will exploit the other’s vulnerability

248


Authors

Year

Definition

Sitkin and Roth

1993

Belief in a person’s competence to perform a specific task under specific circumstances

Barney and Hansen

1994

The mutual confidence that no party to an exchange will exploit another’s vulnerability

Morgan and Hunt

1994

Confidence in an exchange partner’s reliability and integrity

Andaleeb

1995

A’s belief that B can be relied upon to produce positive outcomes or not produce negative outcomes for A from the investment in the relationship

Currall and Judge

1995

An individual’s behavioural reliance on another person under a condition of risk

Hosmer

1995

Trust is the expectation by one person, group or firm of ethically justifiable behaviour – that is, morally correct decisions and actions based upon ethical principles of analysis – on the part of the other person, group or firm in a joint endeavour or economic exchange

Kumar et al.

1995

Trust exists when a firm believes its partner is honest and benevolent

Mayer et al.

1995

Willingness of a party to be vulnerable to the actions of another party based on the expectation that the other party will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party

McAllister

1995

The extent to which a person is confident in, and willing to act on the basis of, the words, actions and decisions of another

Andaleeb

1996

The willingness of a party to rely on the behaviours of others, especially when these behaviours have outcome implications for the party bestowing trust

Brockner and Siegel

1996

The beliefs that people maintain about the other party’s future behaviour

Burt and Knez

1996

Trust is anticipated cooperation

Cummings and Bromiley

1996

A common belief among a group of individuals that another individual or group (a) makes good faith efforts to behave in accordance with any commitments either explicit or implicit, (b) is honest in whatever negotiations precede such commitments, and (c) does not take excessive

Appendix A: Trust definitions Authors

Year

249

Definition advantage of another, even when the opportunity is available

Mishra

1996

One’s party willingness to be vulnerable to another party based on the belief that the latter party is (a) competent, (b) open, (c) concerned and (d) reliable

Misztal

1996

To believe that results of somebody’s intended action will be appropriate from our point of view

Nooteboom

1996

X trusts Y to the extent that X chooses to cooperate with Y on the basis of a subjective probability that Y will choose not to employ opportunities for defection that X considers damaging, even if it is in the interest of Y to do so. The trustworthiness of Y depends on Y’s true propensity to employ those opportunities

Robinson

1996

One’s expectations, assumptions or beliefs about the likelihood that another’s future actions will be beneficial, favourable or at least not detrimental to one’s interests

Tyler and Degoey

1996

Feelings that an authority made a good faith effort and treated the parties involved in the conflict fairly

Webb

1996

A judgement or a confidence estimate that an organization or a person is going to act in a predictable way

Blomqvist

1997

An actor’s expectation of the other party’s competence and goodwill

Doney and Cannon

1997

Perceived credibility and benevolence of a target of trust

Uzzi

1997

The belief that an exchange partner would not act in self-interest at another’s expense and appeared to operate not like calculated risk but like heuristic – a predilection to assume the best when interpreting another’s motives and actions

Bhattacharya et al.

1998

An expectancy of positive (or non-negative) outcomes that one can receive based on the expected action of another party in an interaction characterized by uncertainty

Doney et al.

1998

A willingness to rely on another party and to take action in circumstances where such action makes one vulnerable to the other party

250


Authors

Year

Definition

Hagen and Choe

1998

The expectation that the promise of another can be relied on and that, in unforeseen circumstances, the other will act in a spirit of cooperation with the trustor

Jones and George

1998

A psychological construct, the experience of which is the outcome of the interaction of people’s values, attitudes, and moods and emotions

Lewicki et al.

1998

Confident positive expectations regarding another’s conduct

McKnight et al.

1998

We define ‘trust’ to mean that one believes in, and is willing to depend on, another party

Rousseau et al.

1998

Psychological state comprising the intention to accept vulnerability based on positive expectations of the intentions or behaviour of another

Sako and Helper

1998

An expectation held by an agent that its trading partner will behave in a mutually acceptable manner (including an expectation that neither party will exploit the other’s vulnerability)

Sheppard and Sherman

1998

Acceptance of the risks associated with the type and depth of interdependence inherent in a given relationship

Whitener et al.

1998

An attitude held by one individual – the trustor – toward another – the trustee . . . This attitude is derived from the trustor’s perceptions, beliefs and attributions about the trustee, based upon his or her observations of the trustee’s behaviour

Zaheer et al.

1998

The expectation that an actor (1) can be relied on to fulfil obligations (Anderson and Weitz 1989), (2) will behave in a predictable manner, and (3) will act and negotiate fairly when the possibility for opportunism is present (Anderson and Narus 1990; Bromiley and Cummings 1995)

Falcone and Castelfranchi

2001

Trust basically is a mental state, a complex mental attitude of an agent x towards another agent y about the behaviour/action relevant for the result (goal) g. Trust is the mental counterpart of delegation

APPENDIX B

TRUST SCALES

Authors

Year Cronbach’s Definition Alpha

Swan et al.

1988 0.86

1. 2. 2. 2. 2. 2. 3. 2. 2. 4. 5. 2. 6. 7. 8.

Anderson and Narus

1990

Distributor firm side Based upon your past and present experience, how would you characterize the level of trust your firm has in its working relationship with the manufacturer?

If salesperson gave me a compliment I would question if salesperson really meant what was said I could rely on salesperson to mail an important letter for me if I couldn’t get to the post office I would be able to confide in salesperson and know that he/she would want to listen I would expect this salesperson to play fair I am not sure that trusting this salesperson would be a good idea* I have a good reason to trust this salesperson I have doubts about trusting this salesperson I feel I can completely trust this salesperson

Manufacturer side Based upon your past and present experience, how would you characterize the level of trust your company has in its working relationship with the firm? Moorman et al.

1992 0.84

User’s trust in researcher (new scale) 1strongly disagree; 4neither agree nor disagree; 7strongly agree 1. If I or someone from my department could not be reached by our researcher, I would be willing to let my researcher make important research decisions without my involvement 2. If I or someone from my department were unable to monitor my researcher’s activities, I would be willing to trust my researcher to get the job done right 3. I trust my researcher to do things I can’t do myself

251

252 Authors

Appendix B: Trust scales Year Cronbach’s Definition Alpha 4. I trust my researcher to do things my department can’t do itself 5. I generally do not trust my researcher

Scheer and Stern

1992 0.86

1. 1. 2. 3. 4.

Ganesan

1994 0.9

Retailer’s trust in vendor (vendor’s credibility) 1. This resource’s representative has been frank in dealing with us 2. Promises made by this resource’s representative are reliable 3. This resource’s representative is knowledgeable regarding his/her products 4. This resource’s representative does not make false claims 5. This resource’s representative is not open in dealing with us* 6. If problems such as shipment delays arise, the resource’s representative is honest about the problems 7. This resource’s representative has problems answering our questions

Image does not give Diagnostix the respect it deserves Image is fair in its dealings with Diagnostix Image can be trusted Image is sincere in its dealings with Diagnostix

0.88

Retailer’s trust in vendor (vendor’s benevolence) 1. This resource’s representative has made sacrifices for us in the past 2. The resource’s representative cares for us 3. In times of shortages, this resource’s representative has gone out on a limb for us 4. This resource’s representative is like a friend 5. We feel the resource’s representative has been on our side

0.8

Vendor’s trust in retailer (retailer’s credibility) 1. The buyer representing this retailer has been frank in dealing with me 2. Promises made by the buyer representing this retailer are reliable 3. The buyer representing this retailer is knowledgeable about the product 4. The buyer representing this retailer has problems understanding our position*

Appendix B: Trust scales Authors

253

Year Cronbach’s Definition Alpha 0.76

Vendor’s trust in retailer (retailer’s benevolence) 1. The buyer representing this retailer has made sacrifices for us in the past 2. The buyer representing this retailer cares for my welfare 3. In times of delivery problems, the buyer representing this retailer has been very understanding

Morgan and Hunt

1994 0.947

In our relationship, my major supplier (anchors: strongly agree/strongly disagree) 1. . . . cannot be trusted at times* 2. . . . can be counted on to do what is right 3. . . . has high integrity

Andaleeb

1995 0.962

1. . . . is very dependable 2. . . . is not sincere about keeping its commitments 3. . . . cannot be counted on to be helpful* 4. . . . is not very reliable*

Kumar et al.

1995

Trust in partner’s honesty 1. Even when the supplier gives us a rather unlikely explanation, we are confident that they are telling the truth 2. The supplier has often provided us with information which has later proven to be inaccurate* 3. The supplier usually keeps the promises they make to our firm 4. Whenever the supplier gives us advice on our business operations, we know they are sharing their best judgement 5. Our organization can count on the supplier to be sincere Trust in partner’s benevolence 1. Though circumstances change, we believe that the supplier will be ready and willing to offer us assistance and support 2. When making important decisions, the supplier is concerned about our welfare 3. When we share our problems with the supplier, we know that they will respond with understanding

254 Authors

Appendix B: Trust scales Year Cronbach’s Definition Alpha 4. In the future, we can count on the supplier to consider how its decisions and actions will affect us 5. When it comes to things that are important to us, we can depend on the supplier’s support

Lassar et al.

1995 0.79

Trustworthiness 1. I consider the company and people who stand behind these televisions to be very trustworthy 2. In regard to consumer interests, this company seems to be very caring 3. I believe that this company does not take advantage of consumers

Andaleeb

1996 0.95

1. . . . should be cautious in dealing with . . . 2. . . . should not hesitate to make important purchase decisions based on . . .’s suggestions

Geyskens et al.

1996

Trust honesty Our organization can count on the supplier to be sincere Trust benevolence When making important decisions, the supplier is concerned about our welfare

Macintosh and Lockshin

1997 0.8

Trust in the salesperson 1. My salesperson can be counted on to do 1. what is right 2. My salesperson has high integrity 3. There are times when I find my salesperson to be a bit insincere*

Siguaw et al.

1998 0.8

Credibility 1. This supplier has been frank in dealing with us 2. Promises made by this supplier are reliable 3. This supplier is knowledgeable regarding his/her products 4. This supplier has problems understanding our position* 5. This supplier does not make false claims 6. This supplier is not open in dealing with us* 7. This supplier has problems answering our questions*


255

Year Cronbach’s Definition Alpha 0.94

Benevolence 1. This supplier has made sacrifices for us in the past 2. This supplier cares for us 3. In times of shortages, this supplier has gone out on a limb for us* 4. This supplier is like a friend 5. We feel this supplier has been on our side

Swan et al.

1999

Trust in salesperson 1. This salesperson can be trusted 2. This salesperson has my interests in mind 3. This salesperson keeps his/her promises

Garbarino and Johnson

1999 0.93

1. The performances at this theatre 1. always meet my expectations 2. This theatre can be counted on to produce a good show 3. I cannot always trust performances at this theatre to be good* 4. This theatre is a reliable off-Broadway theatre company 5. The quality of the productions at this theatre is consistently high 6. I worry that the performance will be a waste of time* 7. I am concerned that the performance will not be worth the money*

Grayson and Ambler

1999 0.72

User’s trust in advertising agency representative 1. If I or someone from my department could 1. not be reached by our agency representative, 1. I would be willing to let this representative 1. make important advertising decisions 1. without my involvement 2. I trust my agency representative to get the job done right without having to monitor his/her progress 3. I trust my agency representative to do things that I can’t do myself 4. I trust my agency representative to do things that people in my department can’t do themselves 5. I generally don’t trust my agency representative

256

Appendix B: Trust scales

Authors

Year Cronbach’s Definition Alpha

Sharma and Patterson

1999 0.9

(Moorman et al. 1992; Crosby et al. 1990) 1. My adviser can be relied on to keep his/her 1. promises 2. There are times when I find my adviser to be a bit insincere* 3. I find it necessary to be cautious in dealing with my adviser* 4. My adviser is trustworthy 5. I suspect that my adviser has sometimes withheld certain pieces of critical information that might have affected my decision making* 6. I have confidence in my adviser 7. I generally do not trust my adviser*

Smith and Barclay

1999 0.92

Mutual trust 1. S/he is among the most honest people 1. I know 2. S/he has integrity 3. S/he is not very reliable* 4. S/he is quite dependable 5. S/he is responsible 6. Sometimes s/he does not follow through on commitments made* 7. When it comes to hardware, this rep knows enough to be effective 8. S/he understands the customer’s business 9. This rep really knows the industry 10. S/he is not a friendly person* 11. S/he is not especially likeable* 12. I can count on this rep’s ability to adapt to specific customer situations 13. Sometimes I wonder about the appropriateness of the decisions made by this rep* 14. Sometimes his/her judgement is way off 15. S/he often has ulterior motives for doing things 16. S/he acts with good intentions

Zineldin and Jonsson

2000 0.9

1. 2. 3. 4.

We can always trust the supplier The supplier has high integrity The supplier keeps promises When the supplier makes important decisions it also consider our interests


257

Year Cronbach’s Definition Alpha 5. The supplier is always honest with us 6. High level of trust has been developed between the personnel in our organization and the supplier 7. The supplier considers it important that our company is successful 8. There is no reason for us to be suspicious of the supplier

Chaudhuri and Holbrook

2001 0.96

Brand trust 1. I trust this brand 2. I rely on this brand 3. This is an honest brand 4. This brand is safe

Hewett and Bearden

2001 0.84

(adapted from Doney and Cannon 1997) Please rate your agreement with each of the following statements regarding the marketing operation at headquarters using a seven-point scale, where 1 ‘to a very little extent’ and 7‘to a very great extent’ • The marketing operation at headquarters keeps promises it makes to our marketing operation • We believe the information that the marketing operation at headquarters provides to us • The marketing operation at headquarters is genuinely concerned with the success of the marketing operation at this subsidiary • The marketing operation at headquarters considers our welfare when making decisions regarding this market • Individuals in the marketing operation at headquarters are trustworthy • Individuals in the marketing operation at headquarters are not always honest with us*

Liu and Leach

2001

Trust in salesperson Compared with the salespeople of other suppliers 1. the salesperson is not trusted by the people at my firm* 2. the salesperson sometimes acts opportunistically at our expense* 3. the salesperson is trustworthy

258 Authors

Appendix B: Trust scales Year Cronbach’s Definition Alpha 4. the salesperson is always honest with us 5. the salesperson always acts in a spirit of cooperation

Morris and Cadogan

2001 0.945

Mutual trust (7-point scale with ‘very strongly disagree’/‘very strongly agree’ anchors) The partner firms . . . 1. cannot trust each other at times 2. are perfectly honest and truthful to each other 3. can trust each other completely 4. can count on each other to do what is right 5. are always faithful to each other 6. have great confidence in each other 7. have high integrity

Nicholson et al.

2001

Interpersonal trust 1. I can rely on the supplier’s rep to keep the promises he makes 2. I trust my major supplier’s rep completely 3. I know that this supplier’s rep will deal with us fairly 4. I can expect my major supplier’s sales rep to tell me the truth

Coulter and Coulter

2002 0.91 2003

My service provider . . . 1. is trustworthy 2. keeps my dealings with him confidential 3. is honest 4. has a great deal of integrity 5. brings high standards to his/her work 6. is a person with principles

Handfield and Bechtel

2002

Indicate how accurately one term or other describes your relationship with the key-input supplier: • Antagonistic vs. trust (five categories) – reverse-scored • Distrust vs. trust (five categories) – reversescored • Harmony vs. discord (five categories)

Hewett et al.

2002 0.958

adapted from Doney and Cannon (1997) 1. This supplier keeps promises it makes to our business 2. This supplier is not always completely honest with us


259

Year Cronbach’s Definition Alpha 3. We believe the information that this supplier provides us 4. This supplier is genuinely concerned that our business succeeds 5. When making important decisions, this supplier considers our welfare as well as its own 6. We trust this supplier keeps our best interests in mind 7. This supplier is trustworthy 8. We find it necessary to be cautious with this supplier*

Verhoef et al.

2002 0.75

1. XYZ can be relied on to keep its promises 2. XYZ puts the customer’s interests first 3. XYZ usually keeps the promises that it makes to me 4. I can count on XYZ to provide a good service

Yu and Pysarchik

2002 0.68

(Schurr and Ozanne 1985) 1. I have many good things to say about my manufacturer’s trustworthiness 2. I can trust my manufacturer to be very ‘up front’ with me 3. I can trust my manufacturer to keep a trade secret 4. My manufacturer will sometimes play games with me* 5. I am convinced that I can trust my manufacturer in negotiations

Bigne and Blesa

2003 0.699

Distributor’s trust 1. The manufacturer’s explanations of 1. problems, such as delays in delivering 1. orders, are always credible 2. When this manufacturer makes important decisions he/she is concerned for our interests 3. We can count on this manufacturer when we need his/her support in difficult situations

DelgadoBallester et al.

2003 0.81

Brand trust Reliability: 1. . . . is a brand name that meets my expectations 2. I feel confidence in . . . name

260 Authors

Appendix B: Trust scales Year Cronbach’s Definition Alpha 3. . . . is a brand name that never disappoints me 4. . . . brand name guarantees satisfaction 0.83

Intentions: 5. . . . brand name would be honest and sincere in addressing my concerns 6. I could rely on . . . brand name to solve the problem 7. . . . brand name would make any effort to satisfy me 8. . . . brand name would compensate me in some way for the problem with the (product)

Ranaweera 2003 0.78 and Prabhu

In our relationship, my phone company . . . 1. cannot be trusted at times* 2. can be counted on to do what is right 3. has high integrity

Selnes and Sallis

2003

1. 1. 1. 2.

Walter and Ritter

2003 0.85

Customer trust 1. Overall trust 2. Honesty 3. Benevolence I 4. Benevolence II 5. Competence

Harris and Goode

2004

Trust in the web site Indicate your level of agreement with the following: 1. . . . is interested in more than just selling me goods and making profits 2. There are no limits to how far . . . will go to solve a service problem I may have

I believe the other organization will respond with understanding in the event of problems I trust that the other organization is able to fulfil contractual agreements 3. We trust that the other organization is competent at what they are doing 4. There is general agreement in my organization that the other organization is trustworthy 5. There is general agreement in my organization that the contact people in the other organization are trustworthy


261

Year Cronbach’s Definition Alpha 3. . . . . is genuinely committed to my satisfaction 4. Most of what . . . says about its products is true 5. I think some of . . .’s claims about its service are exaggerated* 6. If . . . makes a claim or promise about its products, it’s probably true 7. In my experience . . . is very reliable 8. I feel I know what to expect from . . . .

Koufaris and HamptonSosa

2004 0.865

Initial e-trust 1. This company is trustworthy 2. I trust this company keeps my best 2. interests in mind 3. This company will keep promises it makes to me 4. I believe in the information that this vendor provides me 5. This company wants to be known as one who keeps promises and commitments

Bart et al.

2005 0.91

Trust in the web site 1. This site appears to be more trustworthy than other sites I have visited 2. The site represents a company or organization that will deliver on promises made 3. My overall trust in this site is . . . 4. My overall believability of the information on this site is . . . 5. My overall confidence in the recommendations on this site is . . .

Note: *reversed item Source: adapted from Gastaldo (2004)

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Index abstraction levels, in trust 224–7, 239 advanced relationships see final stage relationships; long-term relationships affective loyalty 98, 100 affective trust see emotional trust alliances see marketing partnerships; networks; strategic alliances ambiguity 32, 33, 151–2 analytical prerequisites, in trust definitions 126 antecedents of trust 186–95, 200, 201 behavioural 191–3, 202 cognitive 164–6, 202, 209–210 and dependence types 153 in e-trust 105–7, 203–6 intra-organizational 62 leverage of 209, 211–12, 228 research results 209–210 and trust development 228–30, 231–2 see also communication; competence; cooperation; enacted self/other; evolution; experience; motivations; personal characteristics; reputation; satisfaction; shared values anticipated cooperation 144, 248 assumption, in trust definitions 144 asymmetrical relationships 15 attitudes conceptualization of 156–7 in trust definitions 124, 143, 146–8, 246, 250 authority relationships 16, 153 barriers, to market entry 29 behavioural antecedents of trust 191–3, 202 see also experience; satisfaction behavioural consequences of trust 202 see also cooperation

behavioural loyalty 98, 99, 100 behavioural trust 127, 128, 130, 147–8, 157 see also cognitive–behavioural trust; cooperation; reciprocity behavioural variables in relationships 13–15 see also reciprocity belief in trust definitions 124, 132–4, 136, 143, 144–8, 245, 246, 247, 248, 249, 250 see also confidence betrayal, of trust 221–2, 223, 224 bilateral relationships 14, 15, 16, 153, 163–4, 170, 233–4 see also multidimensional relationships brand association 219, 240 brand image 96–8, 100, 210 brand trust, scales 257, 259–60 calculative trust 77 betrayal of 222 in consumer behaviour 153–4 in early stage relationships 217–18, 223 as non-trust 164–5 as predictive trust 166 and rational choice theory 59, 60, 70, 71, 72 and trust development 230 see also risk capability see competence cartels 16 see also strategic alliances causal ambiguity, and trust 32 channels see distribution channels characteristic-based trust 171 co-location 219 co-opetition 11, 23 coercive power 198

301

302

Index

cognitive antecedents of trust 164–6, 202, 209–210 see also competence; opportunistic behaviour; reputation cognitive–behavioural trust 158–9 cognitive consequences of trust 202 see also commitment; conflict; noncoercive power; uncertainty cognitive loyalty 98, 99, 100 cognitive representations interactions between 232–5 see also perception cognitive trust 158 betrayal of 222 and competence 212, 220 and consumer behaviour 154 definition 157, 165, 217 development of 218, 223 in e-commerce 104 as predictive trust 166 collaborative behaviour see cooperation collaborative marketing 16, 88 commitment 90–91, 102, 133, 134, 196, 219, 248 communication 53–4, 62, 191–3, 198, 205, 210, 229, 231 competence and cognitive trust 212, 220 cooperative 86 expectations of 56 and identification-based trust 212 as a resource 29 as trust antecedent 187–8, 209, 210, 212, 229, 230, 232 see also cognitive trust competition entry barriers 29 types of 23 competitive advantage relationship-based 30–36, 37–8, 232 resource-based view 27–30 see also customer loyalty complexity, reduction of 56–7 conative loyalty 98, 99 conditioned trust 220 confidence 174 in trust definitions 132–4, 143, 144–5, 146, 148, 245, 246, 247, 248, 249, 250

see also belief conflict levels 196–7 consequences of trust 191, 192, 195–200, 201, 202, 203, 204 in e-trust 204 in trust definitions 124–6 see also betrayal; commitment; communication; cooperation; satisfaction consumer communities 111 consumer goods, research into trust 208–210 control 149 mechanisms, in alliances 63–4 see also transaction governance mechanisms convenience stage see early stage cooperation 13, 37 anticipated 144, 248 in distribution channels 90–91 in e-commerce 229 psychological studies 52–5 as a trust antecedent 191 as a trust consequence 198 in trust definitions 249, 250 see also marketing, partnerships; strategic alliances cooperative competency 86 cooperative marketing 16, 88 coordination mechanisms, non-contractual 74–5 culture of organizations 37, 62 see also shared values customer equity value 40–41 customer loyalty 29, 38, 39–41, 98–100, 101–2, 223, 224 see also long-term relationships customer retention rates 39–40 customers and innovation diffusion 87 trust scales 258 typology 18 dependence 16, 153, 171–2 see also interdependence determinants see antecedents deterrence-based trust 164–5, 217 development stage relationships 17, 220, 223, 225

Index discrete exchanges 14, 22 dispositional trust 53, 54, 60, 175, 221 and e-commerce 106, 108 see also unconditional trust distribution channels and innovation diffusion 87 relationships in 8–9, 88–93 trust scales 251–60 see also marketing; sales management; supplier partnerships distributive justice see fairness distrust 58, 167–71, 219, 220, 221–2, 231–2 see also trust dynamic model of relationships 16–18, 19–20, 195 see also evolution e-trust 102–8, 203–6, 228–30, 239 scales 259–60 see also virtual social systems early stage relationships 17, 18, 217–18, 219–20, 223, 225, 227 economic-financial risk 153 economic relations and interpersonal trust 70–71 and social relations 73–7 see also transactional costs theory embeddedness, relational 86 emotional trust 104, 157, 158, 209, 210 enacted self/other 233–4 evolution of relationships 16–18 of trust 217–24 see also dynamic model exchange concept 5–7 limitations of 9–11 discrete 14, 22 value-added 25 see also marketing; relationships; social exchange theory expansion stage see development stage expectations and brand image 98 and communication 192 and deterrence-based trust 217 and risk 149

303

in trust definitions 133, 134, 136, 142–3, 144, 145, 245–6, 247, 248, 249, 250 and trust development 231 typologies 56–7 see also obligation fulfilment; reliability; reputation experience and brand image 97 as trust antecedent 94, 106, 187, 205, 209, 231–2 see also customer loyalty; reputation explorative trust 166 external interface resources 35–6 external relational resources 35–6 fairness as trust antecedent 189–90 as trust consequence 198 faith 158, 174 fate 158 feelings see affective loyalty; emotional trust final stage relationships 17, 18, 165–6, 218–19, 221–2, 223–4, 225–6 see also betrayal; long-term relationships financial-economic risk 153 firm-specific resources 34, 35, 36 firms see organizations functional risk 153–4 goodwill trust see identification-based trust hopeful trust 167–8, 232 identification-based trust 154, 217 in advanced relationships 165–6, 217–19, 223–4 betrayal of 222 case examples 227, 239–40 and competence 212 see also shared values ideological trust 157, 158 image see brand image industrial goods markets 7–8, 84–8, 94–5 see also distribution channels; manufacturers

304

Index

industrial network approaches, in marketing 7–8 information and risk 149 see also calculative trust; cognitive trust; key informants; knowledge information and communications technology see e-trust initial distrust 219 initial trust 107–8, 220–21 innovation 42, 85–8 see also knowledge transfer institutional environment 33 institutional trust 160–61, 171 and e-commerce 105, 106, 108 and rational choice theory 70 in trust definitions 127 and trust development 221 see also systemic trust intangible resources acquisition of 29 see also brand image; customer loyalty; knowledge transfer; social capital integrity see obligation fulfilment; reliability; reputation; shared values intention see motivations; willingness inter-networks competition 23 inter-organizational assets interconnectedness 32 inter-organizational networks 20–22, 23, 87, 175–6, 240 inter-organizational relations effects of trust resources 37–8 personal factors 65–6, 93–5 studies of 10–11, 63–6 inter-organizational trust 161–4 interaction approaches, in marketing 7, 8–9 interdependence 16, 17–18, 223–4 see also dependence intermediaries see distribution channels; salespeople internal interface resources 35–6 Internet, trust in see e-trust interpersonal relations in inter-organizational relations 65–6, 93–5

see also intra-organizational relations interpersonal trust 161–4 in e-commerce 105 in economic transactions 70–71 and sales management 93–5 scale 258 intra-network competition 23 intra-organizational relations 37, 61–3, 87 joint ventures 63–5 judgement, in trust definitions 144 key informants, in trust measurement 207 knowledge areas, of trustees 225, 226 knowledge-based trust see cognitive trust knowledge redundancy 86 knowledge transfer 29–30, 38, 86, 87–8 see also innovation leverage 209, 211–12, 228 lexical correspondences in trust definitions 126–8, 138, 139 see also semantic networks lexical richness, of trust definitions 123, 124, 136–8 lifecycles see evolution lifetime value, of customer loyalty 40 long-term relationships 13, 17, 18, 37, 86, 93, 227–8 see also final stage relationships longitudinal analysis see evolution loyalty see customer loyalty loyalty management 223, 224 management behaviour 37, 62, 95 see also strategic management manufacturers, trust scales 251 market entry, barriers to 29 market relationships, risk typologies 152–3 market research, usage, and trust 85 marketing cooperative 16, 88 definitions 4–5, 6–7 industrial network approaches 7–8

Index interaction approaches 7, 8–9 partnerships 219 studies, trust definitions in 136–8 see also brand image; distribution channels; exchange; purchasing sequence index; sales management; strategic alliances markets see consumer goods; industrial goods markets means–end models 224–7 measurement of trust 206–208, 237–8 scales 251–61 methodology, in trust measurement 207–8, 209 mimicry, trust-based 59, 238–9, 240 mono-dimensional relationships 4, 11–15, 19–20 see also unilateral relationships motivations as trust antecedents 188, 209, 210, 229, 230 see also opportunistic behaviour multidimensional relationships 15–16, 20, 49–51, 74–6, 240 see also bilateral relationships negative reinforcement, and brand image 96–7 networks and competitive advantage 30–36 of place 33, 175 and trust 175–6 see also consumer communities; industrial network approaches; inter-organizational networks; semantic network; strategic alliances neural networks 234–5 non-coercive power 198 non-contractual coordination mechanisms 74–5 normative trust see identification-based trust obligation fulfilment expectations of 56–7, 245, 246, 250 see also reliability one-way relationships see unilateral relationships online trust see e-trust

305

opportunistic behaviour and determination of trust 188 and trust betrayal 221–2 and vulnerability 154–6 see also transactional costs theory; trust façade organizational studies of trust 61–6 organizations culture 37, 62 economic value, effect of trust 41–3 see also firm-specific resources; inter-organizational; intra-organizational partner scarcity, and competitive advantage 32–3 perceived risk 151 perception and communication 192 in trust definitions 144 see also cognitive representations perceptual centrality 211–12 personal characteristics in inter-organizational relations 65–6, 93–5 as trust antecedents 188–9 in trust definitions 127, 128, 133, 139 see also dispositional trust personal relationships see interpersonal relations; intra-organizational relations personality aspects of trust 54, 60 see also dispositional trust personnel management 95 perspective, in trust measurement 207 place, networks of 33, 175 positive reinforcement, and brand image 96–7 power, and trust 198 pre-relationships 17, 18, 217–18, 219–20, 223, 225, 227 predictive trust 166, 230 prisoner’s dilemma 52–4, 60 probability, subjective 59, 68, 144, 149, 246, 249 procedural justice see fairness process-based trust 171

306

Index

product development see innovation promise fulfilment see obligation fulfilment; reliability psycho-social risk 153, 154 psychological construct, in trust definitions 144 psychological state, in trust definitions 144 psychological studies of trust 51–5 see also socio-psychological studies purchasing sequence indexes 39 rating scales see scales rational-based trust see calculative trust rational choice theory 58–9, 60, 66–9, 149 reciprocity 68–9, 232–5, 245, 246, 247 relation portfolio value 39–41 relation-specific investments, and competitive advantage 31–2 relation-specific resources 34–5, 36 see also trust resources relation-specific risk 150 see also vulnerability relational atmosphere 84–5 relational complexity 22 relational embeddedness 86 relational rent, generation of 32–3 relationship-based competitive advantage 30–36, 37–8, 232 relationships behavioural variables 13–15 developing 220–21 in distribution channels 8–9, 88–93 dynamic model 16–18, 19–20, 195 economic and social dimensions, integration of 73–7 evolution of 16–18, 217–24 and exchange 6 intensity of 15, 16, 86 management, inter-organizational 65–6 risk taking in 150 in the services sector 9, 101–2 social 56–8, 73–7

stages 13 development stage 17, 220, 223, 225 early stage 17, 18, 217–18, 219–20, 223, 225, 227 final stage see betrayal; final stage relationships long-term see long-term relationships typology 13, 14, 161–4 asymmetric 15 authority relationships 16, 153 bilateral 14, 15, 16, 153, 163–4, 170, 233–4 mono-dimensional 4, 11–15, 19–20 multidimensional 15–16, 20, 49–51, 74–6, 240 strong ties 15, 86 unilateral 14, 163, 170 weak ties in 15, 86 see also commitment; conflict levels; dependence; dynamic model; interdependence; market relationships; networks reliability 92, 101 in trust definitions 127, 128, 133, 139, 146, 246, 248, 249, 250 see also obligation fulfilment reliance, in trust definitions 133, 136, 143, 245, 246, 247, 248 reputation 175 and brand image 96 and e-commerce 106, 205 and reciprocity 68–9 see also experience; trust resource-based view, of competitive advantage 27–30 resource indivisibility 33 retention rates (customer) 39–40 risk definition 151–2 as prerequisite for trust 148–54 quantification of 152 in trust definitions 127, 128, 130, 134, 138, 139, 143, 145, 245, 246, 247, 250 typologies 152–4 see also calculative trust; uncertainty; vulnerability

Index

307

risk taking behaviours 150 role modelling 95 routine trust 157–8

systemic trust 55–6, 160–61, 175–6, 240–41 see also institutional trust

sales management, and interpersonal relations 93–5 salespeople, relationships with managers 95 satisfaction and loyalty 98–9, 101–2 as trust antecedent 190–91, 210, 229 as trust consequence 198 scales, for measurement of trust 251–61 semantic networks 211–12, 228, 237–8, 240 see also lexical correspondences services sector, relationships in 9, 101–2 shared values in the social order 58 as trust antecedent 198, 209, 210, 212 in trust definitions 248 in trust development 219, 220, 223–5, 227, 229, 231 see also culture; identification-based trust social capital 29–30 social exchange theory 89–90 social learning 54, 56, 60, 175 social relations 56–8, 73–7 social systems 55–6, 58 virtual 59–61 socio-psychological studies of trust 52, 60–61, 66 sociological studies of trust 55–61 spatial separation see time–space distantness stimulus–response mechanism, and brand image 96–7 strategic alliances 13, 16, 37, 63–5 see also marketing, partnerships strong ties, in relationships 15, 86 strong trust 167–8, 169 structural equation models 208 subjective probability 59, 68, 144, 149, 246, 249 supplier partnerships 16 see also distribution channels swift trust 63

tactic collaborations 13 teamwork 62–3, 87 technology trust 104–5 termination see betrayal terminology, in trust definitions 123–8, 136–8 terrorism 79 time asymmetry 59–60, 61, 62, 92–3 time compression, diseconomies of 32 time–space distantness 59, 61, 103 transaction governance mechanisms 74–6 transaction value analysis 76 transactional costs theory 69–73, 76, 85 transactional relationships 13 trust abstraction levels 224–7, 239 as an economic good 67–8 antecedents see antecedents betrayal of 221–2, 223, 224 consequences see consequences definitions attributes see assumption; attitudes; belief; confidence; cooperation; expectations; judgement; perception; personal characteristics; psychological state; reliability; reliance; risk; shared values; vulnerability; willingness clusters 130–36 content analysis 122–30 from marketing studies 136–8 lexical correspondences 126–8, 138, 139 lexical richness 123, 124, 136–8 semantic network 211–12, 228, 237–8, 240 as social contract 156 summary 245–50 as trusting 85 development of 63–4, 219, 220, 223–5, 227–32, 238–41 evolution of 217–24

308

Index

intensity of 167–8, 169 measurement of see measurement models 199–203, 222–7, 235–7 reciprocity in 68–9, 232–5, 245, 246, 247 related concepts 172, 174–6 studies organization 61–6 psychological 51–5 socio-psychological 52, 60–61, 66 sociological 55–61 targets 160–64 theoretical irrelevance of 69–73 as a transaction governance mechanism 74–6 typologies 173–4 calculative see calculative trust characteristic-based 171 cognitive see cognitive trust cognitive–behavioural 158–9 conceptualizations 141–8, 156–9, 211–12 conditioned 219, 220 deterrence-based 164–5, 217 dispositional see dispositional trust emotional 104, 144, 157, 158, 209, 210, 249 explorative 166 hopeful 167–8, 232 ideological trust 157, 158 initial 107–8, 220–21 inter-organizational 161–4 interpersonal see interpersonal trust predictive 166, 223, 230 process-based 171 routine 157–8 strong 167–8, 169 swift 63 systemic see systemic trust technology 104–5 unconditional see unconditional trust unstable 167–8 typologies identification-based see identification-based trust typologies institutional see institutional trust

see also distrust; opportunistic behaviour; reputation; risk; trusting; uncertainty; vulnerability trust assumptions 221 trust-based mimicry 59, 238–9, 240 trust-building mechanisms, in alliances 63–4 trust extension 87, 175, 226–7, 230, 239, 240 trust façade 174, 227 see also opportunistic behaviour trust resources 29–30, 37–8 see also relation-specific resources trustees knowledge areas 225, 226 in risk definitions 128, 129 as targets of trust 160–64 trusting 85, 103–4, 150 trustors, self-concept 225, 226, 232 two-way relationships see bilateral relationships uncertainty 57, 58, 59–60 definition 151–2 in distributor relationships 88 and e-trust 102–3 and explorative trust 166 reduction of 196 in the services sector 101 in teamwork 62–3 see also calculative trust; innovation; risk unconditional trust 175, 219, 220 see also dispositional trust unidimensional see mono-dimensional unilateral relationships 14, 163, 170 see also mono-dimensional relationships unstable trust 167–8 value-added exchanges 25 value creation theory 41 values see identification-based trust; shared values variable operationalization, in trust measurement 206 vendors see distribution channels; salespeople virtual self/other 233–4

Index virtual social systems 59–61 see also e-trust virtual teamwork 63 vulnerability and risk 150, 154–6 in trust definitions 127, 128, 138, 143, 145, 245, 246, 247, 248, 249, 250

309

weak ties, in relationships 15, 86 weak trust 169 web sites quality, and e-trust 106–7, 204, 205–6 trust scales 259–60 willingness, in trust definitions 127, 133, 134, 136, 142, 143, 145–6, 148, 247

Trust In Market Relationships

Trust In Market Relationships

Working in Adversarial Relationships: Operating Effectively in Relationships Characterized by Little Trust or Support

Trust and Mistrust: Radical Risk Strategies in Business Relationships

Building Trust: In Business, Politics, Relationships, and Life

In Trust

Trust

Trust

Trust

Results Through Relationships: Building Trust, Performance, and Profit Through People

Trust

Relationships

Trust

Results Through Relationships: Building Trust, Performance, and Profit Through People

Trust

In Mike We Trust

Communication in Interpersonal Relationships

In Dog We Trust

Trust in Love

Trust in Cyberspace

Studies in Dispensational Relationships

In Mike We Trust

In Dog We Trust

Lessons in Trust

In Dog We Trust

Left in Trust

Lessons in Trust

Trust In the Season

Trust in Society

Trust In Market Relationships