Trust within and between Organizations. Conceptual Issues and Empirical Applications

Citation

Weibel, A. (2003), "Trust within and between Organizations. Conceptual Issues and Empirical Applications", Personnel Review, Vol. 32 No. 5, pp. 667-671. https://doi.org/10.1108/00483480310488405

The jacket's description of this book offers a useful orientation to its aim and approach. This books wants to offer a “wide‐ranging study of trust within and between organizations from the perspective of several social and management sciences”. Unlike other books published in this area before, the editors stress that they seek to complement the burgeoning trust literature with a truly multidisciplinary view on trust and empirical studies that cover such diverse societal contexts as Britain, France, Germany, Canada, the USA, Japan, India and China. Although the book is mainly geared toward issues in organizational theory, scholars of management and human resources will find several topics covered interesting too.

In the introduction and the conclusion both editors – Christel Lane and Reinhard Bachmann – offer their interpretation of the content of this challenging book. However, rather than merely restating how they intelligibly arranged and rearranged the chapters of the book, I decided to offer yet a different reading from the “other” hitherto more dominant socio‐psychological approach to trust. I would like to answer the question: “What can a researcher learn from this book who usually focuses on micro‐level intra‐organizational studies?”.

Although there a many more subjects covered, four issues are central from a more micro‐level perspective. First of all there are some chapters that add to the already quite developed debate on trust as a multidisciplinary construct that may integrate micro‐level psychological processes with macro‐level institutional arrangements. Second, a group of contributors study the interplay of formal institutions and trust building. Third, some authors add to our understanding of how different national settings influence interpersonal and inter‐organizational trust building. And finally two chapters of the book address the dark sides of trust.

In her introduction Lane differentiates sources of trust and different levels of trust analysis. Calculative trust is mainly advocated by economists and game theory and focuses on the idea that a rational actor bestows trust only if her calculations suggest a net benefit in doing so. For value and norm‐based trust shared values are the basis. Common cognitions and tacit knowledge render a “world in common” which serves as the basis for cognitive trust. Lane further mentions that trust can be analysed on different levels such as on an interpersonal, an institutional and a system level. Ten chapters later in the conclusion of the book Bachmann elaborates again on these distinctions. In his analysis he seeks to show that neither basis of trust is alone sufficient. Trust should best be understood as a multidimensional construct where elements of calculation, social norms and collective cognitions are present at the same time. Also trust is preferably studied on multiple levels. Interpersonal trust is influenced by the institutional framework, but the institutional arrangement never completely determines the quality of social interaction. Thus, micro‐level trust relations are constrained and enhanced by macro processes. In Chapter 1 Sydow seeks to marry these different sources of trust with a multi‐level approach building on Giddens’ conceptual framework. He shows how trust is created and reproduced through the institutional order of a business system whereby all sources of trust (as modalities) facilitate trust production. By explaining the notion of recursiveness of “social praxis” he also offers a new interpretation of how vicious or virtues circle of trust and control develop. Brenkert in Chapter 10 among other things focuses on the normative dimension of trust yet turns the usual relation upside down by looking at the normative implications of trust. He implies that trust, although not a sufficient condition for moral business relations, is certainly a necessary condition. To the extent that people consciously trust each other they must have some mutual understanding of each other which is a precondition for morality. Also trust involves a certain restriction of self‐interested behaviour so that the interests of the others are not harmed. Finally trust involves a certain reciprocity which offers a certain leeway for decisions and actions. As morality is often tied to some degree of autonomy and self‐determination trust will promote this basic condition. In this way trust can further morality in business relations.

The interplay of the institutional environment and trust building are prominent features of Chapters 3, 4, 5, and 6. In Chapter 3 Sako tries to answer the question whether trust improves business performance. She looks at trust in supplier relations in the USA, Japan, Germany and Latin catholic countries. She examines carefully under which conditions contracts are trust enhancers. In a cross‐level test she shows that in the USA the offering of longer‐term contracts led to lower levels of trust. Quite contrary in Europe (with the notable exception of the UK), where longer‐term contracts fuelled trust building. The reason for this may be that the existing relationships in the USA were adversarial. In this context longer‐term contracts pronounced this value incongruence rather than being a remedy to it. Liebeskind and Oliver in Chapter 4 look at the effects of intellectual property rights on trust building. In biotechnology the widespread involvement of university researchers has impacted traditional forms of academic research. Scientists that work for the biotech industry and the university at the same time have a greater interest in protecting their intellectual property out of commercial interest than other researchers. These commercial interests invade scientific research on several levels. For example collaborative relationships with parties who have commercial interests call for deeper forms of trust, because incentives for unethical behavior are increased. But also researchers that are engaged in commercial ventures have higher demands on research collaborations than before as strict confidentiality has become more important to them. Consequently a change in the intellectual property rights system of a university impacts directly on the number and quality of research alliances in the scientific community as there are fewer research co‐operations as a result. In Chapter 5 Deakin and Wilkinson draw on a comparative study of supplier relations in Britain, Germany and Italy to show that trust and legal regulations are interdependent and that a tighter legal framework may further the development of trust. In Germany and to a lesser extent in Italy the legal framework is much tighter than in Britain. Legal norms are taken for granted and cannot be contracted out except at a high cost. The authors show that this legal framework acts as a facilitator for trust. For example in Germany firms are very much aware of possible legal costs and they are most likely to carry insurance against liability yet at the same time they are also least likely to take legal action for breach of contract. The German legal framework (and its extra‐legal norms promoted by the intermediate associations) seems to absorb the risk of inter‐organizational cooperation up to a certain degree and by this allows social actors to trust one another more than is possible without this reduction in risk. Finally Marsden analyses in Chapter 6 the role of inter‐firm institutions for trust within the employment relationship. He starts with the notion that trust in this relationship is inherently fragile as both employees and employers can never be sure whether the other party uses the constitutional information asymmetry of the relationship to their own advantage. A downward spiral into low‐trust relations can begin with a shock to the established workplace equilibrium, for example, when managers start to control workers in some area important to them, which the latter then may interpret as showing institutional distrust. It is therefore very important that both parties share some common understandings on how work has to be done. For example in the US jobs are assigned by the work post role i.e. the work is divided into discrete work posts for each of which individual workers are held responsible. This common understanding helps control opportunism on both sides as it sets limits on managerial authority and provides a basis for the employment relationship. He then goes on to highlight how interfirm institutions supplement these common understandings and by this further the co‐operation within the firm.

The influence of national settings on trust building are subjects to Chapters 8 and 9. Humphrey in Chapter 8 studies the transfer of supplier relations towards partnership in India where trust had to be developed where there was previously none. This is an extraordinary challenge as “trust relationships have a start‐up problem”. Usually in this situation risk is contained through formal means such as contracts and penalties. However, in India there is none of a legal and institutional framework or trade associations that might support closer supplier‐customer relations. Rather firms have to build trust despite this lacking institutional framework. It is then that personal trust becomes the backbone of these relations and it has to be constructed slowly through a process of mutual learning. Child, in Chapter 9, in similar vein analyses how firms that enter China through alliances can build up the necessary trust between them and their business partners. Again high trust in the Chinese society can only be found in family relations or in the Guanxi system. For a foreign company it is very difficult to enter such relationships and it is therefore confronted with the low trust within Chinese society. There are two options for firms that still wish to build successful relationships. A low trust option is built on securing management control of the joint venture and dealing with key external institutional bodies directly. The high trust option for foreign investors is to rely on the Chinese partner to cope with the several complexities arising in a Chinese context. This kind of partnership very often starts with a mutually acceptable calculus for the relationship to be established. As in the Indian case trust building then becomes mainly a matter of personal trust whereas the “boundary spanners” with experience of both cultures and institutional systems become very important.

Finally and maybe most interestingly two chapters explicitly address the dark sides of trust. In Chapter 2 Hardy and coauthors start from the idea that any study of trust needs to take into account the often asymmetrical power in relations. Power may be hidden behind a façade of trust and rethoric of collaboration and can then be used to promote vested interests through the manipulation of the weaker partners. The aim of this pretending to be trustworthy and caring is to secure agreement and reduce chances of opposition by creating legitimacy for actions. The authors describe an examplary case where a company gains the trust of a trade union only to manipulate the union not to use its contra‐power and to create some sort of lock‐in to finally be able to disinvest a production site. Kern in chapter 7 addresses the problem that trust under specific circumstances can create blockages to learning and innovation. In his analysis of this problem he looks at one of the most pressing problems facing German industry today: producing basic innovations is the very weakness of the system. The problem stems from the fact that interorganizational networks in Germany tend to be too stable. New relations with new ideas are hardly formed. Additionally the long tradition of working together might have created some kind of a “group‐think”‐syndrome where basic tenets are seldomly discussed.

The questions of trust and trust building have become very pronounced these days. This book, together with the volume edited by Kramer and Tyler (1996) and the special issue of the Academy of Management Review (1998), offer a formidable overview on the state of the art of today's trust discussion. A trust researcher looking for a more macro‐oriented, sociological account of trust cannot ask for better contributions. Management and Human Resources scholars will also find some chapters, especially those combined with empirical studies, very helpful. However it would have been very interesting if one of the editors helpful commentaries would have bridged this debate with the ongoing debate in the more micro‐oriented, socio‐psychological area. To research further in this area this important point remains to be done.