Trust, commitment and relationships in supply chain management: a path analysis

Abstract

Purpose -The primary purpose of this study is to examine the relationships between the level of trust and several relevant constructs drawn from transaction cost analysis (such as asset specificity, behavioral uncertainty, and partner's opportunism) and social exchange theory (informational sharing). Design/methodology/approach -A comprehensive questionnaire based on various theories on trust and commitment was mailed in 2001 to supply chain practitioners in the Midwest region. A total of 171 valid returns were received out of 1,800 mailings (9.5 percent). A path analysis was used to estimate parameters or relationship between relevant constructs and trust, and trust with the level of commitment. Findings -A firm's trust in their supply chain partner is highly associated with both parties' specific asset investments and social exchange theory. Information sharing has a primary impact on reducing (improving a partner's uncertainty behavior which, in turn, would improve the level of trust. Finally, the level of commitment is strongly related to the level of trust, supporting Morgan and Hunt's hypothesis.Research limitations/implications -This research used supply chain practitioners in one region as a target population. It is highly recommended to duplicate this study in other regions to verify the findings. Originality/value -This is the first research paper linking various variables to trust and trust to commitment in supply chain management using path model.

Analysing trust as a means of improving the effectiveness of the virtual supply chain

“…The commitment to building trust by supply chain partners is claimed to be a significant determinant in achieving successful supply chain partnerships (Heffernan, 2004;Kwon and Suh, 2005;Poirier, 1999;Sahay, 2003;Selnes, 1998;Wilson, 1995;Zineldin and Jonsson, 2000). Additionally, lack of trust in a supply chain is claimed by Poirier (1999) as "the single biggest obstacle to advancing supply chain improvement".…”

“…Trust relates to the willingness of two or more partners to take the risk of relying on the exchange of another partner in whom they have confidence (Batt, 2003;Kwon and Suh, 2005;Mayer et al, 1995;Moorman et al, 1993;Sahay, 2003;Selnes, 1998;Wilson, 1995;Wu et al, 2004;Zineldin and Jonsson, 2000). Trust in supply chain partnerships requires each partner to have a belief in the other partner not to take advantage of them (Batt, 2001a-b;Heffernan, 2004;Kwon and Suh, 2005;Lane and Bachmann, 2000;Zineldin and Jonsson, 2000).…”

“…Trust in supply chain partnerships requires each partner to have a belief in the other partner not to take advantage of them (Batt, 2001a-b;Heffernan, 2004;Kwon and Suh, 2005;Lane and Bachmann, 2000;Zineldin and Jonsson, 2000).…”

“…Trust in a supply chain can be related to the members' competence or work standard, skill, knowledge and ability to fulfil a promise, agreement or obligation (Coulter and Coulter, 2002;Kwon and Suh, 2005;Mayer et al, 1995;Selnes, 1998;Wu et al, 2004;Yee and Yeung, 2002). Mutual trust between supply chain partners is built on the trust in, and acknowledgement of, the competence of the other partner to provide goods or services customised to their requirements (Batt, 2003;Coulter and Coulter, 2002;Heffernan, 2004;Kwon and Suh, 2005;Zineldin and Jonsson, 2000).…”

“…Mutual trust between supply chain partners is built on the trust in, and acknowledgement of, the competence of the other partner to provide goods or services customised to their requirements (Batt, 2003;Coulter and Coulter, 2002;Heffernan, 2004;Kwon and Suh, 2005;Zineldin and Jonsson, 2000).…”