Trustworthiness as a Source of Competitive Advantage

Abstract

Three types of trust in economic exchanges are identified: weak form trust, semi‐strong form trust, and strong form trust. It is shown that weak form trust can only be a source of competitive advantage when competitors invest in unnecessary and expensive governance mechanisms. Semi‐strong form trust can be a source of competitive advantage when competitors have differential exchange governance skills and abilities, and when these skills and abilities are costly to imitate. The conditions under which strong form trust can be a source of competitive advantage are also identified. Implications of this analysis for theoretical and empirical work in strategic management are discussed.

Trust, control and knowledge transfer in small business networks

“…In the early twentieth century, the Austrian writer Egon Friedell postulated: ''The most reliable way to make people decent is to take them for decent''. The importance of trust in business relationships is highlighted by various authors (Welter 2012;Barney and Hansen 1994;Fink and Kessler 2010;Howorth and Moro 2006). Becerra et al (2008) suggest that knowledge transfer, as an endeavour with high levels of behavioural uncertainty, calls for high levels of trust.…”

“…Research suggests that both trust (that relies on the ethical and moral values of the business partners) and LOC apply to inter-firm transaction relationship (Bradach and Eccles 1989;Barney and Hansen 1994). Thus, Adler (2001), by expanding the logic of transaction cost economics as developed by Williamson (1988), introduces trust as a mechanism for behavioural coordination in exchange relationships that has equal importance to hierarchical control [such as contracts and other formal tools á la Williamson (1988)].…”

A model of trust-repair discourse

“…Trust is a valuable asset for business organizations (Barney and Hansen, 1994;Ingenho↵ and Sommer, 2010;Pirson and Malhotra, 2011). However, some actions or events initiated by a company can damage trust between the company and its stakeholders, creating distrust and threatening its social legitimacy and survival (Poppo and Schepker, 2010).…”

Measuring Social Capital for Social Performance

“…The concept of trust holds the distinction of being widely associated with both social capital and corporate competitive advantage. 24 In the pilot testing, it was discovered that Misimans tend not make global attributions of "trustworthiness". 25 In Misiman culture, trust related behaviors differentiate situations more than people.…”