Under a cloud of suspicion: trust, distrust, and their interactive effect in interorganizational contracting

Abstract

Although considerable research has examined the role of trust in interorganizational relationship (IOR) contracting, scholars have devoted less attention to how trust and distrust jointly influence this process. We propose and test a model wherein trust, based on partner reliability, is constrained to the IOR exchange context where it develops and does not generalize to other contexts. Distrust, rooted in value incongruence, more readily generalizes across exchange contexts. Results support these predictions. In addition, our analysis shows that trust and distrust combine such that managers decrease their preferences for highly specific focal-context contracts only when in-context trust is high and distrust is low. We discuss how these findings may provide a more nuanced understanding of the relationship between trust-based and contract-based IOR governance.

Resource Orchestration for Innovation: Structuring and Bundling Resources in Growth- and Maturity-Stage Firms

“…As such, it is particularly helpful in determining the drivers of managerial decisions when faced with a variety of potentially relevant criteria that can vary across situations (Connelly et al, 2012). This method has gained recent attention in strategic management research examining managerial decisions such as alliance partners (Hitt et al, 2004b), interorganizational contracts (Connelly et al, 2012), and international joint ventures (Reuer et al, 2013).…”

Revisiting the Foundations of Organizational Distrust

“…Distrust has been linked to a large set of organizational issues ranging from intergroup behaviors (Insko and Schopler, 1997), revenge (Bies and Tripp, 1996), transaction costs (Levi et al, 2004), cognitive processes (Fein, 1996;Hilton et al, 1993), organizational control (Walgenbach, 2001), purchasing decisions (Cho, 2006), or interorganizational contracting (Connelly et al, 2012a;Lumineau, 2017). Fifteen years ago, Kramer (1999) and Lewicki et al (1998) pointed out the importance of distrust in organizations and called for a more systematic study of this construct.…”

Trustworthiness of Autonomous Systems

“…We trust someone who is trying their best, who is transparent about their actions and has a character that, regardless of competence, inclines them to take responsibility for their actions, be thoughtful and empathetic to others and other traits. This two-factor model of trust combines ability and ethics [19,20,51,59]. Trust (T) consists of: [19,20,51,59] • Competence (C)…”

“…This two-factor model of trust combines ability and ethics [19,20,51,59]. Trust (T) consists of: [19,20,51,59] • Competence (C)…”

“…A single integrity failure may result in a loss of trust in the way that a single incompetent action does not [51]. People use integrity judgments to generalize across domains of a relationship, where as competence is more domain specific [20]. Additionally integrity-based trust implies a reduced threat of opportunism in a way that competence-based trust does not [59].…”