Trustworthiness as an Economic Asset
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served as the interview team. After discussing the role of trustworthiness in their
operations and the definitions in Table 1, the owner/operators were asked to select
the type of trust that characterized their economic relationship with employees,
customers, and suppliers. Trust was distributed over a five-point scale, with
weak-form trust 5 1 and strong-form trust 5 5. A trust level was selected for the
seven most important employees, customers, and suppliers. Importance was
defined as the economic revenue or cost associated with that individual or firm.
After the ranking exercise, the owner/operators discussed the reasons for their
rankings.
With this experimental design we performed a preliminary empirical test of
Barney and Hansen’s (1994) three forms of trust. Are these forms of trust
understood by business executives? Do they have meaning in their day-to-day
operations? Do all three forms exist simultaneously? If so, what is the distribution
or mapping of trust across business relationships? And finally, do these maps vary
by business, and if so, how do they vary and why?
Results: The Nature and Incidence of Trustworthiness
Owner/operators experienced little difficulty understanding the types of trust
outlined in Table 1 and during the interviews quickly applied them to their
business operations. These small business executives spoke freely, and in some
cases passionately, about the role of trustworthiness in their business relation-
ships. Trustworthiness is a business asset, according to these executives, provid-
ing competitive advantages to the firm. Fig. 1 captures the nature of these
advantages with respect to their source and process characteristics as described by
these managers.
Employees, customers, and suppliers approach a transaction with a basic set of
beliefs and values associated with how they do business. These behavioral
fundamentals produce observable characteristics in the trading parties handling of
the transaction. Repeated observations of these characteristics create a trustworthy
reputation for the other party. Trustworthiness increases business flexibility,
reduces risk, saves managerial time, and reduces monitoring costs. All six
managers indicated that semistrong- and strong-form trust relationships create
competitive value for their firms.
According to these owner/operators, trustworthiness takes time and money to
develop and to maintain as a productive asset. However, unlike depreciable assets,
trust appreciates in value through experience. Strong-form trust, and even forms
of semistrong trust, substitute for investments in other formal governance
activities (e.g., monitoring mechanisms) and reduce the probability of noncom-
pliance.
The owner/operators noted that price and quantity were critical considerations
in all business relationships because of their direct impact on profitability. Yet