Trustworthiness as an Economic Asset
187
Table 2. Level of Trust for Three Business Relationships (Number and
Percent of Total Rankings by Relationship)
|
Business Relationship |
Level of Trust | ||||
|
Weak 1 |
2 |
Semi-Strong 3 |
4 |
Strong | |
|
Suppliers |
9 (24) |
9 (24) |
10 (26) |
4 (10) |
6 (16) |
|
Employees |
7 (18) |
0 |
2 (5) |
9 (23) |
21 (54) |
|
Customers |
14 (44) |
2 (6) |
10 (31) |
2 (6) |
4 (13) |
these executives emphasized that these traditional economic variables were not
necessary and sufficient conditions for business success. Identity signals embed-
ded in economic exchanges were critical too. The “who” of trading relationships
is not dominated by the “how much.” Both economic signals are vital.
Table 2 summarizes the rankings across the three types of business relation-
ships. For both suppliers and customers, weak trust associated with identity-less
markets represented 18-34% of these relationships. The majority of these
exchanges contained some degree of economically relevant identity through
formal or informal contracts and/or high levels of assurance that all parties’
interests will be protected. In the case of employer-employee relationships, strong
trust (a ranking of 5) dominated the other two forms. Important labor inputs in
these firms represent much more than a commodity where price and quality are
easily discovered in a nonopportunistic market.
These executives use three forms of governance in their business transactions:
the market, contracts, and social capital or strong-form trust. This empirical result
supports Lewicki and Bunker’s (1996) claim that firms maintain a portfolio of
governance mechanisms in their business transactions in their efforts to minimize
transaction costs that are subject to the operational needs and constraints of the
business. We found all three governance forms in all firms. Informal and formal
contracts (semistrong) and social capital (strong form) were more prevalent than
markets (weak form) in the portfolio for the most important transactions.
The multiple-case design also produced support for Lewicki and Bunker’s
(1996) hypothesis that some trust relationships evolve over time. Weak trust
relationships can evolve into semistrong- or strong-form trust transactions as the
number of transactions increases and the trading parties become more acquainted.
For example, all six owner/operators indicated that most employees are hired
either “as commodities” or “under contract,” but a selected few become
strong-form trust employees in the firm. Some suppliers and customers also
followed this evolutionary pattern toward a noncalculative relationship.
Trustworthiness mappings (Fig. 2) for the six firms provide a graphical account
of the three fundamental empirical relationships associated with trust summarized
in Table 2. Noteworthy is the moderately positive correlation between economic
importance and the form of trust for five of the six firms. The more economically