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MODEL FOR DEVELOPING TRUST IN CONSTRUCTION MANAGEMENT
By
DIODORO ZUPPA
A DISSERTATION PRESENTED TO THE GRADUATE SCHOOL
OF THE UNIVERSITY OF FLORIDA IN PARTIAL FULFILLMENT
OF THE REQUIREMENTS FOR THE DEGREE OF
DOCTOR OF PHILOSOPHY
UNIVERSITY OF FLORIDA
2009
2009 Diodoro Zuppa
To Julia
ACKNOWLEDGMENTS
I would like to acknowledge a number of individuals for their assistance in the
completion of my dissertation. First, I would like to thank Dr. Casella for his assistance with the
statistical analysis in my research. Second, I would like to acknowledge Dr. Scicchitano and his
team at the Florida Research Center for their assistance in administering the telephone survey.
Third, I would like to acknowledge the individuals at the Shimberg Center for their support.
Fourth, I would like to express my gratitude to my dissertation committee: Dr. Issa, Dr.
Williamson, Dr. Lucas, Dr. Olbina, and Dr. Chow. More specifically, I would like to
acknowledge Dr. Issa, the chair of my committee, for being a valued academic mentor, setting
high standards, creating a rewarding Ph.D. experience and exposing me to a number of academic
opportunities; Dr. Williamson for her continual guidance, encouragement and funding the
telephone survey and SPSS training required to complete my dissertation; Dr. Lucas for the
insightful discussions regarding the human impacts on construction projects; Dr. Olbina for her
support and feedback; and Dr. Chow for his participation and encouragement. Fifth, I would like
to thank my parents and my sisters for their encouragement. Sixth, I would like to give a special
thanks to Dr. Williamson for providing me the many forms of support and encouragement
throughout the process. Her commitment to my academic, professional, and family success was
greatly appreciated. Last, I would like to express my deepest gratitude to my wife and my
daughter. I would like to thank Patricia for her unwavering encouragement and creating the
opportunity to pursue my goals, and Julia for making the journey more enjoyable than I thought
possible.
TABLE OF CONTENTS
Page
A C K N O W L E D G M E N T S .......................................................................................... .............. 4
L IST O F T A B L E S ............................................................................................... . . 8
LIST OF FIGURES .................................. ......... 12
ABSTRACT ................................................. .............. 15
CHAPTER
1 IN TRODU CTION ....................................................... ............. ....... ....... 17
1.1 N eed for R research .............. ............. ............... . ....... .. .......... .. 17
1.2 Challenges Specific to U.S. Construction Industry.............................. ........... 19
1.3 M ain R research Focus ............................................... ... .... ............ .. 20
2 L ITE R A TU R E R E V IE W ....................................................................... ......................... 24
2.1 Leadership ........................................................................ ........ 24
2.1.1 D efining Leadership ................ ........................................... .............. 24
2.1.2 The Difference between Leadership and Management............................ 25
2.1.3 Trait A approach ................................................... .... .. .......... .. 27
2 .1.4 B eh av ior A p p ro ach .......................................................................................... 3 1
2.1.5 The N eeds A pproach...................................................... ........... .............. 35
2.1.6 Situational A pproach...................................................... ........... .............. 39
2.1.7 Transform national Approach .................................................... ...... ....... 43
2.1.8 Team A approach .............................................. ........ .. .......... .. 47
2.1.9 L leadership Sum m ary ............................................... ............................ 48
2 .2 T ru st ............................ ... .............................................................................................. 4 9
2.2.1 D definition of Trust .................................................. ................ ............ 49
2.2.2 Trust Focused Compendiums of Papers...................................... ................. 49
2.2.3 Trust Focused Dedicated Journal Editions.................................................... 58
2.2.3.1 Trust in the Business Environm ent............................. .................... 58
2.2.3.2 Trust w within organizations .............................................................. 65
2.2.3.3 Trust in human resource management .......................................... 67
2.2.3.4 Trust in organizations .............. ...... ......................... ........... 71
2.2.3.5 Trust among personnel .............. ...... .......................... .......... 74
2 .2 .3.6 T rust in m marketing .................................................... .... .. .............. 77
2.2.4 K ey Trust R research ....................................................................... 83
2.2.5 Trust in V irtual Environm ents ........................................ ....... .............. 97
2.2.6 Breach of Psychological Contract and Trust........................... .......... 101
2.2.7 Summary: Integrated Model of the Trust Process................ .... ............. 103
2.2.7.1 Orientation phase ........... .. .............................................. ....... 103
2.2.7.2 Evaluation phase ................................................. ..... ......... 106
2.2.7.3 Action phase .............. ........................ .. ........ .. ............. 109
2.2.7.4 Outcome phase.................................. .............. 110
2.3 Trust in Construction M anagem ent...................................... .......................... 111
2.3.1 K ey Perform ance Indicators..................................... .......................... 111
2.3.2 Leadership Skills.................... .... .................... ............................ ........ 112
2.3.3 Core Com petencies ............................... ... .................................... 113
2.3.4 Productivity .......................... ................... 114
2.3.5 Benefits of Trust .................................. ...... ...... .. .... ........... 115
2.3.6 Antecedents of Trust ............... ......... ...... .............. 115
2.3.7 T rust and P artnering ...................... .. .. .................... .................... .............. 115
2.3.8 Trust and Team s ........................ .... ................ ...... .. ............ 116
2.3.9 Trust and Information and Communication Technology............................ 116
2.3.10 Trust Frameworks and Models From the Construction Literature .............. 118
2.3.11 Sum m ary ........................................ 120
3 M E T H O D O L O G Y .............................................................................. .......................... 180
3.1 Framework of Trust Factors........... .... ............................ 182
3.2 Scenario Test.............. ........................ ......... .... ............ .. 182
3.3 P rioritizing the F actors......... ......... ......... ......... ........................ .............. 182
3.4 Research Questions .............. ............ ........ ............. 184
3.5 Survey Instrument ..................................... ..... .............. ............. 184
3.6 Statistical Analysis and Preliminary Trust Model .............................................. 185
3.7 Validating Case Studies and Revised Trust Model ............. ............ 186
4 RESULTS 195
4.1 Survey Respondent Characteristics................................... 195
4.2 Survey Results.......................................... ............ 196
4.3 C correlation A analysis .......... ...................................... ........................ .......... 198
4.4 Chi-Squared Goodness of Fit Test.................... ........... .............. 200
4.5 Chi-Squared Test for Independence................................................ ... ................ 203
4.6 L ogistic R egression .............................. .................... .. .. .... ..... .. ............ 204
4 .7 T ru st M o d el ............ ......... .. ............. .. .................................................. 2 0 4
4 .8 V alidating C ase Studies ..................................... .................................................. 205
4.9 R revised Trust M odel ................ ........... .................... .... ....................................... 212
4.10 Comparison to Other Leadership and Trust Models............................................ 214
4.11 Comparison to Construction Specific Trust Models............................................ 216
5 SUMMARY, CONCLUSIONS AND RECOMMENDATIONS ...................................... 252
5 .1 S u m m a ry .................................................................................................................... 2 5 2
5.2 Conclusions ......... .. ....... . ......... .......................................... 257
5.3 R ecom m endations .......... ...... ....... .. ...... ......... ................... 259
APPENDIX
A TRUST FRAMEWORK SCENARIO TEST ........................................................... 262
B C A R E E R FA IR SU R V E Y ........................................................................ .................... 266
C FIN AL SU RVEY IN STRU M EN T......................................................................... ..... 267
D LETTER TO PERSPECTIVE SURVEY PARTICIPANTS............................................... 271
L IST O F R E F E R E N C E S ................................................................ ...................................... 272
B IO G R A PH IC A L SK E T C H ........................................................................ ........................ 288
7
LIST OF TABLES
Table page
1-1 Ranking of Computer use by industry in 2006 .......... ............................................ 22
1-2 Ranking of Private Sector Industries According to the Lowest Median Years of Employee
Tenure ................................................... .......... 22
1-3 Employed Workers by Alternative Work Arrangements in 2005 .................................. 23
2-1 Comparing Leadership and M management ............. ................... ........... .............. 121
2-2 Com paring Leaders and M managers ........................................... .................... ...... 121
2-3 Summary of the Trait Approach ........... ... .............. .............. 122
2-4 Summary of the Behavior Approach ...................................... .............. 123
2-5 Overview of Corresponding Theory of Needs................. ............ ........... .......... 124
2-6 Description of Different Power Bases .................. ....... ........... .... .......... .. 126
2-7 Sum m ary of the N eeds Approach......................... ........ ........................ .............. 127
2-8 Major Findings in Cognitive Resource Theory ...................................... 128
2-9 Sum m ary of the Situational A pproach................................................. .................... 131
2-10 Factors of Transformational and Transactional Leadership ................... ............ .. 132
2-11 Sum m ary of the Transform national Approach ................................................................. 134
2-12 Comparison of Team Effectiveness Criteria........... ................................ .............. 135
2-13 Summary of Leadership Approaches........................................... 136
2-14 D definitions of T rust................................ ...................................................... 137
2-15 Form s and Facades of Trust ....................................................................... 139
2-16 Phases of Alliance Development and Evolution of Trust............................................... 139
2-17 Sources of Intentional R liability .................................................................................. 140
2-18 Sources of R eliance....................................................... .. .. .... ..... .. ............ 140
2-19 Sum m ary of Com pendium of Papers..................................... .......................... ......... 140
2-20 Form of Dependence, Risks, Qualities of Trustworthiness and Mechanism of Trust .... 141
2-21 Trust Building Processes, Base Disciplines, and Underlying Behavioral Assumptions 144
2-22 Sum m ary of Academy of M anagem ent................................... .................................... 146
2-23 Risk Reduction in Different Alliance Types....................... ...... .............. 147
2-24 Sum m ary of Organizational Studies ...................................................... ........... ... 148
2-25 Summary of International Journal of Human Resource Management............................ 149
2-26 Summary of Organizational Science ................................... 150
2-27 Sum m ary of Personnel Review.................... ................................... ......................... 150
2-28 Summary of European Journal of M marketing ............................................................. 152
2-29 Comparison of the Behavioral Definitions of Trust ....................................................... 153
2-30 Trust A ntecedents ......... ......................... ... ....... .......... 155
2-31 M managing Trust: Sample Insight From the Literature ........................................ ...... 157
2-32 Theoretical Approaches to Trust Development..................... ...... ............... 159
2-33 Comparison of Types of Trust ..................................................................... 160
2-34 Sum m ary of K ey Journal A articles ............................. .................................................. 163
2-35 Summary of Trust in Virtual Environm ents ............................................................. 166
2-36 Sum m ary of Trust and Psychological Trust.............................................. ... ... .............. 167
2-37 Examples of Cyclical Development of Trust.................. ....................................... 170
2-38 Key Performance Indicators in the Construction Industry ............ ....... ............. 170
2-39 Use of Leadership Approaches in Construction ..................................................... 171
2-40 Leadership Skills for Project Managers in Construction............................................... 172
2-41 Core Competencies of Project Managers in Construction................ ... ............ 173
2-42 Benefits of Building and Maintaining Trust in Construction ............. .............. 174
2-43 The Antecedents of Trustworthiness in Construction................................. .............. 175
2-44 Partnering Success Factors in Construction............... ................. ......... 175
2-45 Success Factors of Teams in Construction .............. ...... ......................................... 176
2-46 Benefits of Using Technology in Construction .................................... .............. 176
2-47 Factors of Success for Using Technology and Virtual Collaboration in Construction... 177
2-48 Relationship-Based Trust Framework ................................................................. 177
2-49 Processes in Construction That Require Trust.......................................... .... .. .............. 179
3-1 F ram ew ork of T rust F actors................................................................................... 188
3-2 Categories of Trust ..................................... ................. .......... ................ 192
3-3 R research Questions .................. .................. .................. ......... .............. .. 194
4-1 Communication Type Correlation Matrix .............................................................. 226
4-2 Document Type Correlation M atrix..................................................... 226
4-3 Trustworthiness Correlation M atrix..................................................... 227
4-4 Stakeholder Correlation M atrix ............................. .... ................................... 227
4-5 KPI Correlation M atrix ............................................................. .............. 227
4-6 Contract Type Correlation M atrix .............. ......................................................... 228
4-7 Pre-construction and Design Phase Correlation Matrix......................... .............. 228
4-8 Construction Phase Correlation Matrix .................... ........................................ 228
4-9 M management Correlation M atrix.................... ............................... ........................... 228
4-10 Chi-Squared Goodness of Fit Test Results: Communication Method......................... 229
4-11 Chi-Squared Goodness of Fit Test Results: Document Type.............. ................ ... 229
4-12 Chi-Squared Goodness of Fit Test Results: Trustworthiness ...................................... 229
4-13 Chi-Squared Goodness of Fit Test Results: Stakeholder............................................... 230
4-14 Chi-Squared Goodness of Fit Test Results: KPIs....................................... ................ 230
4-15 Chi-Squared Goodness of Fit Test Results: Contract Type.......................................... 230
4-16 Chi-Squared Goodness of Fit Test Results: Pre-construction & Design Phase............ 230
4-17 Chi-Squared Goodness of Fit Test Results: Construction Phase.............................. 230
4-18 Chi-Squared Goodness of Fit Test Results: Management.................... ............. 231
4-19 New Categories ............. .... ............................... ............... ....... 231
4-20 Results of Chi-Squared Test for Independence .................................... .............. 232
4-21 Significant R relationships ...... .. ............. ........................................ .............. 233
4-22 Case Study 1 ........ ..................................... ............... 236
4-23 Case Study 2 ........ ..................................... ............... 237
4-24 Case Study 3 ........ ..................................... ............... 238
4-25 Case Study 4 ........ ..................................... ............... 239
4-26 Case Study 5 ........ ..................................... ............... 240
4-27 Case Study 6 ........ ..................................... ............... 241
4-28 Case Study 7 ........ ..................................... ............... 242
4-29 Case Study 8 ........ ..................................... ............... 243
4-30 Case Study 9 ........ ..................................... ............... 244
4-31 Comparison of the Different Trust Models................ ............................... 249
4-32 Uniqueness of the Revised Trust Model to the Trust Models in the Construction
L literature ................. ..................................... ........................... 25 1
LIST OF FIGURES
Figure Pae
2-1 Follower Behavior Based on Strongest Need................................. ............ 124
2-2 Sequence of Actions for a Leader to Identify the Strongest Needs of a Follower......... 125
2-3 Leader Roles in the Path-Goal M odel...... ......................................................... 129
2 -4 S itu action al L ead ersh ip .................................................................................................... 13 0
2-5 Transformational Leadership and Transactional Leadership ............. ................ 133
2-6 T eam L leadership M odel ................................................................................................. 135
2-7 Detailed M odel of Initial Trust Formation ...................................... ........ .............. 141
2-8 Integrating Trust and Distrust: Alternative Social Realities................ .................... 142
2-9 A Process Model of Opportunistic Betrayal ........................................................ 143
2-10 Exchange Framework of Initiating Managerial Trustworthy Behavior......................... 143
2-11 Trust and Control in Strategic Alliances.............................. .................. 144
2-12 Proposed Model of National Culture and the Development of Trust ............................ 145
2-13 Integrated Framework of Trust, Control, and Risk in Strategic Alliances ................... 147
2-14 Dispositional and Situational Determinants of Trust in Two Types of Managers ........ 148
2-15 The Relational Exchanges in Relationship Marketing............................................. 151
2-16 The KMV Model of Relationship Marketing ............. ................................ ............ 151
2-17 Trust and Reliance in Business Relationships .................................... .............. 152
2-18 Derived Path Coefficients Based on Structural Equation Analysis of the Theoretical
Model ........................................ .............. 154
2-19 P proposed M odel of T rust ................................................................................................ 156
2-20 The Cyclical Trust-Building Loop for Collaboration............. ..... ................. 156
2-21 Managing Trust: Summary Implications for Practice ............... ............. .............. 158
2-22 Stages of Trust D evelopm ent...................... ................. ................... .............. 161
2-23 The Continuum of Degrees of Intra-Organizational Trust .................................... 161
2-24 A D epiction of the Trust Process ................................................................. .... 162
2-25 Antecedents of Virtual Collaboration ..................................... ......................... ......... 164
2-26 Taxonomy of Trust Information ................................ .............. 164
2-27 Components of the Conceptual Framework in the Context of E-commerce................ 165
2-28 Developed Research Model for Investigating Online Trust ................. ............... 166
2-29 Integrated Model of the Trust Process............. ............... .............................. 168
2-30 Different Forms of Trustor and Trustee Relationships................................................ 169
2-31 The Continuum of Degrees of Trusting Action........................................................ 169
2-32 Pinto et al. 2008 Trust M odel ................................................ ............................. 178
2-33 W ong et al. 2008 Trust M odel ........................ ................................ ........................... 178
2-34 Jin et al. 2005 Trust M odel ................................................... .............................. 179
3-1 Overview of M methodology ................................ ........................................... 187
3-2 The Gender, Position and Years of Experience of Survey Respondents..................... 192
3-3 The Survey Respondent's Company Type, Construction Type and Annual Volume.... 192
3-4 Ranking of Trust Factor Categories........................... .......................... .............. 193
3-5 Ranking of the Need of Trust in Different Phases of Construction............................ 193
4-1 Survey Respondent Characteristics: Type of Construction ................... .... ........... 218
4-2 Survey Respondent Characteristics: Company Type............................ .............. 218
4-3 Survey Respondent Characteristics: Company Volume........................ .............. 219
4-4 Survey Respondent Characteristics: Role in Company ............................................ 219
4-5 Survey Respondent Characteristics: Years of Experience.............................. 220
4-6 Survey Respondent Characteristics: Education Distribution............................... .... 220
4-7 Survey Respondent Characteristics: Age Distribution .............................................. 221
4-8 Survey Respondent Characteristics: Gender Distribution ........................................ 221
4-9 Rankings of Communication M ethod.................................... ........................... ........ 222
4-10 R ankings of D ocum ent Types...................................................................... ........ ... 222
4-11 R ankings of T rustw orthiness ........................................ ............................................ 223
4-12 R rankings of Stakeholders ............................................ ............................................. 223
4-13 Rankings of Key Performance Indicators............................. .............. 224
4-14 Rankings of Contract Types...... ................................... 224
4-15 Rankings of Pre-Construction and Design Phase ..................................................... 225
4-16 Rankings of Construction Phase ......... ................. ......... ..................... .............. 225
4-17 Rankings of M anagem ent Skills ......... ................. ......... ..................... .............. 226
4-18 Trust Factors Tested for Trust Model .............................. 233
4-19 Categories of Trust Factors............................................................ .............. 234
4-20 Prelim inary Trust M odel .......................................... ....................... .............. 235
4-21 Trust Model for Contracting Parties on Construction Projects ............. ............... 245
4-22 Detailed Trust Model for Contracting Parties on Construction Projects..................... 246
4-23 Pinto et al. 2008 Trust M odel ................................................ ............................. 247
4-24 W ong et al. 2008 Trust M odel ........................ ................................ ........................... 247
4-25 Jin et al. 2005 T rust M odel ........................................... ............................................ 248
Abstract of Dissertation Presented to the Graduate School
of the University of Florida in Partial Fulfillment of the
Requirements for the Degree of Doctor of Philosophy
FACTORS IMPACTING TRUST BETWEEN CONTRACTING PARTIES ON
CONSTRUCTION PROJECTS
By
Diodoro Zuppa
August 2009
Chair: R. Raymond Issa
Major: Design, Construction, and Planning
The construction industry is facing a number of challenges related to low productivity
rates, uncertain profits and low adaptation rates of new technologies. Trust between contracting
parties on construction projects is viewed as an important strategy to address these and other
problems. This research focused on identifying the factors found on construction projects that
weakened or strengthened trust between stakeholders.
A thorough literature review of leadership approaches, trust models and leadership and
trust in construction was completed. The leadership literature found that effective leadership was
dependent on trust. The review of the trust models confirmed this finding and provided insights
regarding the nature of developing trust. The construction literature provided additional insights
and the necessary context of trust on construction projects.
The methodology applied in the research first developed a comprehensive framework
containing a number of factors that could impact trust on construction projects. The applicability
of the framework was tested. The factors in the framework were prioritized and reduced with the
use of a preliminary survey. The revised prioritized framework provided the basis for the
research questions and survey questions. The survey was administered by phone with fax and e-
mail support. The survey results were analyzed using advanced statistical methods. The
statistical results were developed in a preliminary trust model. The model was tested by
validating cases studies. The results of the case studies were incorporated to develop a revised
and final trust model for contracting parties on construction projects.
The survey respondents were characterized as highly educated males with over 20 years
of construction experience holding senior positions. Thorough the use of descriptive statistics,
correlation analysis, Chi-Square Goodness of Fit Test, Chi-Square Test of Independence, and
validating case studies each trust factor was identified as weakening trust, strengthening trust or
requiring trust. The major findings indicated that face-to-face communications strengthened
trust; the over use of e-mail weakened trust; honoring informal and formal agreements was the
key antecedent of trust; time was the key performance indicator; construction management was
enhanced by high levels of trust and trust could increase the bottom line of construction projects.
CHAPTER 1
INTRODUCTION
The construction industry, which is characterized by uncertainty, complexity and urgency,
currently faces a number of obstacles (Telem et al. 2006; Dainty et al. 2005; Turner and Muller
2003). Construction projects in particular present some of the most challenging arenas within
which to apply advanced information and communication technologies and project management
techniques (Dainty et al. 2005). The circumstances surrounding construction projects have
resulted in a number of negative impacts including low productivity rates, low adaptation of new
technologies, low profit margins, high number of claims, high number of delays and high
number of safety infractions. The consequences of not creating more efficient construction
projects and construction teams are significant considering the U.S. construction industry
employs close to 8 million people and accounts for over $1 trillion(8%) towards the gross
domestic product (2008 U.S Statistical Abstract).
1.1 Need for Research
Trust and leadership can significantly contribute to the success or failure of construction
projects. Hyvari (2006) found that a project manager's leadership ability accounted for
approximately 76% of a project's success and 67% of a project's failure. Other studies have
showed that a project manager without leadership skills can increase the unexpected transaction
costs by 25% if he/she was unable to effectively clarify misunderstandings (Levitt 2007).
However, effective leadership is dependent on trust between contracting parties. "Leadership
without mutual trust is a contradiction" (Bennis 2003, page 131). Trust is imperative in building
successful teams, adopting new technologies, reducing costs and improving the bottom line of
construction projects (Lui et al. 2006; O'Connor and Yang 2004; Fong and Lung 2007). Trust
also has a direct link to reducing costs and saving time (Construction Industry Institute 1993).
Trust is the lubrication that makes it possible for organizations to work. It's hard to
imagine an organization without some semblance of trust operating somehow, somewhere.
Trust is the glue that maintains organization integrity. Like leadership, trust is hard to
describe, let alone define. We know when it is operating and when it is not. We cannot say
much more about it expect for its essentiality (Bennis and Nanus 1985, page 43).
Scholars in construction tend to frame research questions from technical dimensions. They
focus on new technologies, processes, techniques, and materials while failing allocate the same
levels of research to understanding the human dimensions involved in the construction process
(Turner and Muller 2005). Construction research lags behind other fields of research in how
leadership and trust building (human dimension) skills impact the success (profit, costs,
schedule, quality, safety) of construction projects. A a special issue for its 50th Anniversary, the
Journal of Construction Engineering and Management outlined a number of pressing research
areas. Developing new construction specific management models that assist construction
professionals in bridging the gap in values, beliefs, norms and work practices of individuals on
construction projects across the globe were among the top priorities (Levitt 2007). The special
issue also stressed the importance of improving leadership, communication, and trust building
skills to compliment and support technical skills (Russell et al. 2007). Other research has stressed
the importance of using the combination of advanced technology and trust based relationships
(Ho 2009; Kim et al. 2009, Yeung et al. 2009). However, scholars have found that the impacts of
the factors leading to good leadership and strong trust specific to construction projects have not
been researched to the same degree as in other industries (i.e. financial, business, government,
educational) (Turner and Muller 2005). There is a need to evaluate leadership and trust theories
in the context of the construction industry and to develop construction specific leadership and
trust models. Recent trust research in the construction literature has focused on the Asian
construction industry (Jin and Ling 2005; Jin and Ling 2006). The focus of this research is to
help mitigate the lack of leadership and trust research in the U.S. construction industry.
1.2 Challenges Specific to U.S. Construction Industry
Many leadership and trust models discussed in the literature have been developed without
considering the unique context of the U.S. construction industry. Using information from the
U.S. Bureau of Labor Statistics an overview of the U.S. construction industry is provided.
Safety. The construction industry has the worst safety record for all industries analyzed by
the Bureau of Labor Statistics. For instance, in 2005, the construction industry experienced 1,186
or 21% of fatal work injuries out of 5,702 total fatal work injuries in the U.S. This was the most
of any industry (about one out of every five fatal work injuries recorded). The construction
industry also had the highest nonfatal injuries and illnesses incident rate for all private industries.
It had 414,900 nonfatal injuries and illnesses. This translated into an incidence rate of 6.3
(injuries or illnesses) per 100 full-time workers while the average incident rate for private
industries was 4.6 per 100 full-time workers (Department of Labor, Bureau of Labor Statistics,
2007).
Computer use. According to the Bureau of Labor Statistics, the construction industry has
the lowest use of computers and the second lowest use of the Internet of private industries
studied. Twenty-eight per cent (28%) of employees in the construction industry use computers at
work and 21% use the Internet at work (Table 1-1) (Department of Labor, Bureau of Labor
Statistics, 2007)
Employee tenure. The construction industry is saddled with one of the lowest levels of
employee tenure rates of all private sector industries. Table 1-2 shows that in terms of median
number of years, employees in the construction industry remain with an employer for 3 years.
This can be considered short compared with the manufacturing (5.4 years) and transportation and
utilities industries (4.9 years). The low level of employee tenure is coupled with the highest
average weekly hours worked (38.6 hours per week) compared to other industries (Department
of Labor, Bureau of Labor Statistics, 2007).
Alternative and contingent employment arrangements. The number of alternative
workers identifies the portion of workers in an industry that have non-typical employment
arrangements (Department of Labor, Bureau of Labor Statistics, 2007). Table 1-3 ranks the
percent of independent contractors, on-call workers and workers provided by contract firms
according to industry. Construction ranks the highest or the second highest in use of each type of
temporary employee (Department of Labor, Bureau of Labor Statistics, 2007).
Regulatory complexity. The construction industry is burdened by numerous regulatory
requirements. For instance, as construction project managers in the United States attempt to
delivery successful projects they are faced with over "44,000 jurisdictions at the state and local
government levels that regulate building design, construction, and renovation through a
confusing, diverse, and, at times, conflicting array of codes, standards, rules, regulations, and
procedures" (Russell et al. 2007, page 662).
Summary of Characteristics of Construction Industry. The analysis in this section
compared the construction industry to other private sector industries. Using data from the U.S.
Census Bureau and the Bureau of Labor Statistics, it was evident that the construction industry
faces high regulatory complexity, high turnover, a large number of temporary employees, poor
safety record and low use of computers.
1.3 Main Research Focus
The main focus of this research centered on developing a construction specific trust model. The
model is aimed at improving trust between contracting stakeholders on construction projects.
The model incorporates a set of prioritized factors found on construction projects that were
linked to weakening or strengthening trust. The range of construction specific factors were
associated with communication methods, document types, types of stakeholders, expectations,
key performance indicators, contract types, management skills and the processes found in each
phase of the construction process. These also acted as supplementary research questions. The end
result of the trust model was intended to assist in addressing the challenges facing the U.S
construction industry while enhancing the bottom line of construction projects and their
stakeholders.
Table 1-1. Ranking of Computer use by industry in 2006
% of Computer R% of Internet
Rank Industry Rank Industry
Use Use
1 Financial activities 82.4 1 Financial activities 68.9
2 Information 77.5 2 Information 67.5
Business & Business &
3 68.4 3
professional services professional services 57.1
Education and health Education and health
4 62.2 4
services services 42.8
5 Manufacturing 51.9 5 Manufacturing 39.1
Transportation and
6 Wholesale trade 51.1 6 Transportation and
utilities 33.7
Transportation and
7 Transportation and 47.6 7 Wholesale trade
utilities 32.7
8 Mining 42.5 8 Mining 31.8
9 Leisure and hospitality 30.4 9 Construction 21.0
10 Construction 28.1 10 Leisure and hospitality 17.6
Source: Department of Labor, Bureau of Labor Statistics, 2007
Table 1-2. Ranking of Private Sector Industries According to the Lowest Median Years of
Employee Tenure
Rank
1
2
3
4
5
6
7
8
9
10
Source: United
Occupational Category Median Years
Leisure and hospitality 1.9
Construction 3.0
Wholesale retail 3.1
Professional and business services 3.2
Mining 3.8
Financial activities 4.0
Education and health services 4.0
Transportation and utilities 4.9
Nondurable Goods Manufacturing 5.4
Manufacturing 5.5
States Department of Labor, Bureau of Labor Statistics, 2007
Table 1-3. Employed Workers by Alternative Work Arrangements in 2005
Workers
Provided
Independent On-call Provided
Rank Industry np Rank Industry o Rank Industry by
Contractors Workers Contract
Contract
Firms
Education and Public
1 Construction 22.0 1 33.8 1 16.6
health services administration
Professional
2 and business 21.3 2 Construction 12.2 2 Construction 16.5
services
Financial Leisure and Education and 1
3 10.4 3 10.4 3 15.7
activities hospitality health services
Transportation
4 Other services 9.9 4 an ti 8.4 4 Manufacturing 14.1
and utilities
Professional Professional
5 Retail trade 8.9 5 and business 7.7 5 and business 10.4
services services
Education and Financial
6 8.7 6 Retail trade 5.6 6 6.8
health services activities
Leisure and Leisure and
7 Leisue a 4.5 7 Manufacturing 4.8 7 eisu an 4.5
hospitality hospitality
8 Transportation Public Transportation
and utilities administration and utilities
9 Manufacturing 3.2 9 Other services 3.8 9 Information 4.0
Agriculture &
Agriculture & Financial Wholesale
10 related 2.6 10 3.4 10 3.4
industries activities trade
industries
Wholesale Wholesale
11 ol 2.1 11 e 2.1 11 Retail trade 3.1
trade trade
12 Information 2.0 12 Information 1.8 12 Other services 0.3
Public Agriculture &
13 administration 0.3 13 Mining 1.0 13 related 0.2
administration
industries
Source: Department of Labor, Bureau of Labor Statistics, 2007
CHAPTER 2
LITERATURE REVIEW
The literature review is organized in three sections. The first section reviews leadership
theory in the field of business management. The second section focuses on trust literature from
the disciplines of psychology and business management. The third section analyzes the topics of
leadership and trust specific to construction management, which include key performance
indicators, teams and information technology.
2.1 Leadership
The leadership section of the literature review begins with an attempt to define leadership.
It continues with a discussion on the differences between leadership and management. The
section concludes with a review of the main leadership approaches, which include trait,
behavioral, needs, contingency, transformational and team. In describing the different leadership
approaches the terms "leader" and the "follower" are used. This connotation does not imply a
hierarchical relationship. It simply provides a distinction between the entities in the leadership
process.
2.1.1 Defining Leadership
Leadership is a universal phenomenon in humans and examining it is one of the world's
oldest pursuits (Bass 1990). Leadership research has revealed over 130 different definitions
(Burns 1978), making it "one of the most observed and least understood phenomena on earth"
(Burns 1978, page 2). Bass states that "there are almost as many different definitions of
leadership as there are persons who have attempted to define it" (Bass 1990, page 11). Burns
(1978) also points out that it is important to have different definitions of leadership to address the
contextual difference in which leadership is used. For instance, the meaning of leadership might
be different in the financial services industry compared to the meaning of leadership in the
construction industry.
Although scholars have failed to agree on a definition of leadership, some common
ground exists. First, leadership is an intended interaction between a leader and a follower
(individual, group or organization) with the relationship between the leader and follower not
necessarily hierarchical in nature. Second, the interaction between the leader and the follower is
a process that is context specific where the leader influences or inspires the follower to achieve
mutually beneficial goals. Third, the leader has the ability to effectively adapt to changing
situational variables. Fourth, the process of influence is based on the most important needs of the
follower creating an enthusiastic, commitment by both parties. Last, the leader and follower are
both transformed, changed or have experienced growth by the process of leadership (Hackman
and Johnson 1991; Hersey et al. 2001; Northhouse 2001; Yukl 2002; Burns 1978; Bass 1990).
2.1.2 The Difference between Leadership and Management
Although a manager (or a project manager in the construction industry) is sometimes
called a leader, the act of leading (leadership) is different than the act of managing (management)
(Covey 1989; Kotter 1990; Bass 1990; Zaleznik 1992; Bennis 2003). Leadership and
management are complementary yet distinct making it difficult to define leadership (Caldwell
2003). Leadership could include management, but management does not necessarily include
leadership (Bass 1990). This permits the potential conflict between these two functions where
managing may hamper leadership development and leadership may disrupt the effectiveness of
managers (Covey 1989; Zaleznik 1992). "Strong management alone can create bureaucracy
without a purpose, but strong leadership alone can create change that is impractical. Effective
managers must also be leaders and leaders must manage" (Yukl and Lepsinger 2004, p. 10). The
necessity for leadership and management must find a balance that enables construction
companies to thrive in a constantly evolving and highly unpredictable industry (Cheng et al.
2007; Dainty et al. 2005; Odusami, 2002).
Leadership is more of an art (Covey 1989) that focuses on inspiring and aligning people
to a company's vision while management focuses on more traditional measures linked to the
company's bottom line (Kotter 1991). Leadership is a social process within a network of
complex relationships which forms a constantly evolving community. As people in this
community interact conflicts between personal values, beliefs and needs arise. A leader sees past
the conflicts and aligns the individuals into an effectively functioning community focused on the
same goal. Leadership creates new beliefs, patterns and actions while management is used to
adapt to this change by establishing stability and predictability (Barker 1997). Leadership
creates the vision for change and management translates the vision into actions (Caldwell 2003).
Other researchers go so far to argue that mangers and leaders are different types of
people, managers being more reactive and less emotionally involved, and leaders being
more proactive and more emotions involved. The overlap between leadership and
management is centered on how they both involve influencing a group of individuals in
goal attainment. (Northouse 2001, page 12)
As indicated in Tables 2-1 and 2-2, management includes the functions of planning,
budgeting, organizing, staffing, controlling, problem solving, and focusing on the short term
bottom line. Leadership includes the functions of establishing direction, aligning people,
motivating, producing change, and inspiring trust for the long term (Kotter 199; Bennis 2003). In
the construction industry the function of management would be defined by budgeting,
scheduling, and performance measuring (Menches and Hanna 2006; Cox et al, 2003; Chua et al.
1999) where leadership would be defined by constantly improving (Spatz 1999) team building
(Skipper and Bell 2006) and trust building (Bulter and Chinowsky 2006).
In contrast, other scholars challenge the distinction between leadership and management.
They argue that the main focus of any organization is the achievement of goals and whether they
are accomplished by management or leadership makes no difference. Even managers that are
insensitive and lower employee morale can still achieve good results (Andersen 2006). In the
construction industry these goals are referred to key performance indicators (Cox et al. 2003) or
measures of project success (Hughes et al. 2004). However, scholars and researchers argue
because of the unique conditions of the construction industry sound management (Cox et al,
2003) and leadership (Skipper and Bell 2006; Dainty et al. 2005) are essential to success of
construction companies.
2.1.3 Trait Approach
The leadership trait approach section discusses the great man theory, leadership traits
between 1904 and 1947, leadership traits between 1948, and 1970 and the five factor model.
Great Man Theory. The pursuit of identifying personality traits of "great leaders" has
been a goal of scholars since the beginning of time. Confucius in 500B.C. and Aristotle in
300B.C. proposed ideal traits for leaders (Muller 2007). At the beginning of the 20th Century the
great man theory emerged and focused on the special traits of great leaders that aided them in
achieving extraordinary accomplishments regardless of the situation (Chemers 1997).
The great man (or leader) theory suggests that certain individuals are born with superior
traits that allow them to achieve "great things" or change the course of history. These traits could
be in the form of a deep passion for power, a sense of mission, an unbounded reserve of energy,
or an iron will. The word leadership is derived from the verb act which is believed to have two
distinct components, the function of giving commands (leader or beginner) and the function of
executing (follower or finisher). The leader depends on the followers to complete the commands
and the followers depend on the leader to initate the commands. Historically, the strength of the
leader was in the original initiative and risk, not in the execution. The lager in magnitude the
accomplishment the larger the mythological image of the leader became (Jennings 1960).
Great leaders separate themselves from average leaders by their ability to excel in
situations where high degrees of personal risk and personal initiatives are required (Jennings
1960). "The greatest leaders have this ability to turn situational incompatibilities into assets. The
situation can be shaped by the force of the great leader to the same extent that the weak leader
can be shaped by the force of situation," (Jennings 1960, pagel5).
Leadership traits. The trait approach to leadership emerged from the great man theory.
"The term trait refers to a variety of individual attributes, including aspects of personality
temperament, needs, motives and values" (Yukl 2002, page 176). A leader's traits, which are
inherited and learned, are transferable from situation to situation (Hersey et al. 2001). The needs
and motives of a leader guide, energize and sustain their behavior. These needs can be
physiological (hunger) or emotional (achievement). Values influence the leader's preference,
perceptions and choice of behavior. They are internalized and determine right from wrong,
ethical from unethical. Skills, which can be considered traits, refer to the ability to accomplish
something in an effective manner. Skill can also be classified as technical, interpersonal and
conceptual in nature (Yukl 2002).
Leadership traits 1904-1947. Stogdill (1948) completed a through review of leadership
studies (throughout various groups, business, educational, gangs etc.) in the time period of 1904
to 1947. The review found the following organization of common successful leadership traits:
capacity (intelligence, alertness, verbal facility, originality, and judgment), achievement
(scholarship, knowledge and athletic accomplishments), responsibility (dependability, initiative,
persistence, aggressiveness, self-confidence, and the desire to excel), participation (activity,
sociability, cooperation, adaptability and humor), status (socioeconomic position and popularity)
and situation (mental level, status, skills, needs and interests of followers, objective to be achieve
and so on). Moreover, Stogdill (1948) found that the situation determined which traits and skills
would be required by the leader.
Leadership traits 1948-1970. Following up his previous research, Stogdill completed an
additional review of leadership traits and skills from leadership literature in the time period of
1948 to 1970. Stodgill found that determination, persistence, self confidence and ego strength to
be important leadership traits and interpersonal competence became more important as the
necessary technical skills had been mastered. Stogdill concluded that every leader had
distinguishable natural traits that separated them from followers, every situation had different
demands, and the result of the interaction between the traits and situations, which was the most
pressing challenge in proactive leadership, was unknown. The driving force between traits and
the situation was fulfillment of individual needs in the situation. This process continues whether
the needs can be fulfilled or there is just a hope of fulfilling the needs (Bass 1990).
The five factor model of personality variables. The five factor model of personality or
the "Big Five" personality variables was an attempt to create a common group of traits that
predicted successful job performance for leaders. Research on the Big Five predominantly
focused on the business sector. An additionally goal for the Big Five was to create a common
language for leadership trait theory and provide a basic level for analysis (Digman 1990).
Goldstein (1999) defined the Big Five variables as: emotional stability (calm, secure, and non-
anxious) or conversely not neuroticism; extroversion (socialable, talkative, assertive, ambitious,
and active); openness to experience (imaginative, artistically sensible and intellectual);
agreeableness (good natured, cooperative, and trusting); conscientiousness (responsible,
dependable organized, persistent, and achievement oriented). Additional scholars such as Hughes
(1992) added other variables to the Big Five including values, achievement and rugged
individualism.
Although there is some general agreement in the literature about the value of the Big Five
personality variables, conflicting results exist regarding the importance of each particular
variable. Robertson et al.'s (2000) findings indicate that conscientiousness is the best predictor
while others found achievement (Hough 1992) agreeableness and emotional control (Smith and
Canger 2004) as the most important variables. Barlow et al. (2003) found that the required
leadership skills and traits change according to the level of the organization and the experience
of the leader. Anderson (2006) stated that traits of leaders could not explain organizational
performance and that leadership and management is not about possessing special traits but
instead it is about action.
Clusters of traits and skills forming other competencies. Recently, other competencies
have evolved from the interconnection and clustering of a number of leadership traits and skills.
These competencies include emotional intelligence (emotional maturity, self-confidence), social
intelligence (perceptiveness and behavioral flexibility), ability to learn, adapting to the changing
internal and external environments. These competencies require a number of traits and skills to
be present at the same time (Yukl 2002). The major strength of the leadership trait approach is
that it can be applied to all types of individuals, at all levels and in different situations. The major
weakness of the leadership trait approach is that there is no definitive list of "leadership traits"
and identification of traits is viewed as highly subjective (Northouse 2001).
Summary of trait approach. Traits of great leaders have been studied since the beginning
of time (Muller 2007). There is some agreement amongst scholars that leadership traits could be
predictors of job performance and project success. Yukl (2002) proposes that leaders wanting to
be effective should know their traits by understanding their strengths and weaknesses,
developing relevant skills, and selecting subordinates that address their weaknesses. It is
important that leaders know the influence their inherent and learned personality traits have on
their followers in work situations. Table 2-3 provides a detailed summary of the trait approach to
leadership.
2.1.4 Behavior Approach
The behavior leadership approach differs from the leadership trait theory by focusing on
how leaders behave rather than whom leaders are (Northhouse 2001). Behavior in leadership
refers to how individuals act or responds to their environment. Although behaviors are seen to be
unconscious they are thought to be learned and unlearned. This section reviews the Ohio State
leadership studies, the University of Michigan leadership studies and the managerial grid
leadership model.
The Ohio State leadership studies. The Ohio State leadership studies were an extensive
undertaking involving several disciplines and focusing on the situational determination of leader
behavior on the group as opposed to the individual (Stogdill and Coons 1957). The instrument
used in the studies was the Leader Behavior Description Questionnaire. The questionnaire began
with 1,800 items which were further broken down to 150 items and then classified into 9
dimensions of leadership behavior. The 9 dimensions included: integration (acts which tend to
increase cooperation among group members or decrease cooperation among them);
communication (acts which increase the understanding and knowledge about what is going on in
the group); production (acts which are oriented toward volume of work accomplished);
representation (acts which speak for the group interaction with outside agencies); fraternization
(acts which tend to make the leader a part of the group); organization (acts which lead to
differentiation of duties and which prescribe ways of doing things); evaluation (act which have to
do with distribution of rewards or punishments; initiation (acts which lead to changes in group
activities; domination (acts which disregard the ideas or persons of members of the group)
(Fleishman 1953).
Research results showed that the previous nine dimensions of research could be further
simplified into two dimensions, employee focused and work focused. The authors concluded that
leadership behavior either focused on building relationships (consideration) or completing work
(initiating structure) (Stogdill and Coons 1957).
University of Michigan leadership studies. At approximately the same time as the Ohio
State leadership studies (early 1950s) the Institute of Social Research at the University of
Michigan conducted a number of long range studies focusing on human relations in group
organization. One segment of the study centered on the relationships between clerical workers
and their supervisors in the home office of the Prudential Insurance Company (Katz et al. 1950).
A second segment of the study focused on railroad gangs and their foreman. The purpose of the
studies were to discover the relationships between supervisory attitudes and behaviors, group
productivity, worker moral and compare the findings between the clerical workers and the
railroad gangs (Katz et al. 1951).
The study of clerical workers and their supervisors compared high performing sections to
low performing sections. High performing sections were found to receive general rather than
close supervision, they had a greater sense of pride in their work and their supervisors were more
employee oriented than production oriented (Katz et al. 1950).
The study of railroad gangs and their supervisors found similar results to the study of
clerical workers. Foremen of high performing gangs were to found to be sensitive to the work
and personal needs of gang members. They showed interest is the worker's off the job problems
and were constructive rather than punitive in their attitude towards the worker's mistakes. High
performing foremen also spent more time on leading than on working (Katz et al. 1951).
In a followed up research paper to the University of Michigan Studies Katz and Kun
(1952) further described that individuals are a part of many interlocking social systems. The
systems are work related and non-work related and each system has its own pattern of rewards
and punishments set up by different individuals or groups of individuals with different goals and
intentions. The authors stated that it is a mistake to think that workers are only part of a work
social system and it is important to understand that as the individual's involvement in these
social systems change, the individual's values, attitudes, perceptions, and motives will also
change. (Katz and Kun 1952)
Likert (1961), Director of the Institute for Social Research, University Michigan,
concluded that successful supervisors were effective communicators primarily focused on the
human aspects work related challenges. Likert defined communication as a complex process
involving many dimensions, transmitting, receiving and interpreting information. Leadership is
a relative process where leaders must adapt their behavior to expectations, values, and
interpersonal skills of other individuals. This applies to within the organization, outside the
organization and at all levels. As a result no specific style, behavior or communication strategy
will work in all situations (Likert 1961). In summary, the University of Michigan research found
that task oriented behavior, relations oriented behavior and participative leadership differentiated
effective from non-effective leaders (Yukl 2002).
Managerial grid. Blake and Mouton's Managerial Grid (1985) further expanded the two
dimensions put forth in the Ohio State leadership studies (task focused and relationship focused)
and created a Managerial Gird. The Managerial Grid has the levels of concern for production on
one axis and levels of concern for employees on the other axis. Levels of concern refer to the
character and strength of the assumptions behind the leader's leadership style. Blake and Mouton
outlined five leadership styles: county club management (focus on relationship), impoverished
management (no focus on relationship or task), authority-obedience (focus on task), organization
management (focus on relationship and task) and team management (commitment to relationship
and task from both leader and follower). The authors concluded that the team leadership style,
which gained a commitment from both leader and follower on the importance of the relationship
and the task, was most effective. The Managerial Grid model also stated that leaders make
subjective appraisal of situations which include assumptions based on experiences,
organizational policies and personal values, which guide behavior and constitute a personal
leadership theory or style (Blake and Mouton 1985). "The foundation for understanding
managerial leadership is in recognizing that a boss's actions are directed by assumptions
regarding how to use authority to achieve organization purpose with and through people" (Blake
and Mouton 1985, page 9).
Strengths and weaknesses of the behavior leadership approach. The strength of the
behavioral approach is that it adds to the trait approach and is supported by many empirical
studies. However, not having a universal list for effective leadership behaviors is a weakness
(Northouse 2001).
Summary of behavioral approach. The leadership behavior theory focuses on how a
leader behaves instead of what traits the leader possesses. Effective leaders are both people and
task focused and they have the ability to gain commitment from their followers (Blake and
Mouton 1985). Table 2-4 provides a detailed summary of the behavioral approach to leadership.
2.1.5 The Needs Approach
This approach describes the importance of follower needs, leader communication and
leader power.
Understanding the follower's needs. A follower's behavior is dependent on two factors,
their needs in a particular situation and the changing strength of these needs. Every individual
has a unique set of needs that may or may not be evident to the follower or the leader. These
needs could be conscious and/or subconscious making them difficult to identify. Generally,
needs are categorized by maintenance needs or a growth needs. Maintenance needs are essential
for all individuals and are building blocks for growth needs. Table 2-5 illustrates that
maintenance needs includes items related to physiology (food) safety (shelter) and social contact
(friendship). Growth needs typically emerge once the maintenance needs are sufficiently
satisfied and these could include the need for achievement and self-esteem. Maintenance and
growth needs are interconnected and change according to the situation, stage of life, career, etc.
(Hersey et al. 2001; Maslow 1970).
The behavior of a follower is based on his or her strongest need in a particular situation.
The strength of needs are in continual fluctuations and are based on past experiences
(Expectancy Theory), future expectations/probability of success (Availability Theory) ( Hersey
et al 2001), present situation (Lewin 1945) and the position of the need on the
satisfied/unsatisfied continuum (Maslow 1970). These four factors continually interact to create
the strongest need at a particular time. Past experiences, positive and negative are based on
Vroom's Expectancy Theory and states that past experiences (positive and negative) strengthen
or weaken a need based on its probability of being accomplished. Future expectations is based
Availability Theory and implies that perceived limitations in the environment will also support
and hinder the strength of a need. Maslow showed that as need becomes satisfied it looses its
strength and other needs emerge, whereas an unmet need influences behavior to a greater degree.
However, Expectancy Theory and Availability Theory qualifies this statement according to the
perceived probability of success. As the probability of success approaches 100% or 0% the
motivation for this need decreases because the high likelihood and high unlikelihood of
achieving the need is less motivating (Heresy et al. 2001).
As a follower acts, the need gets closer or further away to fulfillment. If the follower
continually faces blocks to satisfying the need, frustration arises and the strength of the need
either increases or decreases. Continually frustration leads to a change in the strength of the need
according to the perceived probability of success. As the need approaches fulfillment or
satisfaction other needs strengthen and emerge influencing or re-prioritizing behavior (Heresy et
al. 2001). This process is explained in Figure 2-1.
By understanding the driving factors of the follower's behavior, leaders can become more
conscious of their leadership approach. Figure 2-2 describes the leadership approach for a leader
when the goal is to align actions with followers needs. The first step for a leader is to identify the
follower's strongest needs and select the leadership approach accordingly (Bennis 2003; Potter
1990). Once the leadership approach (or combination of approaches) is determined, a leadership
attempt can be made. If the leadership attempt is successful, the leader will achieve the desire
outcome. If the leadership attempt is not successful, the leader will not achieve the desired
outcome. In the case of failure, the leader must focus again on identifying and aligning actions to
the needs of the follower in order to influence or spark action in the follower (Maslow 1970;
Hersey 2001).
Leader communication. Communication is based on the transfer of verbal and nonverbal
symbols. Depending on the unique make up of individuals (past experiences, culture, religion,
etc) the interpretation of symbols and the value assigned to them is arbitrarily generated. This is
what makes humans unique and communication complex. The goal of communication is to
create a shared reality between the sender and receiver of symbols (Hackman and Johnson 1991).
Dean Bamlund, a noted communication scholar, identified five basic principles of the
human communication process. The first principle suggests that communication is a dynamic
ever-changing process that begins with the experiences, skills, feelings and characteristics of the
people involved. The second principle states that communication is circular in nature. This
implies the individuals involved the communication process are simultaneously senders and
receivers of symbols. The notion that communication is complex and involves the understanding
and negotiation of shared interpretations is the third principle. The forth principle states that
communication is irreversible, once a message is sent and interpreted, it can not be taken back.
The fifth principle is that communication encompasses the total personality of the individuals
involved in the communication. (Hackman and Johnson 1991)
Hackman and Johnson (1991) listed seven communications skills for leaders to effectively
influence followers. The skills included: developing perceptions of credibility (competence,
trustworthiness dynamism), developing and using power bases effectively, making effective use
of verbal and nonverbal influence, developing positive expectations for others, managing change,
gaining compliance, and negotiating productive solutions. From a communication stand point,
leaders are made not born, and are required to be aware of how their communication style is
perceived by the follower (Hackman and Johnson 1991).
Use of power. A leader's effectiveness in motivating and influencing followers, in a large
part, is determined by the follower's of leader's use of power (Yukl 2002). French and Raven
(1959) define power in terms of influence which causes changes in a person's behavior,
opinions, attitudes, goals, needs, values and other aspects of the their psychological field. Before
influencing or motivating can be attempted, a leader uses one of seven power bases. These power
bases are reward, coercive, legitimate, referent, expert (French and Raven 1959), information
(Pettigrew 1972), connection (Hersey et. al 1979) and ecological (Yukl 2002) (Table 2-6). Some
authors further categorize the power bases into position power and personal power (Yukl 2002).
The power of leaders is determined by their ability to produce a result aligned with the
needs of the followers (Petigrew 1972). Every individual, consciously or subconsciously, defines
the range of power they will allow the leader. If the leader proceeds beyond this range, the
leader's power with the individual decreases. Every time a leader attempts influence or exercises
power two forces are put in motion, a directing and an opposing force. The follower will be
influenced by the force that is perceived more powerful (French and Raven 1959).
The stronger the needs or values of a follower in a particular situation, the more power
the leader can exert and the more power the follower will tolerate. The relationship of power is
determined by the follower's strongest need in a particular situation and the follower's
perception of the extent of the leader's power. Therefore the leader needs to know the
motivational bases of followers (strongest) which will define the domain of influence
(Cartwright 1965).
The strength and form of power a leader has in a particular situation is dependent on the
strongest need of the follower. The range of power varies from case to case and situation to
situation. Using power outside the range decreases the power. Some bases of power have more
potential for follower resistance, frustration (coercive power) and some have more potential for
increased follower satisfaction (referent and expert power) (French and Raven 1959).
Yukl (2002) argues that power and influence are separate constructs. The power base and
the extent of power effects influence tactics. Yukl defines nine influence tactics: rational appeal,
appraising, inspirational appeals, consultation, exchange, collaboration, personal appeals,
ingratiation, legitimating tactics, pressure and coalition tactics. Yukl and Tracey (1992) in a
study on influencing followers found rational persuasion, inspirational appeal, and consultation
as the most effective influence tactics. Pressure tactics, similar to coercive power were usually
ineffective, resented and a socially undesirable (Yukl and Tracey 1992). Charbonneau (2004)
found that rational persuasion and inspirational appeals may increase the perception of
transformation leadership style. Even with these findings, it is important to note that influence
attempts can use any sequence of influence tactics and can be effective dependant on the
situation.
Summary the needs approach. This approach highlighted the importance of leader's
ability to identify and align with the strongest needs of the follower in a particular situation.
Additionally, this section illustrated that how a leader communicates and how a leader uses
power or influence tactics will also have impact the leader's effectiveness (Table 2-7).
2.1.6 Situational Approach
The contingency and situational approach to leadership discusses the LPC contingency
model, the cognitive resource theory, the path goal theory and the situational model of
leadership.
LPC contingency model. The LPC contingency model matches leader traits and
situations. Using the least preferred coworker (LPC) score the leader is first categorized as being
relationship focused or task focused. Second, using three situational variables, leader-member
relations, task structure and position power (in order of importance), the situation is determined
to be highly favorable, moderately favorable or least favorable. Highly favorable situations
comprise good member-relations, structured tasks and strong position power. This increases the
leader's control and influence of the situation. Fielder, the originator of the LPC contingency
model found that relationship oriented leaders are more effective in moderately favorable
situations, where task oriented leaders are more effective in highly and least favorable situations
(Fiedler 1964; Fielder 1967). "Task motivated leaders perform best in situations in which their
control is either very high or relatively low, while relationship-motivated leaders perform best
when their influence and control are moderate" (Fiedler 1995, page 455).
Fiedler (1967) found that stress and intelligence could be factors that prevented the
appropriate fitting of leadership style and task situation. For instance, if the leader's style did not
match the context the leader would experience stress causing an immature intelligence. More
specifically, in high-stress situations effective leaders were more task oriented and in moderate
stress situations effective leaders were more relationship oriented. In low-stress situation the
leader's intelligence contributed more to group effectiveness, while group intelligence
contributed more in high stress situations. The major challenge with this theory is that it does not
explain extremes and exceptions (Fielder 1967).
The contingency model has a number of conceptual weaknesses. First, it is uncertain how
the LPC score affects the group or if it remains constant over time. Second, the model provides
traits and not behaviors, which creates an obstacle for training. Lastly, it is unclear how the
model proposes to improve leadership, since traits are assumed unchangeable; changing the
situational variables (employee-relations, task structure and position power) is problematic; and
the LPC is inappropriate for fitting the leader to the situation (Yukl 2002).
Cognitive resources theory. Cognitive resources theory of leadership explores the
relationship between group effectiveness and the use of cognitive resources such as experience
and intellectual abilities. The theory states that the group's performance is determined by the
interaction of the leader's intelligence and experience (traits), leader behavior, interpersonal
stress, and group tasks (situation) (Fiedler and Garcia 1987). Interpersonal stress moderates the
relationship between leader intelligence and the subordinate. Causes of stress could include
conflicts with subordinates, demands without adequate resources and support, role conflict with
superiors and frequent work crises (Yukl 2002).
The cognitive resource theory found that that under stress-free conditions intelligence
was the main factor of group influence and effective. Under high stress conditions, experience
was the main factor of group influence and effectiveness (Fiedler and Garcia 1987). "The theory
postulates that there is interference between the intellectual process and experience that is we
cannot at the same time apply logical, analytic, or creative thinking to a problem while reacting
to it automatically on the basis of over-learned skills, knowledge and behavior" (Fiedler 1995,
page 456). Table 2-8 shows the major findings in cognitive resource theory (Fiedler and Garcia,
1987).
Path goal theory. The path goal theory of leadership attempts to explain how a leader's
behavior affects the satisfaction, motivation, and performance of a follower. The path goal theory
focuses on the formal relationship of superiors and subordinates (House 1971).
According to this theory, leaders are effective because of their impact on [followers']
motivation, ability, to perform effectively and satisfactions. The theory is called Path -
Goal because its major concern is how the leader influences the [followers'] perceptions of
their work goals, personal goals and paths to goal attainment, the theory suggests that a
leader's behavior is motivating or satisfying to the degree that the behavior increase
[followers'] goal attainment and clarifies the paths to these goals (Hersey et al 2001, page
111).
Followers are motivated with a leader's behavior if the behavior satisfies an immediate or
future need, complements the follower's environment or it leads to effective performance. Path
goal differs from other leadership contingency theories by emphasizes the fit between leadership
style and the follower's characteristics and work environment. Other leadership contingency
theories emphasize the match between leadership style and a particular situation or leadership
style and the development level of subordinates (House and Mitchell 1974) (Figure 2-3).
Situational leadership theory. Situational leadership is the interplay of the three
continuums, leader task behavior, leader relationship behavior and the follower readiness. These
factors determine which leadership style will be most effective in a particular situation. Figure 2-
4 describes continuums of leader behaviors, styles and decision styles along with follower
readiness. According to the range of follower readiness (high, moderate or low willingness and
ability) and the demands of the situation (relationship or task) the leader can diagnosis and match
which leadership style, behavior and decision style will be most effective (Hersey et al. 2001).
Although aspects of the situational model are useful (Hersey et al 1979; Vecchio 1987), other
aspects are problematic (Blank et al. 1990; Graeff 1997;Fernandez and Vecchio 1997).
Summary of situational approach. The situational leadership approach aims to match
leader behaviors with situational variables (Table 2-9). Generally the leader's behavior rests on a
continuum of high or low relationship oriented behavior or task oriented behavior. Depending on
the situational variables the leader will choose their behavior (relationship or task) accordingly.
Situational variables are also on continuum ranging from high to low. The major situational
variables were leader intelligence, follower readiness (willingness and ability), task clarity, and
follower reward. The strength of the situational approach is that it is practical, easy to use and
understand. However, is lacks a strong body of research and does not explain how different
situational factors change over time.
2.1.7 Transformational Approach
The transformational leadership approach section will review transactional and
transformational leadership, leader-member exchange theory, emotional intelligence and servant
leadership.
Transactional and transformational leadership. Burn (1978) describes the difference
between transactional and transformational leadership. He indicates that transactional leadership
is when "Leaders approach followers with an eye to exchanging one thing for another.... such
transactions comprise the bulk of the relationships among leaders and followers, especially in
groups, legislatures and parties" (Burns 1985, page 4). Bums states that transformational
leadership transpires when:
The transforming leader recognizes and explains the existing or demand of a potential
follower. But beyond that the transforming leader looks for potential motives in
followers, seeks to satisfy higher needs and engages the full person of the follower. The
result of the transforming is a relationship of mutual stimulation and elevation that
coverts followers into leaders and may covert leaders into moral agents (Bums 1985,
page 4)
Bass (1985) argues that transformation leadership motivates followers to do more than
the expected in three different ways. First, leaders raise the consciousness of followers in
accordance with the importance and value of specific goals. Second, leaders influence followers
to transcend self interest for the interest of the team or organization. Third, leaders assist
followers to fulfill their higher needs (Bass 1985).
Transformational leadership builds on the previous leadership approaches in an
integrative and constructive manner (Bums 1985). Transformational leadership attempts to
explain behavior that moves followers beyond the expected outcomes (transactional leadership).
Transactional leadership is not focused on catering to the individual needs of followers or the
personal development of the follower. Its main concern is on the exchanging things of value to
advance the leader's interest (Northouse 2002).
Bass and Avilio (1993) describe the major components of transformational and
transactional leadership. They state that idealized influence, inspirational motivation, intellectual
stimulation, and individualized consideration comprise the factors of transformational leadership.
Contingent reward and management by exception comprise transactional leadership (Table 2-
10).
Tichy and DeVanna (1986) explained transformational leadership as the process that
inspires followers to accomplish great things. This approach stresses that leaders are required to
understand and address the needs of followers. The authors outlined the need for revitalization,
creation of vision, and institutionalizing changes as the major steps in the approach. The
elements of transformational and transactional leadership work together to create performance
beyond the expectations of the parties involved in the relationship (Figure 2-5). This happens
when the self interests of both the leader and the follower are transcended for the interests of the
organization (Bass 1985).
The transformational leadership approach has strong intuitive appeal and has received
considerable attention form researchers. It goes beyond the transactional leadership model by
promoting growth in followers. However, it can lack conceptual clarity and it is similar to the
trait approach, which might be seen as elitist in nature (Northouse 2001).
Leader Member Exchange Theory. The Leader Member Exchange Theory (LMX) states
that exchanges between leaders and followers are both material and psychological (emotional).
This suggests that exchanges are both transactional and transformational or evolve from
transactional to transformational. The theory sets out to explain the relationship or the
interactions between the leader and the follower. This removes the focus from the leader (traits
and skills), the follower (behavior) and context (situational) (Garen and Uhl-Bien 1995).
The development of the LMX theory took place in four stages. The first stage found that
"contrary to prevailing assumptions of the Ohio State and Michigan studies of effective
supervision (average leadership style) many managerial processes in organizations were found to
occur in a dyadic basis, with managers developing differentiated relationships with professional
direct reports" (Garen and Uhl-Bien 1995, page 226). LMX showed no support for the average
leadership style previously postulated. The Research also showed that different followers formed
different perceptions of the same leader. For instance, the leader was both trustworthy and not
trustworthy depending on the follower. Scholars explained the reason for this as resource
constraints put on managers, which forced them invest time with a select group of followers
instead of the entire group of followers (Garen and Uhl-Bien 1995).
The second stage of LMX theory showed that the higher the quality of the leader follower
exchange, the more positive the benefits for the leader, follower and organization that were
realized. As a result, effective leadership processes were dependent on high quality social
exchange relationships. The third stage of the LMX theory focused on the attempt of creating
high quality exchanges between all followers. The authors stressed the importance of making an
offer to all followers to engage into a high quality relationship, which evolved from stranger
partnership (no influence) to acquaintance partnership (limited influence) to maturity influence
(almost unlimited influence). As the partnership matures, the influence is reciprocal and the
mutual trust and respect is extremely high. The fourth stage moves beyond the dyadic
relationships and focuses on the groups (Garen and Uhl-Bien 1995).
Brower et al. (2000) studied relational leadership based on LMX and interpersonal trust.
They found that there was a constant feedback loop between the leader and the follower in which
they subjectively evaluated each other based on trust criteria (ability, benevolence and integrity).
They found that trust was context and situation specific (Brower et al. 2000). Dunegan in his
research found that the perception of the leader (image management) influenced the LMX and
trust between the leader and follower. If the leader was perceived to have the ability to satisfy the
follower's needs the possibility of trust improved (Dunegan 2003).
In summary, the LMX theory focuses on the special, unique relationships leaders creates
with others. If these relationships are characterized by mutual trust and respect, the goals of the
leader, the follower, and the organization are all advanced. This demonstrates the importance for
leaders to strive for high-quality relationships with followers.
Emotional intelligence. Daniel Goleman (1998) argued that emotional intelligence is the
third part of effective leadership. The other two parts are intellectual intelligence and expertise.
He proposed that organizations now compete with people instead of products and this is what
makes emotional intelligence important. Goleman defines emotional intelligence using the
following five elements self-awareness, motivation, self-regulation, empathy and adeptness in
relationships and asserts that any leadership approach must include these elements (Goleman
1998).
Servant leadership approach. Greenleaf (2002) defines servant leadership as the leader
who serves the highest priority needs of the follower first. He states that the person who is a
servant leader is a servant first and a leader second. Servant leadership emphasizes listening to
learn and communicating with the intention of connecting with the follower's own experience. A
person who is a leader first, is predominately concern with their own needs. However, a servant
leader first listens and learns about the follower's highest priorities. With an accurate
understanding, the servant leader then communicates the vision with the intention of linking the
follower's own experience and imagination with the vision. Greenleaf believes this can not be
done without trust in the leader. Additionally, the more challenging and complex the goal, the
more trust in the leader is required (Greenleaf 2002).
Summary of transformational leadership approach. A summary of the transformational
leadership approach is presented in Table 2-11.
2.1.8 Team Approach
Team leadership. The team leadership approach is fairly new and does not benefit from
amounts of empirical research the other leadership approaches have received. "Teams are
organizational groups composed of members who are interdependent, who share common goals,
and who must coordinate their activities to accomplish these goals" (Northouse 2002, page 169).
The major obstacle in team effectiveness is leader effectiveness. Northhouse (2002) defines four
types of leadership functions for groups within internal and external dimensions. These functions
include: diagnosing group deficiencies (monitoring/internal), taking remedial action to correct
deficiencies (executive action/internal), forecasting impeding environmental changes
(monitoring/external), and taking preventative action in response to environmental changes
(executive action/external). By analyzing these four functions it is clear that team leaders are
required to monitor the internal and external situation, implement the appropriate strategies and
apply behavioral flexibility to match the complexity of the situation to ensure team effectiveness
(Northhouse 2002; Lafosto and Larson 2001). Table 2-12 compares the team effectiveness
criteria suggested by Hackman and Walton (1986) with those determined by Larson and LaFasto
(1989).
Team leadership is an ongoing process that requires leaders to receive information,
understand it, and communicate it a manner that is meaningful for the team (Hackman and
Johnson 1991). If trust is absent, it is highly likely that team will loose it effective. The
required trust must also evolve with the team over time (Dyer 1995). Other essential elements of
teams are having a common purpose, interdependence, mutual influence and face-to-face
communication (Hackman and Johnson 1991). Costa et al. (2001) conducted research with 112
teams that tested the relationship between trust and perceived task performance, team
satisfaction, relationship commitment and stress. The results showed that trust was positively
linked to relationship commitment, team satisfaction and task performance. The study also found
that stress and trust were negatively related. Janssens and Brett (1997) in their study of
transnational teams also showed that trust was important in teams and Herzog (2001) identified
trust as a success factor in effective teams and collaborations. Figure 2-6 presents a team
leadership model suggested by House et al. (2001). The model explains the mediating decisions
and the internal (task and relational) and external (environmental) functions of the team leader.
2.1.9 Leadership Summary
Leadership is a complex process that is difficult to define. It involves the ongoing
interaction of inherent personality traits, preferred behavioral styles, unsatisfied needs,
unpredictable situational variables and transformational goals and outcomes. Although a
common definition of leadership does not exist, many of the definitions describe the intended
interaction between the leader and follower, the importance of mutual goals, the ability to adapt
to situational variables, the skill of basing influence strategies on the strongest needs of
followers, and the being transformed by the process. Table 2-13 further summarizes the findings
in the leadership section. In conclusion, despite the number of different approaches to leadership,
effective leadership is dependent on trust between the leader and the follower.
2.2 Trust
The literature on trust is extensive and challenging to organize around themes and topics.
Dietz and Hartog (2006) identified a number of compendiums of papers, dedicated journal
editions and key journal articles. This section is organized by the compendiums, journal editions
and articles identified by Dietz and Hartog with the addition of trust in virtual environments and
trust in breach of psychological contracts.
2.2.1 Definition of Trust
In approximately 50 years of research, scholars have not agreed on a definition of trust.
Table 2-14 lists a selection of cross-discipline trust definitions. The common elements of these
definitions are positive expectations, vulnerability, risk, interdependence, subjective
psychological state of mind and the changing nature of the definition according to context
(situation) and/or discipline (Lewicki et al. 2006).
2.2.2 Trust Focused Compendiums of Papers
This section reviewed one foundational piece of trust research and three additional
compendiums of papers on trust research. The foundational work is by Lunmann (Trust and
Power, 1979) and is often cited as the foundation for trust theory (Schoorman et al 2007;
McAllister 1995; Vangen and Huxham 2003). The compendiums of papers are by Gambetta
(1988), Lane and Bachmann (1998), and Nooteboom and Six (2003) and are cited by Dietz and
Hartog (2006) as important to field of trust research.
Compendium on trust and power (Luhmann 1979). Luhmann (1979) in Trust and
Power, postulates that trust enables action by minimizing fear of loss or fear of making the
wrong decision. Trust reduces the complexity associated with the freedom of behavior and
choice individuals experience in society. Without some form of trust in some mechanism,
individuals would be burdened by society's complexity and paralyzed by fear and inaction
(Luhmann 1979).
Trust reduces social complexity by going beyond available information and generalizing
expectation of behavior in that it replaces missing information with an internally
guaranteed security. It thus remains dependent on other reduction mechanisms developed
in parallel with it for example those of law, of organization and, of course, those of
language, but cannot, however, be reduced to them. Trust is not the sole foundation of the
world; but a highly complex but nevertheless structured conception of the world could
not be established without a fairly complex society, which in turn could not be
established without trust (Luhmann 1979, page 94).
Trust is developed by gaining familiarity with the past, present and future. The action of
trust takes place in the present while contemplating past experiences and expecting or gambling
on the certainty of future outcomes. The decision to trust is the subjective blending of knowledge
and ignorance and anyone who abuses trust will be burdened with more complexity (Luhmann
1979).
In every case [trust] rests on the structure of the system which confers trust...the
readiness to trust is an important instance of ... the absorption of complexity through
structures that can relieve the burden of action. (Luhmann 1979, page 83)
As society evolves and new uncertainty and complexity arises, familiarity and trust are
required to evolve as well. Subsequently, the forms and structures that allow trust to develop are
constantly evolving, changing and adapting to a subjective (individual, group, organizational,
societal) view of the world. Individuals can trust and distrust simultaneously, in a number of
things, at different levels and for different purposes (Luhmann 1979).
Distrust generally functions at the same time of trust. Distrust is also a strategy that
reduces complexity. Individuals who are distrustful distill the complexity of the world and
limitless amount of information by negation until these items are manageable. However, using
distrust to reduce complexity can be more burdensome due to the increased reliance of
information and the challenge of narrowing the information down to a manageable level. Distrust
is manifested by distributing behaviors. Distrust is also controlled by a subjective process similar
to trust. Luhman states that distrust can not be totally eliminated but it must not be allowed to
overcome trust. When distrust occurs, it must be seen an anomaly, an accidental or an
insignificant occurrence and not be permitted to gain momentum and be destructive.
In summary, Luhmann argues that the many forms of trust reduce the complexity of the
world. Without trust, even though subjective, in some form of societal structure, individuals
would be overly burdened by fear and paralyzed to act (Luhmann 1979).
Compendium on trust (Gambetta 1988). Scholars in Gambetta's compendium of
articles, Trust, offered a number of different perspectives on trust. Desgupta (1988) asserted that
trust was central to all transactions and outlined seven key points for understanding the
development of trust. First, trust can only develop when appropriate consequences for breaching
contracts and agreements have been established. The second point stated that the enforcement
agency must also be trustworthy. Third, trust between persons and agencies were interconnected.
Fourth, the promise made by the trustee must be credible (avoid blind trust). The fifth point
described the importance of observing the world from the other person's perspective. Even
though trust did not have a unit of measure, its value can be measured was the sixth point. The
point was that trust emerged out of the inability to monitor the actions of others (Desgupta 1988).
Williams (1988) discussed the importance of knowing the motivations of individuals for
the purpose developing cooperation and trust. Williams defined four different types of
cooperative motivations, two macro-motivations (egoistic and non-egoistic) and two micro
motivations (egoistic and non-egoistic). Egoistic macro-motivations implied that the individuals
cooperated due to fear of sanctions from a higher level of authority (i.e. Government). Non-
egotistic macro-motivations were found in the moral or ethical dispositions of individuals where
there was a sense of duty to a higher level entity (i.e. Country) to cooperate. An egoistic micro-
motivation to cooperate was based on the self-interest of that individual to cooperate in specific
circumstances. A non-egoistic micro-motivation to cooperate implied cooperation in certain
occasions based on an individual's predisposition. Williams concluded that most individuals
were motivated by a combination of macro and micro motivations and it was the responsibility
of the trustor to identify the trustee's motivations (Williams 1988).
Luhmann contemplated the relationship between familiarity, confidence and trust. He
stated that all individuals created familiarity in their environments. Even when individuals
encounter unfamiliar circumstances, they explained it with familiar symbols and experiences
(Luhmannl988). "Trust is a solution for specific problems of risk. But trust has to be achieved
within a familiar world" (Luhmann 1988, p. 95). Luhmann continued with a comparison of the
subtle differences between confidence and trust. In a state of confidence, individuals refrain from
considering alternatives and react to a disappointment with an external attribution. In a state of
trust, an individual chooses a course of action despite possible consequences and attributes
failures internally. Trust and confidence can affect one another and can act as antecedents for one
another. "Trust is an internal calculation of external conditions which creates risk. Trust is based
in a circular relation between risk and action, both being complementary requirements."
(Luhmann 1988, p. 100). The assessment of risk in any situation is highly subjective and
dependent on the trustor's perception (Luhmann 1988).
Gambetta suggested that trust was the basis for a number of important functions, but
warned that an over abundance of trust can de detrimental. This notion was supported by
Baeson's work in the compendium. Even though organizations required basic forms of trust to
exist, increasing trust and cooperation would not necessarily improve effectiveness of
organizations. His research showed that increasing trust could also promote undesirable
circumstances. (i.e., promoting trust and cooperation among criminals or terrorists) not to
mention the potential costs to competition. Gambetta and Baeson explained how competition
benefited organizations and how an over abundance of trust might have negative consequences.
The answer was to balance trust, cooperation and competition (Gambetta 1988, Baeson 1988).
"Even to compete, in a mutually non-destructive way, one needs at some level to trust one's
competitors to comply with certain rules."(Gambetta 1998, p. 214). Understanding this principle,
organizations instituted a number of different constraints in an attempt to maintain the optimal
balance of trust, cooperation and competition.
Gambetta explained that the problem of trust was essentially one of communication.
Individuals need to know about each other motives in order to trust them. Individuals generally
do not believe that everyone will cooperate and therefore fear being taken advantage of.
Gambetta supports this notion by quoting Hume:
When each individual perceives the same sense of interest [motive] in all his fellows, he
immediately performs his part of any contact, as being assured that they will not be
wanting in theirs. All of them, by concert enter into a scheme of action, calculated for
common benefit, and agree to be true to their words ...interest is the first obligation to the
performance of promises. (Gambetta 1988, p. 227)
Gambetta concluded his compendium by stating that trust, in different degrees, was
existent in most human experiences.
Trusting a person means believing that when offered the chance he or she is not likely to
behave in a way that is damaging to us, and trust will typically be relevant when at least
one party is free to disappoint the other, free enough to avoid a risky relationship and
constrained enough to consider that relationship as an attractive option. (Gambetta 1988,
p. 218)
Trust entailed an entire continuum of degrees ranging from blind trust to distrust between agents.
At the core of trust is uncertainty or ignorance. Trustors do not have full knowledge regarding
the behaviors, motives or future responses of trustees. "Trust is a tentative and intrinsically
fragile response to our ignorance a way of coping with the limits of our foresight... [and] a
device for coping with the freedoms of others" (Gambetta 1988, p. 218).
Compendium on trust with and between organizations (Lane and Bachmann 1998).
Lane and Bachman's (1998) compendium, Trust Within and Between Organizations, focused on
trust within and between organizations in a global business environment. In the introductory
chapter, Lane set the context by discussing the pre-conditions of trust, types of trust and the level
of trust analysis. The preconditions of trust were described as the existence of uncertainty and
risk; interdependence between the trustor and trustee; and vulnerability to opportunistic behavior.
The different types of trust included calculative trust (expectations based on self interest of cost
and benefits), value or norm based trust (shared common values and norms), and cognition based
trust (common understanding of social rules, which included process based trust, character based
trust, and institutional based trust). Lastly, trust research transpired in four different levels,
micro-level (between individuals and between organizations), institutional level (institution as
the source of trust), system level (legal, education, political), and societal level (collective values
and norms) (Lane 1998).
Sydow (1998) described the factors surrounding inter-organizational trust (trust between
organizations) in a global market place. He conducted his analysis using the concept of inter-
organizational networks defined as long-term institutional arrangements among distinct but
related organizations based on trust. It was found that several economic benefits were believed to
be associated with using trust as the control system in these networks. These benefits included
reducing transaction costs, adapting collective strategies, coordinating economic activities, and
openly exchanging information and learning. Sydow also outlined six factors that supported trust
as the control mechanism between organizations in a network. These factors were: frequency and
openness of communication; interacting and exchanging in many different ways; openness of
relationships; balanced autonomy and dependence; small number of similar (values and norms)
firms in the network; and similar firm structures (Sydow 1998).
The decision to use power disguised as trust can be tempting for organizations. Power
can reduce the risk of trust by mandating cooperation, compliance and predictability. Although
the power approach reduces risk, it also reduces creativity, innovation and collaboration, items
that trust promotes. At times it is difficult to accurately decipher "trust" from "illusionary" trust.
Consequently, it is important to incorporate the power relations of the situation when assessing
trust in the relationship. Table 2-15 shows the different relationships between trust and power.
Understanding interests, aligning interests, sharing meanings, open communications, and
identifying when power instead of trust are used are the most important factors of distinguishing
trust from power (Hardy et al 1998).
Sako (1998) focused his research on how trust improved business performance. He
argued that trust reduced transaction costs, aligned governance structures, increased returns on
investments (i.e. new systems, higher standards), and improved learning, innovation and
continuous improvement. Specifically, it was "goodwill" trust (concerned for the well-being of
other parties) that had largest impact on performance. Sako's findings also recommended
focusing on trust enhancers, such as providing important information, rather than safe guarding
against potential opportunistic behavior (Sako 1998).
Liebeskind and Oliver (1998) reported how commercial interests have transformed the
nature of trust relationships between academic researchers in molecular biology. The researchers
found that trust was not neutral to the interest of individuals or institutions. Existing trust
relationships were impacted by the interests of new parties, which changed the previous
alignment of interests and values. As new interests entered existing trusting relationships, a new
formulation occurred which had the potential to cause conflict or even the severance of
relationships (Liebeskind and Oliver 1998).
Thus trust is not best viewed as a fixed or given commodity that exists within a specific
social community or network of relationships, but rather should be understood to be the
output of dynamic exchange relationships that are fuelled by individual interests, as well
as being the lubricant for the formation of new exchange relationships. Thus, exchange is
both embedded in trust, and engenders its formation (Liebeskind and Oliver 1998, page
140).
Deakin and Wilkinson (1998) discussed the relationship between the legal system and
inter-organizational trust. The legal system in many instances provided the environment that
enabled trust to develop. At times it acted as the catalyst that triggered intermediate institutions
(trade associations and standard setting organizations) to translate the meta-values of the legal
system into standards for the business community. Additionally, the legal system established
sanctions that protected against opportunistic or uncooperative behavior and provided regulatory
reform that encouraged economic productive (Deakin and Wilkinson 1998).
Marsden (1998) focused on the constraints (or rules) that enhanced trust in employment
relations. These constraints included rules on work (job description and tasks), tools (skills
required to execute the tasks), competence (function of completing work) and qualification
(functional qualifications). The challenge in defining rules is always finding a balance between
flexibility and control. Trust can develop around any set of the rules, but where there is less
opportunity to monitor and protection against opportunistic behavior more trust is required.
Marsden's research also showed the importance of defining the obligations and roles of both the
employee and the employer as well as the scope of the authority associated with each rule and
role. These definitions provided the conditions that enabled trust to transform into high trust
(Marsden 1998).
Child's (1998) research focused on the phases of international strategic alliance
development and the evolution of trust in each phase. Table 2-16 shows that as strategic alliances
develop, the form of trust transformed from self interest-based to common interest-based.
Bachmann (1998) concluded by stating, "The foremost problems relating to the analysis of
trust seem to be connected to the understanding the role of the institutional environment in which
business relations are embedded" (Bachmann 1998, page 298). Consequently, economic activity
and trust are highly dependant on the nature of the institutional environment in which they
interact. The authors in this compendium have used an array of different terms to conceptualize
trust and illustrated the difficulty of finding suitable words or concepts that describe the multi-
dimensional aspects of trust. When researching trust it is important to consider the impact that
power has on the relationship in question. Bachmann also reasserted the importance of a strong
socio-legal framework in creating a stable institutional environment that encourages "good faith"
business activities as opposed to adversarial business activities (Bachmann 1998).
Compendium by Nooteboom and Six (2003). The research presented by Noteboom and
Six (2003) in Trust Process in Organizations, involved a multi-disciplinary approach to examine
the causes and foundations of trust in organizations. Anything can be trusted (person, team,
organization, law etc). Individuals can at the same time extend trust and distrust to the same
object in different contexts and for different reasons. The trustworthiness of objects change in
different situations and consequently the trust extended to these objects change as well. The
mediating factors associated with the changing nature of trust are the interests (values, norms,
etc.) of the parties involved in the relationship (exchange) and trust process that enabled the
effectively learning interests (values, norms, calculations) of each party in the relationship.
Environmental (situational) mechanisms promoting and supporting the learning of interests by
providing security enhances the trust building process (Nooteboom and Six 2003).
Nooteboom and Six (2003) indicated that reliability and reliance were also important
factors of organizational trust (Table 2-17 and Table 2-18). Individuals must be both reliable to
each other and reliant on each other. The Tables discuss the tensions that were found in trust
relationships (egotistical vs. altruistic; control vs. trust), the level of trust analysis (Macro and
Micro), and the general behaviors in each situation. Trustors or trustees that feel betrayed or
taken advantage of will show their discontent in a number of obvious ways. It is important that
other members of the relationship pick up on these cues. Nooteboom and Six concluded their
work on trust by stating that, "Trust is a four-place predicate: someone (trustor) trusts some-thing
or someone (trustee) with respect to something (competence, intentions) depending on conditions
(Nooteboom and Six 2003, page 225).
Summary. Table 2-19 shows the summary of the compendiums discussed in this section.
2.2.3 Trust Focused Dedicated Journal Editions
This section reviews six different dedicated journal editions with articles published in the
Academy of Management Review; Organizational Studies, Organizational Science, International
Journal of Human Resource Management, Personnel Review and European Journal of
Marketing.
2.2.3.1 Trust in the Business Environment
Rousseau et al. (1998) examined the definition of trust; the nature (static or dynamic) of
trust; the status of trust (cause, effect or mediator); and the levels of trust analysis. An across-
discipline review of the literature showed that there was no common definition of trust.
However, there was common ground in that trust was a psychological state of mind, involved
risk, and required the interdependence of the trustor and trustee. Trust was also considered a
dynamic phenomenon that was either building, stabilizing, and dissolving while being
considered either a cause (independent, choice), an effect (dependent, institutional arrangements)
or an interaction (moderating role) (Rousseau et al. 1998).
Rousseau et al. (1998) defined four different forms of trust (deterrence, calculative,
relational and institutional). Deterrence-based trust was considered a low level of distrust and a
substitute of for control. The trustee was judged as trustworthy owing to sanctions or other
mechanisms instituted to minimize the cost of a violation. Calculus-based trust manifested where
risk was continually monitored and a rational choice based on credible information and the belief
of positive gains could be made by the trustor. This type of trust was limited to specific
exchanges. Relational trust or affective trust was established on repeated interactions between
the trustor and the trustee. The trusting decision incorporated information from within the
relationship and concern of the trustor and trustee were reciprocated. The repeated positive
interactions fulfilled expectations and strengthened the willingness to take risks. The last form of
trust described by Rousseau was institutional based trust. This form of trust created the
environment (of structures, rules, standards, etc.) for calculative and relational trust to develop
on the individual, team, organizational, or societal level. The forms of trust changed as the
interests of the individuals involved change and as the structures of the institutions change
(Rousseau et al. 1998).
McKnight et al. (1998) investigated the paradox of high initial trust in some relationships.
They described the paradox as how do two individuals without any prior knowledge of each
other build trust in their initial meeting. Figure 2-7 presents a detailed model of initial trust and
illustrates the interaction between disposition to trust, the cognitive process, institutional-based
trust, trusting belief (trustworthiness) and trusting intention. As two individuals approach a new
trusting relationship, they encounter each others disposition to trust. This comprises their trusting
stance (developed in childhood) and faith in humanity (general outlook). The individual's
dispositions filter into the institutional based trust consisting of structural assurances (rules and
procedures) and situational normality (stable environmental conditions). Next, the institutional
based trust joins with the cognitive processes of categorization (making unfamiliar circumstances
familiar) and illusions of control (perceiving more power than actual). Together they feed into
the trusting belief. The trusting belief is a judgment of trustworthiness based on the criteria of
benevolence, competence, honesty and predictability. Together these four factors, influenced by
the previous variables, form the trusting intention of initial trust between unfamiliar individuals.
Through the process, individuals search and interpret information that matches their beliefs and
views with the intention of creating the desired or expected results. Individuals tend to consider
misjudgments as isolated cases and assess the next relationship in a similar manner (McKnight
1998).
Sheppard and Sherman (1998) conceptualized trust with four distinct and ordered forms.
These forms included shallow dependence, shallow interdependence, deep dependence and deep
interdependence. Table 2-20 shows the four forms of trust according to the associated risk,
qualities of trustworthiness, mechanisms for trust, relational mechanisms and institutional
mechanisms. Sheppard and Sherman (1998) argued that relationships vary in terms of depth and
forms and were categorized as having shallow or a deep interdependence or dependence. In turn,
each category determined the type of risks, trustworthy criteria and trust mechanisms appropriate
for the specific relationship (Sheppard and Sherman 1998).
Lewicki et al. (1998) found that individuals had simultaneous reasons to trust and distrust
in relationships. This illustrated that trust and distrust were separate constructs and not the
opposite ends of the same continuum. Both trust and distrust could exist simultaneously in
relationships. Figure 2-8 shows the constructs of trust and distrust.
The opposite of trust is not distrust their antecedents and consequences are separate and
distinct, they can occur at the same time... [the] increase in distrust can serve the purpose
of enabling emergence of greater trust in social systems. Trust depends on the
inclinations toward risk being kept under control and on the quota of disappointments not
becoming to large...if this is correct than a system of higher complexity which needs
more trust, also needs at the same time more distrust (Lewicki et al. 1998, page 451).
Lewicki et al. also indicated that the keys to remedying distrust in work organizations was
to match skills with requirements, provide appropriate information for work requirements, design
jobs that consider human limitations in processing information, and align personal and
organizational values.
Elangovan and Shapiro (1998) presented a model of the process of betrayal or more
specifically opportunistic behavior in trusting relationships. Betrayal was defined "as a voluntary
violation of mutually known pivotal expectations of the trustor by the trusted party (trustee)
which has the potential to threaten the well-being of the trustor" (Elangovan and Shapiro 1998,
page 548). The scholars stated that the intent of the betrayer was the most critical factor in the act
of betraying or opportunistic behavior. Additionally, they outlined several key considerations in
discussing betrayal. They described the requirements of betrayal as deliberately violating
important expectations that were accepted by both parties, and the betrayal transpired through
action and not just thought. Again, it was important to decipher the intent of the violation. A
trustee genuinely willing to meet the trustor's expectations but unable to was not considered
betrayal. A trustee not wanting or choosing not to meet the trustor's expectations for their own
personal interests was considered a betrayal. Figure 2-9 shows a process model of opportunistic
behavior that leads to betrayal. It begins with triggers which advance into the assessment of
benefits, relationships, and principles. These filter through judgments of benevolence and
integrity and form the motivation to betray. At this point, the penalties related to betraying are
assessed and the coalescence of the variables in the model determined the perceived degree of
opportunistic behavior or betrayal (Elangovan and Shapiro 1998).
Whitener et al. (1998) examined trust in an attempt to identify the antecedents of
managerial trustworthiness in an economic exchange process. "Managerial behavior is an
important influence on the development of trust in relationships between mangers and
employees. We define managerial trustworthy behavior as volitional action that are necessary
though not sufficient to engender employee's trust in them" (Whitener at al. 1998, page 516).
Figure 2-10 shows the exchange framework in initiating managerial trustworthy behavior. The
process begins with three sets of factors, organizational, relational, and individual. These factors
feed into the managerial trustworthy behavior, which consists of behavioral consistency,
behavior integrity, sharing and delegation of control, communication and demonstration of
concern. Lastly, four boundary conditions (received similarity, perceived competence, employee
propensity to trust and task interdependence) are brought into the exchange to develop the
employee perceptions of trust. The Figure 2-10 also shows the cognitive process of the employee
in assessing the manager's trustworthiness (Whitener et al. 1998).
Das and Teng's (1998) examined trust and control in developing partner cooperation in
alliances (for a more detailed review of this topic see Das and Teng in the Organizational
Science section of this document). Das and Teng (1998) indicated that trust and control came
together and affected one another in trusting relationships. Figure 2-11 shows the relationship
between trust and control as it related to confidence in partner cooperation. The figure shows that
control mechanisms affect the trust level and the control level. The trust building activities affect
the trust level, which in turn affect the control level. The control level and trust level determine
the confidence in cooperation among partners (Das and Teng 1998).
Donely et al.(1998) defined five trust building processes along with their underlying
behavioral assumptions and primary base description with originating discipline (Table 2-
21).The trust building processes and the underlying behavioral assumptions described by Donely
et al. (1998) are more detailed that the processes presented by Rousseau et al. (1998) or Lewicki
et al. (1998).
Additionally, Figure 2-12 shows a model of developing trust based on national culture.
The model incorporates a number of findings from the other papers in the Academy of
Management Journal including the importance of cognitive and non-cognitive processes, values
and norms and trust bases on institutions, organizations and individuals (Donely et al. 1998).
Bigley and Pearce (1998) developed a problem-centered organizing framework of trust.
The scholars organized their findings in three main groupings of trust research: interactions
among unfamiliar actors, interactions among familiar actors within ongoing relationships, and
organization of economic transactions.
Three perspectives assisted in understanding the trust process in interactions among
unfamiliar actors. These perspective were dispositional, behavioral decision and institutional.
Each individual has their own disposition to trust or distrust. As these individuals become more
familiar with one other, the information they obtained trough their interaction becomes the major
driver in the trust process. The second perspective focused on the behaviors of unfamiliar actors
in trusting relationships. This perspective stressed the importance of situational factors, influence
behaviors and trust levels. The third perspective drew attention to the role of the institutional
framework that shaped the trust relationship between the actors.
Interactions among familiar actors were defined by the gathering of knowledge or the
forming of bonds between each actor. Organization of economic transactions and its governance
interacted with trust and impacted the perception of risk for individuals involved in the
relationship (Bigley and Pearce 1998).
Jones and George (1998) focused on the emotional elements of trust in organizations. Trust
was described as a psychological construct based on the interplay of people's values, attitude and
moods and emotions. The simultaneous interaction of values, attitudes and moods and emotions
determined the evolving and changing states of trust and distrust in organizations and teams.
Values created an experience of trust by forming trust disposition and the criteria for evaluating
the trust relationship. Values determined what was preferred and not preferred (Jones and George
1998).
We propose that psychologically, the multidimensional experience of trust evolves from
the interactions among people values, attitudes, moods and emotions. Values provide
standards of trust that people strive to achieve in their relationships with others, attitudes
provide knowledge of another person's trustworthiness, and current moods and emotions
are signals or indicators of the presence and quality of trusting a relationship (James and
George 1998, page 535).
When aligned and working together these factors transformed conditional trust to
unconditional trust. Trust evolved when trusting parties were assured in each other values,
attitudes and emotions and moods (Jones and George 1998).
A summary of the journal articles presented in the Academy of Management special
edition on trust is outlined in Table 2-22.
2.2.3.2 Trust within organizations
Although organizations require trust to operate effectively, trust within organizations take
many forms, which are both apparent and non-apparent to the members of organization. For
instance, creating predictability is the predominant function of trust in organizations. However,
as the desired level of predictability is obtained, the role of trust becomes less apparent to the
organizational members and fades into the background. The conscious awareness of trust appears
again when the once predictable organizational environment changes or threatens its current
structure or form. For example, bureaucracies were effective at creating trust amongst managers
until its form was threatened and the predictability of it structure was lost. All forms of trust are
fragile and have to be reaffirmed consistently. Specifically, trust needs to be reaffirmed more
with lower level employees than higher level employee because of the lower levels of trust (Grey
and Garsten 2001).
In the recent times of the "continual change" mantra, trust and predictability was found in
the common language and values of organizational restructuring rather than the once predictable
hierarchical and bureaucratic structures of organizations. This included the predictability
surrounding the goals of flexibility, customer service, professionalism, profit and quality. This
also rendered individuals potentially controllable and hence trustworthy. Additionally, Grey and
Garsten discovered that a faction of organizational leaders viewed trust as a way to control
employees and obtain their desired results (Grey and Garsten 2001).
Reed (2001) showed how a critical realist approach was useful in analyzing trust/control
relations. The dimensions of trust and power in governing organizations shaped the dimensions
of expert power within organizations. In defining trust, the researcher stressed the importance of
aligning values and norms to support collaboration within uncertain environments (Reed 2001).
The concept of trust is taken to signify and present a coordinating mechanism based on
shared moral values and norms supporting collective cooperation and collaboration
within uncertain environments. Control is taken to refer to a coordinating mechanism
based on asymmetric relations of power and domination to which conflicting
instrumental interests and demands are overriding contextual considerations (Reed 2001,
page 201).
Trans-organizational relationships, with the goal of long-term cooperation, were dominated
by trust and power. Trust in organizations can take many forms, such as contract trust,
competence trust, goodwill trust, calculus trust, knowledge based trust and identification based
trust. Trust minimized uncertainty and complexity, but created risk. Misplacing trust and its
associated costs created risk that organizations intended to circumvent. Legal norms and
sanctions that created stable work conditions, standards of expertise and rules and procedures
were mechanisms that reduced the risk of trust and enabled trans-organizational relationships to
flourish. These mechanisms also created the perception of trustworthiness which also fostered
valuable relationships (Bachmann 2001) although they could also be perceived as a form of
control.
Power, which was seen to be a prerequisite for trust, was another method that managed
risk, complexity and uncertainty. Generally, in environments characteristic of instability and
unbearable risk, the use of power over trust was preferred. Relationships with low levels of
regulation exhibited more power dominant mechanisms than trust dominant mechanisms. The
relationship between trust, power and control changed depending on the institutional structures
within and between the organizations (Bachmann 2001).
Knights et al. (2001) found that control was a precondition of trust in virtual forms of
organizations. Control was seen as a precondition of trust, where strict security rules make
virtual environment more trustworthy and fosters trust development (Knights et al. 2001).
Das and Teng (2001) focused on trust, control and risk in strategic alliances. Their research
was a continuation of the work reviewed in the Academy of Management section of this
document. The integrated framework presented in Figure 2-13 illustrated that trust and control
were two distinct methods for reducing risk in strategic alliances. The framework showed that
trust was more intrinsic and comprised goodwill trust and competence trust. Control was more
active and comprised behavior control, output control and social control. Trust and control both
lead to the reduction of relational risk and performance risk (Das and Teng 2001). Das and Teng
(2001) also described different methods for reducing relational and competence risk by different
alliance types (Table 2-23).
Summary. A summary of the journal articles presented in the Organizational Studies
special edition on trust is outlined in Table 2-24.
2.2.3.3 Trust in human resource management
William et al.(2003) in their examination of the employee's perception of a manager's
trust, power and mentoring, found certain communication skills increased trust. The
communication skills that actively increased trust were active listening; self disclosure; small
talk; and the manager's ability minimize the perception of managerial power. Relational
communication skills characterized by the supportive and emphatic face management of
employees were also found to enhance trust. Overall, managers were required to relate to their
subordinates in terms of their values, interests and needs that exhibited trust and not power or
control. Communication styles that discouraged trust included the use of power, coercion,
inability to listen, and negative face management (communication that was perceived as
diminishing the value or worth of the recipient). The challenge for managers was the perceptual
gap in terms of how the manager perceived his communication skills and how the subordinates
experienced his communication skills. Consequently, it is the manager's responsibility to ensure
their communication with subordinates builds trust and not distrust. Employees needed to view
the manager as an "in-group" individual and not an "out-group" individual (Willemyns et al.
2003).
Young and Daniel (2003) conducted in depth interviews that examined the emotional
(affectual) experience of trust rather than the cognitive calculativee) experience of trust
frequently cited in other trust research. The scholars found that trust and distrust emerged from
both emotions and cognitive calculations of risk. Various situational factors, such as the flow of
information, had numerous effects on the emotional and cognitive reactions of trust in the
workplace. The organizational culture and the historical experience of employees were
discovered to be particularly influential in determining the perceived trustworthiness of the
organization and the levels of trust and/or distrust found within the organization. Obstacles to
forming trust included barriers to interpersonal interactions, differences in goals between
management and employees, institutionalized disempowering beliefs, and the perceived
impersonalized or faceless institution. The main solution to these barriers to trust rested on
improving the communication styles of managers that enabled them to build personal
relationships with employees. Managers needed to read the emotional cues on of employees
more accurately in assisting the facilitation of trust. Trust created trust and distrust created
distrust and this relationship was found to be a self-supported, increasing or decreasing spiral
(Young and Daniel 2003).
Gould Williams (2003) established that human resource practices were powerful predictors
of trust and organizational performances. The author's research showed that different human
resource practices had different results and these practices should be aligned to the
organization's values, culture, and goals. Overall, human resource practices communicated the
organization's degree of trust with its employees in terms of it perceived control, rules and
rewards (trustworthiness). This also suggested that it was a good strategy for organizations to
regularly reevaluate their human resource strategies to confirm their effectiveness in
accomplishing desired outcomes (Gould-Williams 2003).
Payne and Clark (2003) surveyed 398 people employed in two UK service organizations to
determine the impact of dispositional and situational factors on the employees' trust in line
managers and senior managers. The scholars hypothesized that dispositional factors would
impact trust to a greater degree in senior managers and situational factors would impact trust to a
greater degree in line managers. They discovered that trust in both types of managers was best
predicted by a combination of dispositional and situational factors. Figure 2-14 outlines the
situational and dispositional determinants of trust in line managers and senior managers. The
model shows that situational factors were comprised of role-set satisfaction, job satisfaction,
confusing job, supportive environment, difficult job, challenging job and controlling boss.
Dispositional factors were comprised of anxiety, generalized trust in others. Payne and Clack
noted that direct experience over time with line managers or senior managers tend to override the
dispositional factors of these managers (Payne and Clark 2003).
Using data from a recent Australian workplace survey (2,000 work places and over 19,000
employees) Morgan and Zefane (2003) examined the effects of several types of major
organizational change (technological, structural and work role) with employee involvement. The
results of their study varied according to types of employee involvement and organizational
change. Reducing trust and increasing perceived risk were significant structure changes (i.e.
downsizing) and lack of opportunity to participate in decision making. Direct and open
involvement supported by communication with high level managers lowered perceived risk and
increased trust. Employees reacted mostly to organizational change that directly impacted their
well-being, job security, wage, work/family balance, or job satisfaction (positively or
negatively). Managers were required to manage trust in ways that lead to institutional stability.
For managers to increase system trust (institutional trust), they first needed to establish personal
trust with employees. In this fashion, trust had it best chance to be reciprocated (Morgan and
Zefane 2003).
Kiffin-Peterson and Cordery (2003) surveyed 218 employees in 40 self-managing work
teams to examine the relationship between trust and team effectiveness. The scholars established
that the situational factors were stronger predictors than dispositional factors on an employee's
preference for teamwork. Two situational factors in particular, trust in co-workers and trust in
management, had the strongest effects. This suggested that even if an employee had a high
trusting character (disposition), without trust in management and co-workers, the employee
would be hesitant to trust the team members. As a result, managers were required to demonstrate
their trustworthiness and the trustworthiness of team members if they wanted effective team
work (Kiffin-Petersen and Cordery 2003).
Blunsdon and Reed (2003) analyzed how trust was impacted by different aspects of work
(social and technical), different occupational composition and different types of industries. The
results of the study showed that trust levels were determined by the features of the workplace as
was the employee's disposition and experience of trust. This implied that trust indicators were
not transferable from one industry to the other or from one work place to the other (Blunsdon
and Reed 2003).
Summary. A summary of the articles discussedin this section are shown in Table 2-25.
2.2.3.4 Trust in organizations
Stewart (2003) tested the cognitive trust transfer process across WWW using hyper test
links. The major finding of their research was that the initial trust beliefs of an unknown target
increased as the perceived interaction of the unknown target and a trust target increased. The
closer associated the unknown targets were with the trusted targets, the more trusted or
trustworthy the unknown targets became. There was a correlation between perceived interaction
and perceived similarity that was transferred through hyper links and increased or decreased the
trust associated with unknown entities. Stewart (2003) established that institutional factors
(institutional-based trust) associated with safeguards were important factors for transferring trust.
In sum, the nature of trust over the WWW was calculus-based and the initial trust with unknown
target was highly associated with the perceived ties with a trust target (Stewart 2003).
Becerra and Gupta (2003) studied data from 157 dyadic relationships among 50 senior
mangers in a multinational corporation to examine the antecedents of organizational trust and
effects of communication frequency on the trusting relationships. As the communication between
the trustor (manager) and the trustee (subordinate) increased, the trusting disposition (inherent
characteristic) of the trustee in the eyes of the trustor became less important as a determinant of
the trustee's trustworthiness. When communication frequency was low between the trustor and
the trustee, the trustee's trust disposition became more important as a determinant to trust.
As communication grows, individual predispositions loose relevance in favor of
organizational context in which trustee and trustor are immersed. Perceived
trustworthiness is initially in the eye of the beholder, but as the frequency of
communication increases, the specific interests and linkages to the organization of both
trustor and trustee become more important. Context is critical to understanding trust
(Becerra and Gupta 2003, page 42)
The specific drivers of trustworthiness included the individual's interests within organization,
organizational tenure, decision making autonomy, and the connection with the organization. The
scholars also illustrated the subjective nature of trust and its psychological state of mind. Similar
to individuals, organizations have trust antecedents. In low communication environments, the
degree of trust changes as attitudes change (disposition), in high communication environments
the degree of trust changes as the context changes (Becerra and Gupta 2003).
The goal of McEvily et al.'s (2003) work was to "connect the psychological and
sociological micro-foundations of trust with the macro-bases of organizing". Since trust was
based on expectations, the trustor defines the trustee's trustworthiness by his intentions, motives
and competencies. Trust influenced the organizing principle either by structuring (i.e. system-
based trust) or by mobilizing (i.e. individuals act according to perceived degrees of
trust).Structuring also implied how trust was transferred in the relationship or throughout the
environment. A key component of the transfer between two unknown parties was a trusted third
party (trust is transferred at the individual level although it might be through a system). The basis
of mobilizing was knowledge sharing. Trust decreased the preference to protect against
opportunistic behavior and increased the amount and quality of knowledge shared (McEvily et
al. 2003).
Dirks and Ferrin (2003) examined the impact of reward structures on trust. Rewards are
seen as powerful tools for altering the beliefs, perceptions and behaviors of individuals. The
scholars found that reward structures had a strong impact on trust in terms of self-perception,
social perception and suspicion in the organization. In terms of a mixed reward structure based
on cooperative and competitive rewards, the perceived trustworthiness of the individual offering
the reward had a strong effect on the how the reward was interpreted. If there were low levels of
trustworthiness, the rewards were perceived with suspicion. Consequently, the perceived motives
behind the organization's reward structures had an indirect effect on the trust level within the
organization (Ferrin and Dirks 2003).
Huff and Kelley (2003) surveyed 1,282 mid level managers from large banks in Japan,
Korea, Hong Kong, Taiwan, China, Malaysia and U.S. to examine the differences in trust levels
between individualists and collectivist cultures. The researchers measured individual propensity
to trust, internal trust (trust within the organization) and external trust (organization's trust with
suppliers, customers, etc.). The findings showed that U.S. bank mangers had higher propensity
trust levels, higher external trust levels (customer and suppliers), but lower inter-organizational
trust levels compared to Asian bank managers (Huff and Kelley 2003).
Carson et al. (2003) studied 129 firms engaged with outside contractors for research and
development and found that the effectiveness of governance-based on trust (no legal remedies
for opportunistic behavior) was dependent on the ability of the partners to accurately read and
learn about each other's behaviors and interests. Accurately assessing the trustworthiness of
exchange partners was dependent on information processing ability. This limits the probability of
misplacing trust and being exposed to opportunistic behavior. The ability to communicate
effectively by learning and reading each others interests and behaviors increased the success of
the execution phase of the relationship. As the ability to process task and relationship
information more accurately increased, the success of the relationship increased and firms used
governance structures based on trust more frequently. Additionally, as the use of trust based
governance structures increased, collaboration within the partnership increased. Trust based
governance structures (lack of legal remedies for opportunistic behavior) stressed the importance
of accurately assessing the exchange partner's trustworthiness by learning and effectively
processing information regarding behaviors, interests and task requirements (Carson et al. 2003).
Dyer and Chu (2003) surveyed 344 supplier-automaker exchange relationships in the U.S.,
Japan and Korea. Dyer and Chu found that transaction costs (monitoring and enforcing) were
reduced by perceived trustworthiness. Suppliers that had low trustworthiness had more face to
face interactions or redundant communications due to lower negotiation efficiency, less
confidence in information provided, and high levels of contracting. Since transaction cost
represented 30 to 40 percent of economic activity, low trustworthiness can considerably increase
transaction costs. Another impact of high trustworthiness was the increase of information sharing
in the relationship. The scholars argued that other governance mechanisms (contracts) are still
necessary to protect against misplaced trust, but they do not create the value and the competitive
advantage that a high level of trustworthiness creates. In conclusion, trust was seen to increase
performance by decreasing transaction costs and increasing the quality of information shared
(Dyer and Chu 2003).
Child and Mollering (2003) surveyed 615 Hong Kong firms with managing operations in
mainland China to examine the effect of context on trust. "The research confirmed the
importance of contextual confidence in institutions for building trust" (Child and Moller 2003,
page 69). Child and Mollering found that institutional based trust had a strong correlation with
organizational performance and that main land China could be well serviced by adapting active
trust practices with organizations (Child and Mollering 2003).
Summary. A summary of articles discussed in this section is is outlined in Table 2-26.
2.2.3.5 Trust among personnel
Gilder (2003) examined the differences in trust between contingent workers (n=33) and
core workers (n=31). Core employees showed higher commitment levels to the team and the
organization and displayed more favorable work related behaviors than contingent workers.
Employees that trusted company polices were more committed and stayed with the company
longer. This study showed that employees with different terms of employment have different
attitudes and behavior responses to teamwork and organizational policies implying that
management needs different strategies for different types of employees (Gilder 2003).
Kerkof et al. (2003) used longitudinal data from 75 work Dutch councils to determine
relational determinants of trust. The results of the study showed that trust was more linked to
relational trust factors as opposed to calculative (instrumental) trust factors. This suggested that
trust was a social commodity reflecting the quality of the relationship rather than the perceived
benefits of the relationship outcomes. Other findings focused on individuals with low
hierarchical or perceived power in organizations. These individuals had lower levels of trust and
were more cynical about trust. However, trust was perceived to be more important to them and
based on the quality of the relationship compared to individuals with higher perceived power
(Kerkof et al. 2003).
Ferres et al. (2003) used focus groups and surveys to examine manager-subordinate
relationships within a large Australian organization. A precursor to this study was the results of
the annual organizational survey that indicated that the trust levels in mangers were low. The
study findings showed that as perceived organizational support increased, the perceived levels of
trust in managers increased. Additionally, the turnover intent decreased and commitment
increased. This illustrated that trust in mangers did not solely depend on the behavior or
character of the managers, it also depended on the situational factors such as company policies,
procedures and rules specifically focused on organizational support and procedural justice.
"Trust does not come from a paycheck, it has to be earned" (Ferres et al., page 583).
According to Tyler (2003) social trust based on inferences of the motives, characters and
intentions of other individuals involved in the trust relationship has become the most important
form of trust in organizations that promote effective growth. Social trust taps into the motives
and interests instead of making judgments about predictability and competence. Tyler (2003)
used an example of a medical doctor to clarify the point. It is difficult to know the competence of
a doctor but one can make an inference about the doctor's sincerity and integrity about doing his
best to help the patient. A supporting factor of social trust is procedural justice (system or
institutional trust). It is difficult to know about someone's competence but inferences on whether
the trustee is working in the best interest of the trustor can be made. Theses inferences are not
about predicting future behavior, but about knowing motivations for the behavior. If the
motivations of the trustee were perceived to be in the best interest of the trustor, a negative
behavior was more tolerable and trust could still be in tact. However, if the motivation of the
trustee was perceived to be not in the best interest of the trustor, a perceived negative behavior
would be interpreted as a distrustful act. This new form of trust focused on gaining buy-in from
employees instead of trying to shape the behaviors of employees through incentives or sanctions
(Tyler 2003).
Bijlsma and Bunt (2003) completed a case study of a hospital with 1,800 employees in a
mid-sized Dutch town with the goal of identifying a parsimonious set of antecedents for trust in
managers. In most trust relationships, individuals search for certain behaviors they feel will
lower their personal, team or organizational risk. The scholars found that the combination of
support, guidance, monitoring, and openness were significant predictors of trust in managers
(Bijlsma and van de Bunt 2003).
Costa (2003) used survey data from 112 teams (359 individuals) from 3 different
healthcare organizations in the Netherlands to examine the impact of trust on perceived task
performance, team satisfaction, and organizational commitment (attitudinal and continuance).
Trust was found to be an important factor for functional teams. However, teams with a short life
cycle (fixed amount of time or specific projects) identified more with the project at hand than the
members of the team. This finding stressed the importance of system or institutional trust rather
than personal trust for short term teams. Teams with a long term life cycle identified more with
the team members and in turn, the team members had more effect on work satisfaction. Other
results showed the multi-component of structure of trust. Trust within work teams was positively
link with the performance, cooperation and positive attitudinal commitment to the organization.
In summary, the antecedents to trust in team members included team member performance,
cooperation, and attitudinal commitment to the organization (Costa 2003).
Summary. A summary of the articles discussed in this section is shown in Table 2-27.
2.2.3.6 Trust in marketing
Arnott (2007) set the context of the special journal edition by defining trust as "a belief in
the reliability of a third party, particularly when there is an element of personal risk." Trust was a
major component of the belief or non-belief of business and brand promises. Arnot described
that there were three determinants of trust, integrity, benevolence and credibility. It was believed
that high business trust lead to favorable outcomes such as more profits and increased customer
loyalty. However, these business relationships were in a constant state of flux (uncertainty,
complexity, etc.) making trust difficult. E-business with its increased likelihood for opportunism,
inappropriate behavior and identity theft, added an additional dimensions to the challenge of trust
(Arnott 2007).
Morgan and Hunt (1994) proposed the commitment-trust theory of relationship marketing.
Relationship marketing evolved from the importance of developing effective networks and
adapting to the changing requirement of success in the global market place. The theory included
concepts such as relational contracting, relational marketing, working partnerships, symbiotic
marketing, internal marketing and co-marketing alliances (Morgan and Hunt 1994).
For most global businesses, the days of flat-out predatory competition is over... In place
of predation, many multi-national companies are learning that they must collaborate to
complete... However competitive a particular industry may be, it always rests on a
foundation of shared interests and mutually agreed upon rules of conduct...business
almost always involves mutually trusting groups, not only corporations themselves but
networks of suppliers, service people, customers, and investors (Mogan and Hunt 1994,
page 20).
Morgan and Hunt (1994) explained ten forms of relational exchanges in relationship
marketing in which commitment and trust are central elements. Figure 2-15 explains the ten
forms. These forms were broken up into supplier partnership, internal partnerships, buyer
partnership and lateral partnerships. The suppler partnerships were further subdivided into goods
suppliers and service suppliers; lateral partnerships were sub-divided into competitors, non-profit
organizations, government; buyer partnerships were further sub-divided into intermediate
customers and ultimate customers; and lateral partnerships were further sub-divided into
competitors, non-profit organizations and government. This illustrated inherent challenges of
building trust simultaneously with a number of different exchange relationships (Morgan and
Hunt 1994)
Morgan and Hunt (1994) developed the Key Mediating Variable (KMV) model of
relationship marketing. Figure 2-16 explains the proposed model. The model showed that
relationship commitment was positively effected by relationship termination costs, relationship
benefits and shared values. Trust was positively impacted by shared values, communication, but
negatively impacted by opportunistic behavior. The model in Figure 2-16 also shows the positive
and negative outcomes of trust and relationship commitment (Morgan and Hunt 1994).
Moorman et al. (1993) defined trust as a "willingness to rely on an exchange partner in
whom one has confidence" (page 82). The scholars tested their theory on 779 users of market
research. They found that trust in the market research information depended on five antecedents.
These antecedents were individual user characteristics (job experience and firm experience);
perceived researcher interpersonal characteristics (research abilities and motivations, non-
research abilities and motivations); perceived user organizational characteristics (organizational
structure, culture and user location); perceived inter-organizational/interdepartmental
characteristics (power, culture location); and perceived project characteristic (importance level,
customization level).
Moorman et al. (2003) determined that interpersonal factors of the researcher were the
best predictors of trust. More specifically, researcher integrity, willingness to reduce research
uncertainty, confidentiality, expertise, tactfulness, sincerity, congeniality and timeliness were
strongly associated with trust. Out of the above mentioned factors, the researcher's perceived
integrity was the most important predictor of trust. The scholars' findings were contrary to
traditional marketing research by including both a psychological component (confidence in the
exchange partner) and a sociological component (willingness to rely on the exchange partner).
This finding portrayed trust as an exchange relationship rather than set of personal characteristics
(Moorman et al. 1993).
Moorman et al. (1992) investigated the role of trust between knowledge users and
knowledge providers. They surveyed 779 users of market research information. Moorman et al's
findings were similar to the findings of Moorman et al. 1993. They found that trust facilitated the
quality of the relationship process and not necessarily the utilization of the research. Trust
directly facilitated the exchange processes and indirectly improved the end result (Moorman et
al. 1992).
Elliot and Yannopoulou (2007) investigated trust in brands. The researchers conducted 14
in-depth interviews of an average duration of one hour with seven females and seven males, 25
through 40 years old. Before discussing their results, the scholars described the relationship
between familiarity, trust and confidence. "Familiarity, confidence and trust are three modes of
exerting expectations about the future based on personal experience and culture; at familiarity
habit predominates; as risk increases trust is necessary, and over time trust reverts to confidence"
(Elliot and Yannopoulou 2007, page 991).
Trust by its nature is unstable and fragile. Its status can change with every
disappointment or satisfaction and as a result the relationship changes accordingly.
Trust evolves out of past experiences and prior interactions. It also develops in stages of
moving from predictability to dependability to trust and eventual and sometimes faith.
This represents a hierarchy of emotional involvement which reaches trust when people
make an emotional involvement in another person. The basic requirements for predictable
are some experience of consistency of behavior from which we can build a knowledge
base. Dependability requires further experience and involves a move away from specific
behaviors to more generalized set of beliefs which are vested in a person. The move is
likely to depend heavily on the accumulation of evidence from a limited and diagnostic
set of experiences involving risk and personal vulnerability. Trust requires a move from
reliance on rational cognition to reliance on emotion and sentiment and developing
intimacy, which lead to an investment of emotion in the person. (page 990)
The findings of the study revealed that when customers faced low risk and low price in
the product they were buying, familiarity was sufficient for a buying action. However, when
perceived risk increased and price levels increased, consumers look for confidence and
dependability for functional brands but consumers required trust to purchase symbolic brands
(Elliot and Yannopoulou 2007).
Sichtmann (2007) conducted 308 face-to-face interviews (in Germany) to analyze the
antecedents and consequences of trust in a corporate brand.
Trust is defined as the belief in which a consumer in a purchase situation is characterized
by uncertainty, vulnerability, lack of control and the independent -mindedness of the
transaction partners relies on, to the effect that a company identified as a corporate brand
will deliver a good or service at the quality which the consumer expects, on the basis of
experiences which the consumer has made in the past. Page 1001
The results of Sichtmann's research showed that competency and credibility were important
antecedents. Trust also strongly influenced purchase intentions, marketing success and word of
mouth behavior. Since, customers were able to verify competency and credibility, trust exerted a
stronger influence on customers rather than non-customers. This suggested that managers should
continue to focus on developing competence and credibility with current customers and explore
other strategies with non-customers (Sichtmann 2007).
Doney et al. (2007), using a literature review and qualitative surveys, tested factors of
trusting relationships between buyers and suppliers in a global, business to business services
context. The model confirmed the positive influence of the following trust building behaviors:
social interaction, open communications, customer orientation, service quality, perceived value
and buyer wealth. Buyers assessed trustworthiness also by the tangible aspects of the service
offerings and social interactions.
This supports study findings that the key to achieving longevity and business expansions
to create a service atmosphere that promotes a buyer's trust of their service provider. In
order to build trust, our study suggests that service providers invest in both the social and
economic aspects of the transaction ... such as open communication and customer
orientation.(Doney et al. 2007, page 1110)
Salespeople required training in techniques that identified fulfilled consumer needs leading to a
trusting relationship (Doney et al. 2007).
Mouzes et al. (2007) used gaps in the literature to develop a conceptual model of trust and
reliance in business relationship. Figure 2-17 presents the conceptual model developed by
Mouzes et al. In the model trust referred to open communication, social interaction and technical
competency; reliance referred to business objectives, contractual documents, and monitoring and
sanctioning behavior. The model conjectured that both high inter-personal trust and high inter-
organizational reliance were required for stable business relationships. Inter-personal trust on its
own was in sufficient. Expedient relationships required mainly high inter-organizational reliance
and not trust. Trust was more important at the inter-personal level where reliance was more
important on the inter-organizational level. Relationships between organizations were based
more on mutual interests than trust. The model also showed the difference between interpersonal
trust and inter-organizational trust, the former was dependent on people and the latter was reliant
on systems (Mouzes et al 2007).
Kingshott and Pecotich (2007) surveyed 34 distributor firms to identify the role that
psychological contracts played in managing customer relationships. Psychological contracts are
highly subjective perceptions of reciprocal obligations that are promissory in nature relying on
perceived terms of an agreement. The study showed that violation of psychological contract
terms reduced the level of trust in relationships with distributors. During the socialization
process, it was imperative that the terms of a psychological contract were obtained, understood
and confirmed. This enabled members of the relationship an opportunity to gain a better
understanding of each others' psychological expectations and a better chance to maintain trust
(Kingshott and Pecotich 2007).
Summary. A summary of the articles discussed in this section is shown in Table 2-28.
2.2.4 Key Trust Research
Deutsch (1958) used a two person non-zero-sum game with college students to test which
factors relating to risk and trust. Trust required a strong need or motivation that encouraged risk
taking behavior even with the exposure of potential undesired consequences. Deutsch made a
number of conclusions about the formation of trust. First, certain social situations would not
occur without mutual trust between two individuals. Second, mutual trust would not occur unless
each person was openly supportive each other's welfare. Third, mutual trust can occur in
situations with the following factors: open communication, understanding of the other person's
behaviors, perceived power to protect against unintended consequences or the presence of a third
party that can moderate the situation (Deutsch 1959).
Rotter (1967, 1971 and 1981) framed his research in social learning theory. Social learning
theory inferred that individuals have expectancies in each situation and their expectancies will be
based on past experiences with similar situations. Rotter's focus was mainly on trust in social
situations and found that higher trusting people were less likely to lie, cheat or steal and more
likely to be happier and friendlier. The researcher also found that contrary to popular belief,
higher trusting people were not gullible and were adept at discerning who to trust and who not to
trust (Rotter 1967, 1971, 1981).
Zand (1972) explained the spiral-reinforcement relationship between trust, information,
influence and control. Zand explained that groups typically faced two challenges, one was the
task or the problem and the other was how the group members interrelated to solve the problem.
High initial trust by the trustor (or leader) increased the quality, accuracy and timeliness of
information shared with the trustee in regard to the problem at hand. This facilitated a positive
mutual influence in terms of decision making, procedures and outcomes, which lead to enhanced
interdependence and less procedure control. Initial trust was reinforced and augmented as
additional mutual confidence was garnered and effective decisions were made. However, a
decreasing reinforcing spiral of trust transpired with low initial trust, inefficient information
sharing, lack of influence and poor decisions. "The pattern of spiraling reinforcement requires all
members of the group to hold similar intentions to trust... trust as behavior conveys appropriate
information, permits mutuality of influence, encourages self-control, and avoids abuse of the
vulnerability of others" (Zand 1972, page 238).
Shapiro (1987) added a new element to the discussion of trust. In the context of economic
affairs, she argued that trust was "a social relationship in which principals (trustor)-for
whatever reason or state of mind-invested resources, authority, or responsibility in an agency
(trustor) to act on their behalf for uncertain future return" (Shapiro 1987, p. 626). The trustor
lacking the expertise of the trustee is unable to keep the trustee accountable and therefore offers
the trustee an opportunity to inappropriately take advantage of the trust. It light of this
uncomfortable challenge, trustors protect themselves with a number of coping strategies. First,
they abstain from engaging in these types of relationships. Second, they attempt to spread their
risk and thereby minimize their potential maltreatment by the trustee. Third, they only deal with
trustees they have dealt with, have a social relationship with, or have good reputations. The last
coping strategy was where trustors felt they had some control of the behavior of the trustee
(Shapiro 1987).
To protect against vulnerabilities in social relationships with high level trustees (i.e.,
agencies, banks, insurance companies, hospital, etc.), individual trustors rely on "guardians" of
trust. The guardians of trust institute a number of procedural norms, structural constraints and
policing mechanisms designed to maintain trust between trustors and trustees. However, since
guardians have the same opportunities to maltreat principals (trustors) as previously identified
for lower level trustees, "who guards the guardians of trust?" Shapiro answered this question
with, trust. This illuminates the paradox of proceduralism and trust. Controlling trustees (agents)
to protection the trustor (principal) against mistreatment, an acknowledgement of distrust is
institutionalized (Shapiro 1987).
Sitkin and Roth (1993) explored the effectiveness of legalistic remedies for trust and
distrust. They began by describing four trust measures. The first measure was the attributes of
individuals and focused the individual's trustworthiness. The second measure of trust was
behavior and implied the link between high trust and cooperation, and low trust and competition.
Situational features, interdependence and uncertainty was the third measure. The fourth measure
referred to institutional arrangements such as legalistic remedies (i.e. contracts, rules, procedures,
etc.) (Sitkin and Roth 1993).
Sitkin and Roth (1993) discussed the effectiveness of legalistic remedies for trust and
distrust. Evidence showed that legalistic remedies fostered distrust in some contexts and trust in
other contexts. In an attempt to clarify, Sikin and Roth defined two types of trust. One based on
reliability in a specific context and the other based on values in a global context. A violation of
the first type of trust (reliable in a particular context) lowered trust but did not necessarily foster
distrust. It was found that an individual can repeatedly violate trust in a particular context and
still be trusted. However, a violation of trust based on incongruent values (second type of trust)
fostered distrust and was unable to be remedied by legalistic mechanisms. Legalistic remedies
were effective to create trust in specific contexts but ineffective to create trust in environments of
conflicting or incongruent values (Sitkin and Roth 1993).
Hosmer (1995) paper's attempted to provide a unified definition of trust and provided a
comparison of the behavioral definitions of trust (Table 2-29). Hosmer argued that there were
five common components in trust definitions. First, trusting person had positive expectations
about the behavior or outcome on the part of the trustee. A second common component was the
"expectation that the loss if trust is broken will be much greater than the gain when trust is
maintained; otherwise, the decision to trust would be simple economic rationality ... and the
probability that trust will be broken is both unknown and outside the control of the trusting
individual; otherwise the decision to trust would be simple economic rationality" (Hosmer 1995,
page 390). Third, trust definitions discussed the need for cooperation to achieve certain benefits.
However, cooperation could be forced (contracts and controls) or voluntary. Fourth, trust was
difficult to enforce even with the existence of contracts, hierarchical controls, legal requirements
and professional obligations. Fifth, there was a base assumption of a duty to protect the rights
and interests of others. In summary, Hosmer offered the following definition "Trust is the
reliance by one person, group or firm upon a voluntarily accepted duty on the part of another
person, group or firm to recognize and protect the rights and interests of all others engaged in a
joint endeavor or economic exchange (Hosmer 1995, page 393).
McAllister (1995)used a sample of 194 mangers and professionals from various industries
in cross-functional dyadic relationships to examine the nature of inter-personal trust. He found
two principle forms of interpersonal trust, cognitive-based and affect-based trust. Cognitive-
based trust referred to the trustor's perception about the reliability and dependability in relation
to the trustor's interests. Affect-based trust referred to a reciprocated interpersonal care and
concern between the trustor and trustee. Affect-based trust included emotional bonds and
genuine care for each others well being. Figure 2-18 describes McAllister's model and associated
findings. Firstly, the model illustrated each form of trust has it own antecedents and patterns of
behavior. Secondly, cognitive based trust was necessary before affect based trust could develop.
This also indicated that the prevalence of cognitive trust was higher than affect based trust.
Third, affect-based trust led to the actions of manager need-based monitoring, manger affiliative
citizenship behavior and manger assistance citizenship behavior. These actions influenced the
outcomes of peer performance and manger performance (McAllister 1995).
Mayer et al. (1995) developed an integrative model of organizational trust. In developing
their model the scholars conducted an extensive review of trust antecedents (Table 2-30).
Benevolence, ability and integrity appeared most frequently in the literature and together
explained a major part of trustworthiness. Figure 2-19 outlined Mayer et al.'s proposed model of
trust. First, the model illustrated the three antecedents of trustworthiness (ability, benevolence
and integrity) and how they feed into the decision to trust. Second, the model showed how the
trustor's propensity affected each antecedent of trustworthiness and the decision to trust. Third,
the decision to trust was evaluated according to the perceived risk. This evaluation determined
whether a risk taking action was executed. Last, this process formed the outcomes of trust and in
turn influenced the perceived trustworthiness of the trustee. Positive outcomes lead to positive
perceptions of trustworthiness and negative outcomes lead to negative perceptions of
trustworthiness (Mayer et al 1995).
Whitener (1997) investigated the impact of Human Resource (HR) activities on employee
trust. Major findings included: explained compensation decisions increased trust; perceived
fairness and accuracy in performance appraisal systems increased trust; and violations of
psychological contracts decreased trust. On the individual level, supervisor trust increased as that
supervisor engaged in open and clear communication that lead to fair outcomes in performance
appraisals, compensation and assessments. Group level trust increased as the quality of
information increased, group interactions reinforced expectations, and opportunistic behavior
was restrained. Trust on the organization level increased as strategic and innovative HR activities
(such as quality circles, work/family initiatives, grievance procedures) were implemented and
supported by open communication and commitment (Whitener 1997).
Kramer (1999) assessed the trust literature. He categorized his findings by: the images of
trust in organizational theory, the bases of trust, the benefits of trust, and the barriers to trust.
Kramer found two main images of trust, trust as a psychological state and trust as choice
behavior. Although the definition of trust continued to change depending on the perspective or
discipline, scholars tended to agree that trust was a psychological state comprised of several
interrelated cognitive processes and orientations. "First and foremost, trust entails a state of
perceived vulnerability or risk that is derived from individual's uncertainty regarding the
motives, intentions, and prospective actions of others on whom they depend (Kramer 1999, page
571). Researchers have argued that the psychological state of trust was made up of cognitive,
affective (emotional) and motivational components. A second image of trust was one of a choice
making decisions and observable behaviors. The trust image of choice behavior was separated by
rational and relational based choices. Rational or calculative choices were considered the most
influential in organizational science and developed by sociology, economic and political theory.
These types of choices were considered a conscious calculation of positives (gains) and
negatives (losses, risk) determined by an internal value system. In the rational trust model it was
important to have a clear understanding of the individual's interests and values. A criticism of
the rational trust model was that it does not consider the emotions of individuals, hence the
relational model of trust. The relational trust model furthered the conceptualization of trust to
include social and situational factors that influenced trust as well as a calculative orientation
towards risk (Kramer 1999).
Kramer found six main bases of trust, which included dispositional, history, third party,
category, role, and rule. Dispositional-based trust referred to the character or the tendency of an
individual in regards to trust. Individuals have different dispositions to trust which can be related
to their beliefs and early trust building experiences. History-based trust referred to previous
interactions with trusting individuals. This depended on the judgment of trustworthiness based
on expectations since complete knowledge was difficult to obtain. Third party as conduits of
trust referred to individuals that could advance or stall the development of trust due to their
reputation, credibility, power and control of information. Category based trust implied that an
individual gained trustworthiness because of membership or association with a certain
categorization within the organization. Role based trust depersonalizedd trust) referred to the
knowledge of an individual has because of their role within the organization and not as a result
of an individuals capabilities, dispositions, motives and intentions. Researchers argued that role
based trust implied trust of the system of expertise (i.e. engineering) and not the person
(engineer) that is trusted (Kramer 1999).
The benefits of trust were both personal and collective. Trust was regarded as an
important element for civic engagement. Trust was seen to reduce transaction costs by
minimizing the need to negotiate every changing detail. Trust fostered cooperative, altruistic and
extra-role behavior which further enhanced goal accomplishment and improved well being
within the organization (Kramer 1999).
Many barriers of building and maintaining trust were predicated on the notion of
perceived opportunistic behavior leading to distrust and suspicion. Actions that were against an
individual's interests or values tended to lead to suspicion and distrust. A person who
experienced distrust acts differently than a person who experienced trust. Certain organizational
technologies such as excessive monitoring devices, security devices can deter trust and promote
distrust, even though they might have had the opposite intention. If people feel coerced into
complying, resentment and distrust escalates. Breach of the psychological contract can also act
as a barrier to trust. Breach in a psychological contract was explained as a subjective experience
where the organization failed to meet its obligations from the perspective of the employee. The
last factor of trust that Kramer considered was the fragility of trust. It was easier to destroy trust
than to create it. Actions that were considered anti-trust held more weight and more difficult to
repair than actions considered pro-trust (Kramer 1999).
Vangen and Huxham (2003) proposed that trust was important for nurturing and fostering
the collaborative process into a competitive advantage in global market place. Figure 2-20
described the trust building loop for effective collaboration. The Figure illustrated the cyclical
nature of trust in nurturing collaboration. Each positive outcome builds on itself incrementally
over time in a trust building loop. A challenge of nurturing collaboration was that collaboration
was typically initiated between parties without trust or without the time to develop trust. This
made modest expectations and a small win approach important in the trust development process.
Table 2-31 provided examples of how trust was managed. Figure 2-21 showed the implications
managing trust in collaboration relations. Depending on the goal of collaboration (ambitious or
modest) there were a number of corresponding strategies. The keys to effective collaborative
processes were managing the perception of risk and continuous attention to nurturing activities.
Challenges of facilitating an effective collaborative process included unequal power relations
and the need to protect the interest of their organizations (Vangen and Huxham 2003).
Elangovan et al. (2006) interviewed 120 senior level managers to assess the relationship of
trust violations and the erosion of trust in dyadic relationships. Trust was measured pre and post
violation. The intention behind the trust violation had the strongest impact on whether trust
eroded and distrust increased. Trust eroded more when the trustee was perceived as "not willing"
rather than "not able" to fulfill expectations. The key distinction was the intention of "not
wanting" versus "not able". The study also found that a maximum of two violations would be
tolerated before trust eroded. Additionally, the less experience the trustee had the more forgiving
a trustor would be. Even though this study measured cognitive states and not actual behaviors, it
demonstrated the importance of constantly meeting the trustor's expectations (Elangovan et al.
2006).
Lewicki et al. (2006) organized the existing work on trust into four broad approaches
(behavioral approach and psychological approach comprised of uni-dimensional, two-
dimensional and transformational). Theses approaches were described in Table 2-32. The table
described how these approaches were defined, measured, at what level does trust began and what
caused the level of trust to change over time.
Additionally Lewicki et al. (2006) provided a list of variables that could have caused the
level of trust to change over time. The variables were composed of a number of psychological,
behavioral and contextual factors. These variables included personality traits of the trustor (e.g.
trust propensity); personality traits of the trustee (e.g. trustworthiness as defined by ability,
benevolence, integrity, reputation, sincerity); characteristics of the past relationship between the
parties (e.g. patterns of successful cooperation); characteristics of their communication processes
(e.g. threats, promises, openness of communication); characteristics of the relationship form
between the parties (e.g. close friends, authority relationships patterns in a market transaction,
etc.); and structural parameters that govern their relationship between the parties (availability of
communication mechanism, availability of their parties) (Lewicki et al. 2006).
Three major types of trust have been identified by Lewicki et al (2006). Descriptions of
calculus-based (deterrence) trust, knowledge-based trust, and relational-based (identification)
trust were provided in Table 2-33. Calculus-based trust was focused on economic exchanges and
was sustained through consequences. The consequences, costs or retributive action were a
deterrent for not acting in a distrustful manner. This type of trust typically existed in
relationships with very few interactions. Knowledge-based trust implied that the parties had
enough information about each other that their behaviors were predictable and supported their
interests. This type of trust developed after frequent interactions between the parties. Relational-
based trust was the full internalization of the parties trust building criteria. Each party fully
understood their expectations and needs and acted in the other party's best interest. Trust
developed in stages, beginning with calculus-based trust and ending with relational based trust.
However there is no guarantee that a relationship will progress from one relationship to the other
(Lewicki et al 2006). Figure 2-22 explained the different types of trust and their relation with
time. Lewicki et al. (2006) stated a certain amount of distrust and particularly the avoidance of
blind trust can be important components of healthy organizations.
A number of challenge areas were associated with measuring trust. A major
inconsistency was that many researchers failed to relate the measures of trust to the definition of
trust. There were instances in the literature where researchers were measuring parameters
unassociated with their definition of trust. A second challenge was that very few trust measures
were used more than once. One researcher found that out of 119 trust measures published, only
11 had been used more than once. A reason for this lack of repetition of trust measures was
attributed to the diversity of the trust targets (subordinates, managers, peers, team members, etc)
and the contexts (different industries, organizational structures and environmental conditions).
Additionally, many measures provided little information about the validity of the construct. The
Likert-type scale psychological approach was used in this trust research. However, it was
questionable whether this type of instrument can capture the complexity of the trust dynamics
over time. This method restricted the range of the responses available to the respondent of the
study. As a result, Lewicki et al. "encourage researchers to consider employing complimentary
methods in including diary accounts, narratives, critical incident techniques, in-depth interview,
case studies and communication analysis" (Lewicki et al. 2006, page 1014).
Dietz and Hartog (2006) investigated the different measures of trust with the goal of
providing consistency and validity in the process of measuring trust. Although they identified
three areas of trust research (trust within organizations or intra-organizational; trust between
organizations or inter-organizational; and trust between organizations and their customers or
marketing), their work focused on trust within organizations (between employees and their
employers or co-workers). Their approach included an across discipline review of the forms,
degrees and processes of trust (Dietz and Hartog 2006).
The three most common forms of trust were trust as a belief, decision and action. Trust as
a belief referred the subjective, optimistic and aggregated set of beliefs and/or judgments
regarding the trustworthiness of the trustee and the expected benefits the trustor would receive as
a result of trusting the trustee. Trust and trustworthy were explained as two different constructs,
where trustworthiness dealt with perceived personality traits and trust dealt with an action.
Trustworthiness did not imply corresponding trusting action. The most common antecedents of
trustworthiness were ability, benevolence, integrity and predictability. However, trustworthy
antecedents could change depending on the situation, context or judgments of the trustor.
Antecedents were viewed as interdependent and their precise make up and weighting depended
on the trustor, situation and context. This implied that the same individual can be viewed as
trustworthy and untrustworthy in different contexts or situations (Dietz and Hartog 2006).
The sources of a trust belief were based on the characteristics of the trustor,
characteristics of the trustee and the characteristics of the relationship. The characteristics or trust
disposition of individuals caused individuals to be more or less trusting. Trust disposition was
found highly influential in the early phases of a relationship, but with the accumulation of direct
experience and first hand knowledge, its influence diminished over time. Other factors that were
considered sources of trust included work environment, deepness of the relationship, stage of the
relationship, national cultural and situational factors (institutional framework, contracts,
legislation, regulation, code of conduct, etc) (Dietz and Hartog 2006)
The second form of trust was the decision to trust. This decision was based on the
subjective belief that the trustee was worthy of trust and that there would be a positive future
outcome. The third form of trust was the action of trust. For the trustor to engage in trust, he/she
must engage in risking taking behaviors. This was also a sign to the trustee that he was being
trusted. This trust action was separate from the trustor's propensity to trust and the trustee's
response to the trusting action.
Dietz and Hartog (2006) proposed five different degrees of trust (Figure 2-23). These five
degrees of trust ranged from distrust (deterrence-based) to complete trust (identification-based).
The evaluations that comprised the different degrees of trust were cognitive based or affective
based, with cognitive acting as a precondition for affective trust. Figure 2-24 shows the multi-
dimensional, integrated framework of the trust process based on the work of Mayer et al. (1995)
and Ross, and LaCroix, (1996) (Dietz and Hartog 2006).
Dietz and Hartog (2006) identified a number of implications for researching and
measuring trust. They outlined the following five major research questions: "which form of trust
is being measured (i.e. a belief, a decision, or trust-based behavior); what is the content of the
belief (i.e. ability, benevolence, integrity and predictability); what is/are the sources of the belief
(i.e. the characteristics of the trustee, the trustor, their relationships, and broader situational
constraints); and what is the identity of the referent (i.e. who is being trusted) (Dietz and Hartog
2007, page 565). The researchers also offered a number of methodological observations. First,
trust measures should measure more than just trustworthiness. Second, when measuring
trustworthiness it was important to determine the ranking or proportions of each antecedent.
Third, the source of the trustor's decision to trust should be identified. Fourth, it was important to
clearly identify the trustee because trust can vary between relationships. Fifth, the wording of
trust measures should be positive and they should not include the word trust (Dietz and Hartog
2006).
Dietz and Hartog (2006) also completed a review of 14 trust measures cited in the
literature from 1995-2004 and found the importance of tapping into different work scenarios and
contexts that might influence trust. A number of 14 trust measures had difficulties in
distinguishing the trustor and the trustee, who was trusting and who was being trusted. The
following were the most common types of relationships measured: "between an employees) and
immediate managerss; between an employee and one immediate work colleague; between an
employee and his employer or with management representing the employer; between an
employee and the rest of the organization; between the organizational departments; multiple
relationships throughout the organizations" (Dietz and Hartog 2006, page 570). It is imperative
that trust measures related directly to the definitions used or implied in the research. Lastly,
Dietz and Hartog suggested that longitudinal studies of trust, which were highly infrequent,
could provide interesting results (Dietz and Hartog 2006).
Schoorman et al's (2007) original article was published in 1995 and was cited over 1100
times. Their current article reviewed the past, present and future of trust research. The first
change made in the scholars' earlier research was defining trust as part of a relationship and not
solely as a trait-like dispositionall) quality. They argued that since trust changed across
relationships and contexts it should be viewed more in terms of a relationship rather than a
predisposition. The antecedents (ability, benevolence, integrity) of trust between organizations
(higher levels) focus mainly on integrity. At lower levels of trust (interpersonal, groups and
within organizations) all three antecedents, integrity, and benevolence ability are considered
important. These antecedents increased the perceived willingness to take risks. Therefore trust
can develop on a number of levels (Schoorman et al. 2007). In relationships, assessments of
trustee's ability and integrity take place fairly quickly and the assessment of benevolence takes
place over time. There are two ways of dealing with risk. One method was by trust and the other
was by control systems.
Trust and controls systems are not mutually exclusive...when the risk in a situation is
greater than trust (and the willingness to take risk) a control system can bridge the
difference by lowering the perceived risk to a level that can be managed by
trust...However, if there is a very strong system of controls in an organization, it will
inhibit the development of trust. Not only will there be few situations where there is any
remaining perceived risk but trustworthy actions will be attributed to the existence of
control system rather than to the trustee. Thus the trustee's actions that should be
interpreted as driven by benevolence or by integrity may be viewed simply as responses
to control systems (Schoorman et al. 2007, page 347).
Schroomann et al. concluded their research with the discussion of a number of new trust
dimensions: affect or emotion, violation and trust repair, cross-cultural, and context-specific
(Schoorman et al. 2007).
Colquitt et al (2007) used a meta-analysis of 132 independent samples to summarize the
relationship between risk taking and job performance. They described four main constructs of
trust: behavioral intention (internal action, judging), positive expectations of others, personality
trait (disposition), and cooperation for risk taking. It was found that all three dimensions of
trustworthiness (benevolence, integrity and ability) had unique relationships with trust. However,
benevolence, integrity and ability had high inter-correlations, which could affect regression
weights in the measuring their relationships to trust. Trust propensity was seen as a factor that
helped the trustor move past trustworthiness and engage in trusting actions. Colquity et al. (2007)
concluded that trust was vital component of effective relationship in organizations.
Summary. A summary of the journal articles presented in this section is shown Table 2-
34.
2.2.5 Trust in Virtual Environments
Penteli and Duncan (2004) conceptualized trust development in temporary virtual teams. In
this type of environment, trust is required to develop quickly without the benefit of time
(traditional trust models).
Virtual teams are composed of geographically dispersed individuals who interact through
interdependent tasks guided by a common purpose with links strengthened by webs of
communication technologies. In this way virtual work is carried out across time and
space as well as across organizational boundaries; moreover apart, from organizational
difference, team member and the type of requirements of the project may vary as an
individual shifts from one virtual team to another" (Pentali and Duncan 2004, page 424).
A benefit to virtual environments was that it enabled organizations to project a number of
different images to suit the different needs and priorities of their audiences (employee,
customers, shareholders). This allowed organizations to maintain simultaneous trustworthiness
with a number of targets (Penteli and Duncan 2004).
Trust in a virtual environment with temporary teams became impersonalized and
discontinuous. The quick trust development process in temporary teams focused on competence
and clear roles. However, this type of trust was fragile and highly influenced by the initial
communication and the work of the team coordinator (Penteli and Duncan 2004).
In the pre-script phases teams member employed impression management behavior to
secure an image of trustworthiness based on competence. This typically translated into actions of
meeting deadlines, sharing information, observing and setting guidelines. This type of trust was
called situated trust and was developed jointly and often in the asynchronous computer mediated
interaction of these players. Contractual agreements (formally scripted) influence trust
development and performance in virtual teams by varying roles, triggering interactions and
enabling interactions to continue. The co-scripted, re-scripted and unscripted interactions
influenced trust development by fostering mutual understanding and commitment within the
virtual temporary team (Penteli and Duncan 2004)
The increasing pressure to perform within a short period of time with unfamiliar people
and within a computer-mediated environment makes the impression management
perspective vital to understanding the behavior and interactions of virtual team members.
The paper suggests that impressionistic behavior conveyed through computer-mediated
communication should be included in our understanding of trust within virtual teams
(Panteli and Duncun, page 437).
According to Peters and Manz (2007) in traditional collaborative and team structures
activities tend to be carried out in a centralized, hierarchical, formal fashion benefiting from a
homogenous culture where information is synchronous and usually bounded by the organization.
In contrast, virtual structures are decentralized, flat and informal. They tend to be characterized
by multi-cultures, heterogeneity and relying on asynchronous information not bound by the
organization. Collaboration is a process that aims to go beyond communication and strait
teamwork. The collaborative process requires a collective responsibility for outcomes and joint
ownership of decisions made by interdependent members of a team. However, collaboration can
be limited by expertise, time, money, or competition. Peters and Manz (2007) define team
collaboration as:
The existence of mutual influence among members that enables open and direct
communication, resulting in conflict resolution, and support for innovation and
experimentation. Team members must have an open mind and be willing to listen to, and
trust in, their teammates. They must also possess the ability to deal with conflict
productively and be supportive rather than authoritative in the team environment (Peters
and Manz 2007, page 119).
Trust, shared understanding and depth of relationships were considered the antecedents of
virtual collaboration (Figure 2-25). Although there were many types of trust, cognitive based
trust was the most effective in virtual collaborations. This type of trust was based on rational
reasoning (cost and benefits) such as technical expertise. However, cognitive trust did not
explain initial trust. An individual's trust propensity or personality based trust was a strong factor
in determining initial trust. Trust among team members created a perceived sense of security for
dependency and collaboration (Peters and Manz 2007). Shared understanding, also known as
shared mental models, provided a clear sense of strategic direction aiming to alleviate the
inherent uncertainty when collaborating virtually. A shared understanding created a vested
interest for all team members about the outcomes produced by the team (Peters and Manz 2007).
The last antecedent for virtual collaboration was depth of relationship. The major obstacle for
building or deepening relationships virtually was the lack of personal interaction. The inability to
see facial expressions and body language were inherent challenges in virtual collaboration
(Peters and Manz 2007).
Developed relationships, shared understanding and trust were important antecedents of
virtual collaboration. The combination of these three factors was believed to increase innovation
and performance of virtual teams. An additional factor was aligning the collaboration with the
interests of the participants. (Peters and Manz 2007).
Brown et al. (2004) investigated the relationship between trust and the willingness to adopt
information systems (IS) and collaborate with others in virtual contexts. The virtual collaboration
literature discussed three dimensions trust. The first dimension was trust in terms of social
characteristics of the parties involved in the collaborative relationship (prior familiarity,
reputation, competence, and ability). The second dimension was trust as immediate outcome of
the collaborative processes (judgments of reliability, openness, integrity, trustworthiness, and
benevolence). The last dimension was trust as institutional (social norms, legal structures, and
privacy policies) (Brown et al. 2004)
Trust promotes cooperation, collaboration and comfort in virtual environments.
In virtual interaction, trust is likely to be particularly important, because collaboration can
be effective only if both parties enter into it with a willingness to open themselves to one
another and cooperate in carrying out a task, solving a problem, and learning [36].
Collaboration requires intensive interaction that creates dependencies parties could exploit
if they so desired. Trust is the glue that binds collaborators by fostering faith that both
parties will contribute and not behave opportunistically. (Brown et al. 2004, page 117)
Trust and distrust form self-re-enforcing cycles, where trust leads to more trust and
distrust leads to more distrust. When individuals enter a new environment without any prior
information about the parties, their disposition to trust has a major influence on the initial degree
of trust within the collaborative relationship. A person's trust disposition is comprised of
personality traits which affect collaboration by determining their initial openness to innovation
and learning new learning new technologies. When entering a new virtual collaborative
environment with strangers, collaborators were generally more cautious until they compiled
more information about the other collaborators. An individual's disposition to trust influenced
their response to the circumstances they encountered and these responses impacted the
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