Can
You Trust the Concept of Trust
in Supply Chain Relationships?
Part II
Faith in the Moral Integrity of Others
by Rob Handfield
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Part
I
Continuing from our last piece, we will discuss
the different elements of trust and how they play
out in supply chain relationships.
Competence
Competence is one’s perception of the ability
of a party to meet commitments. Gabarro breaks
competence based trust into three key areas. First,
specific competence which is trust in the other’s
specific function or area. Second, interpersonal
competence is the ability of a person to work
with people or people skills. Finally, business
sense which addresses a person’s experience,
wisdom, and common sense. A key takeaway from
this research is that to trust a supply chain
partner, you have to have some confidence that
they are able to do the work effectively. For
a procurement manager, this might mean visiting
a supplier and evaluating them, to ensure that
they have the facilities, people, and knowledge
to carry out the contract.
Goodwill
This was first defined by McAllister (1993), and
is identified with a heavy dependence on openness
between people and emotional investment in the
relationship. Affect based trust could almost
be confused with interpersonal or personal trust
because personal issues creep into the relationship
in terms of problem solving, listening, and sharing.
A key distinction between cognitive and affect-based
trust is that while cognitive based trust may
or may not exist at the interpersonal level, affect-based
trust almost always exists only at the interpersonal
level. The importance of interpersonal relations
is recognized to be an important element of trust
(McAllister 1993; Granovetter 1985).
Beyond reliability or predictability, trust can
also be defined in terms of a faith in the goodwill
of others. This faith or goodwill recognizes the
importance of interpersonal relations as an important
element of trust. This new type of goodwill trust
evolved from discussion and research on benevolence,
integrity and honesty as key ingredients to trust.
For instance:
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Trust
is a faith in the moral integrity or goodwill
of others, which is produced through interpersonal
interactions that lead to social-psychological
bonds of mutual norms, sentiments and friendships
(Homans 1962) in dealing with uncertainty
(Ring & Van de Ven 1994). |
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Faith
enables people to go beyond the available
evidence and feel secure that a partner will
continue to be responsive and caring. Feelings
of faith begin with past experiences that
show how much our partner cares” (Rempel
and Holmes 1986) |
Vulnerability
A key breakthrough in the use of the term trust
is the relationship between vulnerability and
trust. Vulnerability is a key issue, because trust
without some kind of vulnerability simply cannot
exist. If a party chooses a course of action that
involves no vulnerability then the firm has simply
made a rational decision. One of the first definitions
to include vulnerability was provided by Deutsch
(1958), who stated that trust involved choosing
a course of action even if the probability of
failure was greater than 50%.
Others believed that trust goes beyond expectation
outcomes under uncertainty to expectation outcomes
under vulnerability. Vulnerability projects a
feeling of being unprotected or exposed while
including an element of uncertainty or risk. If
there is no uncertainty or risk, then the party
is freely giving the other party something. If
there is no exposure by both sides, then the firms
are simply making a rational decision based on
probabilities.
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Sabel
(1993:1133) Trust is the mutual confidence
that no party to an exchange will exploit
another’s vulnerabilities. |
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Zand
(1972) Trust is a risk relationship which
increases the trustor’s vulnerability. |
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Gambetta
(1988: 217) Trust is a particular level of
the subjective probability with which an agent
assesses that another agent or group will
perform an action, both before he can monitor
such an action and in a context in which it
affects his won action. For trust to be present
there must be the possibility for disappointment
or betrayal. |
The
discussion on vulnerability uncovers a key distinction
that must be made between trust and trusting behavior.
Trust can exist without action, but trusting behavior
is the action taken, based on trust in another
party. Lorenz discusses how vulnerability is a
key component of trusting action:
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Lorenz
(1988: 197) trusting behavior consists of
action that (1) increases one’s vulnerability
to another whose behavior is not under one’s
control, and (2) takes place in a situation
where the penalty suffered if the trust is
abused would lead one to regret the action. |
A paradox which exists in was uncovered by Rempel
and Holmes (1986), who wrote that to be able to
trust you must be willing to take the risk of
trusting another party. To be a party to trust,
you must take this risk. MBA students taking the
newly designed “Supply Chain Relationships”
class this semester will be working in a simulation,
in which they will negotiate contracts and manage
business with key customers/suppliers over a two-year
simulated period. They will also answer questionnaire
that demonstrate their feelings about the other
party, including how much they trust them! We
hope to be able to share with you the results
of this exercise, and identify some of the important
insights that emerge!
Sincerely,
Rob Handfield
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