Trust in Business Relations

Scholars in a wide variety of fields have become more deeply interested in the concept of trust. Many theorists prescribe greater trust as a necessary antidote for an increasingly litigious and distrustful society (Lieberman, 1981). Trust holds for them the possibility of greater economic efficiency as well as of deeper human fellowship (Arrow, 1974). In addition, scholars concerned with corporate social responsi bility have pointed to the limits of law in controlling corporate behavior (Stone, 1975). Although trust by itself is not sufficient for the effective social control of business behavior (Barber, 1983), there is the hope that it may partially displace the heavy emphasis on legalistic and formalistic controls. Given, then, that relations of greater trust between organizations and groups are essential to societal well-being and economic efficiency,1 what are the conditions which give rise to such trust? Building upon the work of Macaulay (1963), this paper responds to this question in two parts. First, the concept of trust is operationalized in terms of interorganizational relationships. A model of trust is developed which gives special attention to the connection between trust and problem solving as the need to modify agreements arises. The second part explicates three theories of the causes of trust or trust-like behavior. These views attribute the creation of trust or its substitutes to a generalized morality, institutional arrangements, and interpersonal relationships. It also develops testable hypotheses for each theory. With these analytical tools in place, the researcher will be in a position to study empirically the bases of trust relations in business.