Antecedents of Interorganizational Trust: Joint Decision‐Making, Cultural Adaptation, and Bargaining Power
| Pages | 16-28 |
| Published date | 21 May 2009 |
| DOI | https://doi.org/10.1108/15587890980001513 |
| Date | 21 May 2009 |
| Author | Naoki Ando,Dong Kee Rhee |
| Subject Matter | Strategy |
Journal of Asia Business Studies SPRING 2009
16
INTRODUCTION
Researchers of strategic management have extensively studied
trust developed between partners in relational exchanges and identi-
fied a range of its outcomes (Inkpen and Currall, 1998; Madhok,
1995; Nooteboom, 2002; Ring and Van de Ven, 1992, 1994). For ex-
ample, previous research found that in interorganizational relation-
ships trust is a fundamental and critical ingredient for cooperation
between partners (Barney and Hansen, 1994; Dyer and Singh, 1998;
Smith, Carroll, and Ashford, 1995). Other research suggested that
trust facilitates long-term considerations and maintains good inter-
organizational relationships on an extended basis (Inkpen and Cur-
rall, 1998; Johnson, Cullen, Sakano, and Takenouchi, 1996; Kim and
Mauborgne, 1991). They also found that interorganizational trust is
positively associated with higher performance in relational exchanges
(Zaheer, McEvily, and Perrone, 1998). These studies have primarily
explored what trust generates for relational exchanges. Compared
with the efforts devoted to research on outcomes of interorganiza-
tional trust, however, in the field of management studies there is only
a little theoretical and empirical work to explore how interorgani-
zational trust is created (Becerra and Gupta, 2003; Konovsky and
Pugh, 1994). Even though recent studies have begun paying atten-
tion to the antecedents of trust in interorganizational relationships,
they have mostly focused on structural aspects or initial conditions
(Inkpen and Currall, 1997; Mohr and Spekman, 1994; Sarkar, Ca-
vusgil and Evirgen, 1997; Williamson, 1985). Although interorgani-
zational trust can emerge incrementally through ongoing relational
exchanges (Ring and Van de Ven, 1994), none of these studies have
investigated the effects of the interactions between participants after
the structure of a relational exchange is established. As a result, these
studies cannot explain how trust is developed or impaired during the
course of interorganizational exchanges.
In this study, we intend to explore the antecedents of interorga-
nizational trust. Specifically, we will deal with the question of how
trust is fostered through repeated relational exchanges. As a key factor
for building trust in the course of interorganizational relationships,
we look at justice or fair action (Leventhal, 1980; Tyler and Lind,
1992)1 as the arguments to date suggest that fairness in the course of
a relational exchange process affects the development of trust in an
interorganizational relationship (Inkpen and Currall, 1998; Kim and
Mauborgne, 1991; Mayer, Davis, and Schoorman, 1995; Molm, Taka-
hashi, and Peterson, 2000; Nooteboom, 2002; Ring and Van de Ven,
1994). Based on this underlying argument, we will make an attempt
to identify and empirically examine antecedents of interorganizational
trust. Antecedents of trust, however, could vary across different rela-
tional forms because every form of interorganizational relationship
is distinct (Mayer et al., 1995). For this reason, it may be necessary
to confine the empirical setting to a specific context. In this study,
we deal with international joint ventures (IJVs) as a research setting
because it is a unique type of alliance. Specifically, IJVs are unique in
their shared ownership and joint control (Inkpen and Currall, 1998:
Johnson, 1997); and in addition, they are also cross-cultural alliances.
Antecedents of Interorganizational Trust: Joint Decision-Making,
Cultural Adaptation, and Bargaining Power
Naoki Ando
Hosei University
Dong Kee Rhee
Seoul National University
absTRaCT
The primary purpose of this study is to explore the antecedents of interorganizational trust within an international joint venture
(IJV) context. In exploring how interorganizational trust is developed during the course of managing IJVs, we will look at fair ac-
tion as a key factor in building interorganizational trust. Based on the existing literature, we propose the fair joint decision-making
process, cultural adaptation and the fair distribution of bargaining power as being antecedents of interorganizational trust within the
IJV context. After developing hypotheses about the relationships between these three antecedents and interorganizational trust as well
as causal relations between the antecedents, an empirical study is conducted using a sample comprised of 109 IJVs located in Korea.
The findings show that perceived fairness in the joint decision-making process and the distribution of bargaining power directly affects
trust-building between IJV participants; and also reveal the indirect effects of cultural adaptation on the development of interorganiza-
tional trust.
Keywords: Interorganizational Trust, Joint Decision-Making, Cultural Adaptation, Bargaining Power, Justice
1 Following the previous literature, the terms justice and fairness are used interchangeably.
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