The Need for Trust

The concept of trust has recently received significant attention from management researchers (e.g., Kramer & Tyler, 1996; Rousseau, Sitkin, Burt, & Camerer, 1998). However, the importance of trust and understanding how trust shapes social relationships has long been a central focus for sociologists (Misztal, 1996), political scientists (Barber, 1983), and anthropologists (Ekeh, 1974). Moreover, the significance of trust in achieving effective virtual collaboration is recognized: "Virtuality requires trust to make it work: technology on its own is not enough" (Handy, 1995, p. 44).

Early research defines trust in terms of individuals' expression of confidence in others' intention and motives (Deutsch, 1958). More recently researchers perceive trust in terms of optimistic expectation of behavior of another (Mayer, Davis, & Schoorman, 1995), rather than in terms of intentions and motives of early research. Rousseau et al. (1998), however, claim that there is no universally accepted scholarly definition of trust.

This chapter views trust as a state of a positive, confident, though subjective expectation (Baba, 1999) regarding the behavior of somebody or something in a situation that entails risk to the trusting party (Cook & Wall, 1980; Currall & Judge, 1995). Decision research recognizes that "individuals have cognitive limitations … and must act under uncertainty and often ambiguous and incomplete information" (Luthans, 1992, p. 495). This lack of explicit knowledge introduces perceived risk and, thus, the requirement for trust. To avoid 'cognitive overload' by attempting to know everything about those with whom we interact, we trust. In this way, trust as a subjective expectation regarding the trustworthiness of others becomes a means of complexity reduction and a cooperation enabler (Dibben, 2000). The latter is a particularly valuable function in virtual settings. Trust allows for cooperation without the direct operation of control and power that are common practices in traditionally structured organizations, but are impracticable and counterproductive in virtual forms of organizations.

Collaboration is a key requirement for these forms of organizations. Partners are expected to share skills, expertise, and competencies in order to achieve a shared purpose and a jointly managed common task. Such partnerships, therefore, rely on trust, which often needs to evolve swiftly due to tight deadlines. Indeed, trust is positively related to the performance of partnerships (Aulakh, Kotabe, & Sahay, 1996). When trust prevails, partners are more confident in being open with each other, knowing that information and ideas shared will be used for the benefit and advancement of the partnership.

If trust is not prominent, cooperation is unlikely: "Mistrust, once introduced, sets off a vicious cycle. It makes success harder to attain" (Kanter, 1994, p. 105). As Grabowski and Roberts (1998) also suggest, with trust, synergistic efforts on inter-organizational missions are possible. This is particularly important for geographically dispersed, or virtual, organizations that are more flexible and vulnerable to environmental uncertainties. However, the lack of proximity impersonalises trust (Nandhakumar, 1999), while the virtual context of a geographically dispersed workforce may constrain or even impede rich information exchange, since communication becomes highly computer mediated (Daft & Lengel, 1986; Davenport & Pearlson, 1998). Thus, the formation and development of trust in the digital era is neither an easy nor a one-off task.

The DEI matrix suggests that there is a range of trust configurations required, from digital or computer-mediated/electronic interactions in the organization-to-organization (O2O) context through inter-personal trust in the individual-to-individual (I2I) context. However, regardless of the DEI configuration, trust is always a two-way interaction. For example, in business-to-business interactions, the individual trusts the organization to deliver the goods as specified and not to abuse their personal information. The organization trusts that the individual will pay for the goods and that they are who they say they are. The rest of this chapter embarks on an exploration of trust at multiple levels as shown in the DEI matrix: organizations trusting organizations, trusting relationships between organizations and individuals, and individuals trusting individuals. A specific instance of trust in the DEI matrix—B2C—is explored in the context of e-commerce.