Introduction
For many of us, the idea of trust is something that goes beyond the realm of contracts and terms & conditions. Trust is generally speaking a word you associate with good friends, family, and colleagues that you might have had significant experiences within which trust proved to be vital for success. Stumbling upon the word calculative trust intuitively strikes me as conflicting. However, this brilliant piece of research gives us an overview of the meaning of calculative trust and relational trust in a supply-chain setting.
For the sake of pragmatism, I will illustrate the findings according to the following example. Imagine yourself as the owner of a company that organizes mountaineering trips in remote regions with no emergency facilities nearby. You will select your guides on their mountaineering expertise and knowledge of first aid. The relational trust will be equally important because you will put your stamp of approval on it. Let us see what science will have to say about this topic.
What is the research about?
So, the paper mentions two types of trust: relational trust (RT) and calculative trust (CT).
RT is something that has been established in the past such as the experiences I mentioned with colleagues or industry connections whom you needed to trust. Meanwhile, CT can give you a perspective on the future of the relationship between buyer and supplier. Moreover, penalties and rewards can steer the relationship in the right direction under different circumstances. Relational trust is required for a shared identity and a “think like” effect. The benefit of which is clear because in future transactions it will be easy to make decisions much quicker.
In this research, over 200 managers from different firms have been interviewed. The goal was to create clarity over which type of trust the managers would preferably engage within three different scenarios:
Asset specificity — When there are no specific investments made from the buyer to the seller it pays to go for CT. In the case of specific investments, it will pay to have strong relationships with the seller to guide the process towards good outcomes.
Market uncertainty — When you face a certain market future CT will likely have a positive impact on performance. However, relational trust is most important in uncertain markets.
Behavioral uncertainty — CT is the way to go if you deem performance important and you face uncertain behavior.
What can curious executives learn?
In the case of the mountaineering company, we might presume that you will select your guides on their mountaineering expertise and knowledge of first aid. Other than that you will need to have communicative and personal skills to lead the team. The relational trust will be equally important because you as the owner will put your stamp of approval on the execution of the mission.
In the case of a small business, it might be so that the owner will join for a couple of days to make their assessment. In the case of hiring a new guide asset specificity depends on the qualifications. If the guide is well-known and has all the certificates RT seems appropriate. If it’s a young adventure-seeking guide who just finished training, CT will be appropriate since there is a risk coming from poor education, reckless behavior and so on.
Market uncertainty will create a circumstance in which only the experienced and seasoned guides with relation to the owner make it to a contract. In any case, if you are not sure what to expect from a candidate clear penalties and rewards might be a way to go because it promotes professional behavior. In sales, the latter is the most dominant way to go. I’m not sure whether it is healthy, and needed, to operate like this.
Behavioral uncertainty is most likely a delicate topic for such companies since there are unavoidable risks that come with the job. On the other hand, the safety of the mission for mountaineers is simply the responsibility that comes with the job. Only penalties will arise in the case of serious problems after reckless behavior. The reward is often a simple handshake and thanks. To conclude, both types of trust exist and are in place in business. Let the results of this paper guide you towards the best of human cooperation.
Important notes
Full credit goes to Laura Poppo, Kevin Zheng Zhou and Julie Li. The one-and-only aim of this paper is to further promote it’s content to a wider audience. For the original paper please visit: https://doi.org/10.1002/smj.2374
About the author
Bram van Kleef is an operations-consultant@ VanKleef/Andersson and is located in Amsterdam. He holds an MSc in Business Administration: International Business & Marketing from Kristianstad University in Sweden. For inquiries: info@vankleefandersson.com
