Understanding Institutional-based Trust Building Processes in Inter-organizational Relationships

Abstract

This paper deals with the role of institutions in the development of trust in relationships between organizations. We review various strands of literature on organizational trust and examine the assumptions made about how trust building processes are influenced by institutional arrangements. Following this conceptual analysis, we discuss four mechanisms that are pivotal in the development of institutional-based trust. We also examine four situations where the influence of institutions can be particularly conducive to building trust. Finally, we argue that each of the situations calls for specific mechanisms to be predominantly employed in order to effectively create trust in inter-organizational relationships.