Summary for Trust and Relationship Marketing

Dung Phuong Hoang, E-PhD 2

1. Key concepts

Trust is “willingness to take risk”

"Willingness to take risks may be one of the few characteristics common to all trust situations."
(Johnson-George and Swap, 1982) in which there must be some meaningful incentives at stake
and that the trustor must be cognizant of the risk involved (Kee and Knox, 1970)

“ Willingness of a party to be vulnerable to the actions of another party based on the expectation
that the other will perform a particular action important to the trustor, irrespective of the ability
to monitor or confroi that other party” (Mayer et al., 1995)

Trust is different from “cooperation”: Trust can frequently lead to cooperative behavior, trust is
not a necessary condition for cooperation to occur, because cooperation does not necessarily put
a party at risk. On the other hand, a person can cooperate with someone who you don't really
trust

Trust is different from “confidence” because it requires a previous engagement on a person's

part, recognizing and accepting that risk exists while in the case of trust, former risk must be
recognized and assumed.

Trust is different from predictability since if the other party is predictable, we do not to take risk
nor willing to take risk, instead, we act in a self-interested fashion and not be vulnerable

Trust in the context of business-business relationship

[Trust is] the firm’s belief that another company will perform actions that will result in positive
outcomes for the firm, as well as not take unexpected actions that would result in negative
outcomes for the firm (Anderson and Narus, 1990, p. 45).

Trust is defined as a willingness to rely on an exchange partner in whom one has confidence
(Moorman et al., 1992, p. 315; Schurr and Ozanne, 1985, p. 940; also used by Ganesan, 1994).
We conceptualize trust as existing when one party has confidence in an exchange partner’s
reliability and integrity (Morgan and Hunt, 1994a, p. 23). We define trust as the perceived
credibility and the benevolence of a target of trust (Doney and Cannon, 1997, p. 36)

Trust is different from reliance: for ‘relying on a person’s goodwill towards one is not a
sufficient condition for trust’ (Holton, 1994, p. 65), and while trusting someone implies being
willing to rely on them, the opposite is not necessarily the case. What distinguishes trust from
reliance is the expectation that the other party may take initiatives (or exercise discretion) to
utilize new opportunities to our advantage, over and above what was either explicitly or
implicitly promised. Moreover, the affective element is attributed to trust but not to reliance

Trust is “a personal trait” or Propensity to trust – a characteristic of the trustor which is

different among individuals and leads to a generalized expectation about the
trustworthiness of others

"An expectancy held by an individual or a group that the word, promise, verbal or written
statement of another individual or group can be relied upon." (Rotter, 1967)

“A stable within-party factor that will affect the likelihood the party will trust”

“General willingness to trust others”

"the tendency of a decision maker either to take or avoid risks" (Sitkin and Pablo's, 1992)

Trustworthiness – a characteristic of a trustee

According to Sekhon et al . (2014), trustworthiness refers to a characteristic of a person, a brand,

a product or service or an organization to be trusted. Trustworthiness was assessed as the
motivation (or lack thereof) to lie and help understand why some parties are more trusted than
others

Three dimensions of trustworthiness include ability (i.e. group of skills, competencies, and
characteristics that enable a party to have influence within some specific domain); benevolence
(i.e. the extent to which a trustee is believed to want to do good to the trustor aside from an
egocentric profit motive due to some specific attachment between the trustee and the trustor) and
integrity (i.e. trustor's perception that the trustee adheres to a set of principles that the trustor
finds acceptable  somewhat links to the institutional theory !). These three dimensions may
vary independently of the others, in other words, separable. Although if ability, benevolence, and
integrity were all perceived to be high, the trustee would be deemed quite trustworthy, there may
be situations in which a meaningful amount of trust can develop with lesser degrees of the three.
However, the question is how low can some of the three factors be before the employee would
not trust the manager? In what situations is each of the three factors most sensitive or critical? 
Future research direction

2. Propositions
- The higher the trustor's propensity to trust, the higher the trust for a trustee prior to
avaiJabiiity of information about the trustee.
- Trust for a trustee will be a function of the trustee's perceived ability, benevolence, and
integrity and of the trustor's propensity to trust.
- The effect of integrity on trust will be most salient early in the relationship prior to the
development of meaningful benevolence data.
- The effect of perceived benevolence on trust will increase over time as the relationship
between the parties develops
- The trustor perception and interpretation of the context of the relationship will affect
both the need for trust and the evaluation of trustworthiness. A clear understanding of
trust for a trustee necessitates understanding how the context affects perceptions of
trustworthiness. This proposition is somewhat related to the concept of “blanket trust” –
refers to two situation: while a person may completely trust another with regard to certain
aspects of their behaviour, they may positively distrust them in other matters or where
they have no experience on which to make a judgement, a person may have no view of
another’s trustworthiness in some areas of behaviour
- The dynamic nature of trust: The level of trust will evolve as the parties interact. The
emergence of trust can be demonstrated in game theory as a reputation evolves from
patterns of previous behavior. Trust evolves through the process of a growth of
knowledge and understanding of the people with whom we interact plus the actual
experience of working with them. When a trustor takes a risk in a trustee that leads to a
positive outcome, the trustor's perceptions of the trustee are enhanced. Likewise,
perceptions of the trustee will decline when trust leads to unfavorable conclusions
 Outcomes of trusting behaviors will lead to updating of prior perceptions of the
ability, benevolence, and integrity of the trustee.
Specifically, a research by Nguyen (2005) shows that at different stages of the
relationship, trust appears to have different objects (in what or in whom one trusts),
different bases (why one trusts), and be developed and maintained upon different
mechanisms (how one builds trust). The following tables summarize characteristics of
each stage:

Stage Objects of trust Bases of trust Mechanism of

trusts
Stage 1: Learning The success of the Cost/benefit Early direct
about the partner contract; the calculation that business interactions
cooperative attitude affect the level of (visit each potential
during contract dependence partner, checked
implementation their
premises and
equipment, and
talked to a potential
partner’s managers)
and communication
Stage 2: The business partner Understanding and Business interactions
Understanding and emotional (personal
identification attachments interactions and
socialization)
  In other words, trust changes in both quantitative and qualitative terms over time at
different stages of building relationship
- However, another research also by Nguyen (2009) suggests that there should be
possibility that entrepreneurs can intentionally develop trust with their business partners
at the inception of their relationship instead of passively wait for higher trust through
ongoing business exchanges. This is especially important for SMEs in transition
economies to build trust with new partners where market institutions and infrastructures
are underdeveloped while property rights are not well defined. The study reveals that in
the absence of institutional and cultural preconditions for trust, coupled with only a short
time being in business while trust is a critical resource, intentional trust building becomes
a form of entrepreneurial act to gain new business partners. Specifically, that the use of
informal institutions, establishing personal rapport, sharing business information and
practices, and looking for informal third party endorsements appear to be viable means of
enhancing trust between firms that in turn, positively affects interfirm collaboration while
there is no such relationship between the use of formal institutions and trust found.
- Trust is not necessarily reciprocal since there is no reason why because A trusts B that B
should be assumed to trust A
- Trust also enables us to tolerate uncertainty through our expectation that a trusted person
will seek to reduce our vulnerability to unpredicted contingencies. This does not mean
that we have a right to expect the trusted person to ‘eliminate their self-interest’ (Hosmer,
1995, p. 395) but that we anticipate they will, without receiving instructions from us, take
our legitimate interests into account if such circumstances arise. The certainty with which
another party will do this will grow as their perception of my acceptance of their
trustworthiness increases over time.

Relationship Marketing and trust

The commitment-trust theory of relationship marketing says that two fundamental factors, trust
and commitment, must exist for a relationship to be successful. Relationship marketing involves
forming bonds with customers by meeting their needs and honoring commitments. Rather than
chasing short-term profits, businesses following the principles of relationship marketing forge
long-lasting bonds with their customers. As a result, customers trust these businesses, and the
mutual loyalty helps both parties fulfill their needs.

According to Morgan & Hunt (1994) and Mudie et al. (2006), relationship marketing is a facet of
customer relationship management (CRM) that focuses on customer loyalty and long-term
customer engagement rather than shorter-term goals like customer acquisition and individual
sales. The goal of relationship marketing (or customer relationship marketing) is to create strong,
even emotional, customer connections to a brand that can lead to ongoing business, free word-of-
mouth promotion and information from customers that can generate leads.
According to Jain et al. (2007), building trust is one of the purpose of relationship marketing
while personalization and trustworthiness are two primary dimensions to measure the
effectiveness of relationship marketing