Drivers of Inter-organizational Trust in Buyer-Seller Relationships: A fsQCA Analysis

Abstract

Inter-organizational trust is a key characteristic of buyer-seller relationships (Handfield and Bechtel 2002; Kwon and Suh 2004). This paper investigates the drivers of buyer and seller inter-organizational trust. Previous studies have attempted to investigate the drivers of inter-organizational trust. However, these studies are dominantly based on monadic data collection. Furthermore, most of these studies base their research designs on either traditional case analysis, or use correlation-based statistical techniques to test the suggested antecedents. The former approach relies on very small sample sizes, which does not provide the basis for generating generalizeable conclusions. The latter approach neglects and overlooks identifying equifinal configurations and distinguishing between necessary and sufficient conditions driving buyer-seller relationship outcomes. This study addresses these shortcomings. This is done by using fuzzy set qualitative comparative analysis (fsQCA). FsQCA is fundamentally set-theoretic and uses Boolean algebra to compare qualitatively evaluated attributes of social phenomena (Ragin 2000; Fiss 2007). We include relationship-specific investments (RSI), the role of inter-personal trust, the perception of the business partner’s opportunistic behavior, as well as outcomes of the relationship as conditions driving inter-organizational trust. We use a dyadic research design, which allows for an examination of configurations of important conditions of buyer’s as well as seller’s inter-organizational trust with data collected from the pertinent party.

Main findings of the study are that (seller’s) RSI and inter-personal trust are not sufficient by themselves to induce the buyer’s inter-organizational trust; the causal configuration seen most often is outcome (buyer’s relationship performance) driven when there is also no opportunism. In cases where RSI drives inter-organizational trust, this must be complemented by the absence of opportunism or by inter-personal trust. Furthermore, the presence of opportunism alone does not drive the absence of inter-organizational trust, it needs to be complemented by a lack of inter-personal trust. Alternatively, combinations of other conditions can result in the same absence of inter-organizational trust, however, no mono-causal driver can be found. Regarding the seller’s inter-organizational trust the impact of inter-personal trust is more profound. However, that must also be combined with either absence of opportunistic behavior or relationship performance. The most often observed combination is based on the presence of inter-personal trust and absence of opportunistic behavior (both as core conditions) complemented by relationship performance (as the secondary condition). The buyer’s RSI acts as a peripheral condition. In terms of non-existence of seller’s inter-organizational trust, absence of inter-personal trust is the key. However, that also combined with buyer’s opportunistic behavior or absence of relationship performance (as secondary conditions) is effective. This enlightens our understanding of buyer-seller relationships and contradicts a body of the literature which rests heavily on regression-based statistics and demands that every antecedent meets statistical significance criteria.