Under a cloud of suspicion: trust, distrust, and their interactive effect in interorganizational contracting

Abstract

Although considerable research has examined the role of trust in interorganizational relationship (IOR) contracting, scholars have devoted less attention to how trust and distrust jointly influence this process. We propose and test a model wherein trust, based on partner reliability, is constrained to the IOR exchange context where it develops and does not generalize to other contexts. Distrust, rooted in value incongruence, more readily generalizes across exchange contexts. Results support these predictions. In addition, our analysis shows that trust and distrust combine such that managers decrease their preferences for highly specific focal-context contracts only when in-context trust is high and distrust is low. We discuss how these findings may provide a more nuanced understanding of the relationship between trust-based and contract-based IOR governance. Copyright © 2011 John Wiley & Sons, Ltd.