Organizational Trust: What It Means, Why It Matters
Globalization, workplace diversity, increased awareness of cultural differences, downsizing, delayering, the call for (and in some cases the reality of) increased workplace democracy, international networks, complex alliances, information technologies, and decentralized decision making are only some of the events and processes during which trust assumes significant importance. Trust within and across organizations is conceived by many to be directly related to the ability to form new associations and networks of trusting relationships to accomplish business transactions and, therefore, is predictive of whether or not an organization will remain viable (Fukuyama, 1995). Additionally, trust has been linked to overall employee job satisfaction and perceived organizational effectiveness (Money, Shockley-Zalabak, &Cesaria, 1997). In a time of increased imperatives for change and less certainty about how change can and should occur, it is not surprising that a renewed interest in trust surfaces as scholars and practitioners alike seek to understand relationships among trust, cooperative behaviors, and organizational abilities to change (Kramer &Tyler, 1996).
The purpose of this paper is to describe the constructs of individual and organizational trust, present a researchbased model of organizational trust with relationships to job satisfaction and perceived organizational effectiveness, and discuss the model's implications for managers, human resources, and organization development practitioners. The paper concludes with future research issues and challenges. The Constructs of Individual and Organizational Trust: Definitional Issues A general consensus among researchers concludes that trust is important in a range of organizational activities and processes such as team work, leadership, goal setting, performance appraisal, and in general, cooperative behaviors (Axelrod, 1984; Elangovan &Shapiro, 1998; Gambetta, 1988; Jones &George, 1998; Mayer, Davis, &Schoorman, 1995; McAllister, 1995). Less agreement exists around distinctions between individual and organizational trust definitions and how trust forms, evolves, and changes through organizational experiences and communication.
In recent years definitions of how individuals experience trust have moved from emphases on intentions and motivations to behavioral orientations. Hosmer (1995), for example, views individual trust as one party's optimistic expectations of the behavior of another when the party must make a decision about how to act under conditions of vulnerability and dependence. Mayer, Davis, and Schoorman (1995) describe trust as, "the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other party will perform a particular action important to the trustor, irrespective of the ability to monitor or control the other party" (p. 712). Lewicki, McAllister, and Bies (1998) define trust as confident positive expectations regarding another's conduct, while distrust is confident negative expectations regarding another's conduct.
Bhattacharya, Devinney, and Pillutla (1998) suggest that trust is an expectancy of positive (or nonnegative) outcomes that one can receive based on the expected action of another party in an interaction characterized by uncertainty. Whitener, Brodt, Korsgaard, and Werner (1998) merge several existing definitional approaches reflecting three basic facets of trust: (a) trust in another party reflects an expectation or belief that they other party will act benevolently; (b) a party cannot control or force another party to fulfill the expectation-that is, trust involves a willingness to be vulnerable and to assume risk; and (c) trust involves some level of dependency on the other party so that the outcomes of one party are influenced by the actions of another.
Mishra (1996), in building a model of trust for both individuals and organizations, defines trust as "one party's willingness to be vulnerable to another party based on the belief that the latter party is: (a) competent, (b) open, (c) concerned, and (d) reliable" (p. 265). These four dimensions operate collectively to create the perception of trust. Fukuyama (1995), in focusing on organizational trust across cultures in international economic exchanges, defines trust as "the expectation that arises within a community of regular, honest, and cooperative behavior, based on commonly shared norms on the part of other members of that community" (p. 26). In defining trust in an organizational context, Cummings and Bromiley (1996) anchor their definition in the assertion that trust involves three components of belief (affective, cognitive, and intended behavior) and three behavioral dimensions (whether an individual keeps commitments, negotiates honestly, and avoids taking excessive advantage).
Taken as a whole, the foregoing definitions suggest that both organization-wide and individual conceptions of uncertainty, dependency, influence, and behavior expectations undergird perceptions of trust. Individual trust refers to expectations about individual relationships and behaviors. Organizational trust refers to expectations individuals have about networks of organizational relationships and behaviors. As such, individuals in organizations simultaneously form perceptions of both individual and organizational trust. In this current work, organizational trust is viewed as positive expectations individuals have about the intent and behaviors of multiple organizational members based on organizational roles, relationships, experiences, and interdependencies. Trust in an organization can be experienced differentially by employees with different networks and experiences. When trust perceptions are aggregated across employees, partnerships, stockholders, customers, and other stakeholders these generalized expectations about intent and behaviors become part of the cultural context of the organization.
Organizational Trust and Organizational Effectiveness
A plethora of research relates enhanced networks of trust to general conceptualizations of organizational effectiveness. Rousseau, Sitkin, Burt, and Camerer (1998), in synthesizing much of this work, conclude networks of trust hold important implications for the ability to participate in virtual networks, adaptive organizational forms, crisis management, productive conflict, and decreased transaction costs. Specifically, high levels of organizational trust have been associated with (a) more adaptive organizational forms and structures (Barnes, 1983; Bennis &Bierderman, 1997; Crawford, 1998, Dwivedi, 1983; Miles &Snow, 1995; Rousseau, Sitkin, Burt, &Camerer, 1998), (b) strategic alliances (Das &Teng, 1998; Ingham &Mothe, 1998; Jones &Bowie, 1998; Rule &Koewn, 1998), (c) responsive virtual teams (Coutu, 1998; Fukuyama, 1995; Meyerson, Weick, &Kramer, 1996; Tsai &Ghoshal, 1998), and (d) effective crisis management (Mishra, 1996; Webb, 1996).
High levels of organizational trust can critically reduce litigation charges (Brockner &Siegel, 1996) and transaction costs (Gibbs &Gibson, 1998; Maccoby, 1998; Rousseau, Sitkin, Burt, &Camerer, 1998). This results because high-trust cultures minimize the potential for destructive and litigated conflict, unnecessary bureaucratic control and administrative expenditures, and expensive overhead required to sustain operations that have outlasted their need.
Trust, Communication Exchanges, and Job Satisfaction
Although not specifically referenced in the above definitions and processes, communication is inferred as central to the behavioral dimensions of trust processes. The research generally supports (a) accurate information, (b) explanations for decisions, and (c) openness as communication factors affecting perceptions of trustworthiness and overall job satisfaction. Previous research suggests that information flow has the strongest relationship with trust-in-supervisor (Muchinsky, 1977; O'Reilly, 1977; O'Reilly &Roberts, 1974, 1977). Adequate explanations and timely feedback on decisions are associated with higher levels of trust as is communication which is accurate and forthcoming (Folger &Konovsky, 1989; Konovsky &Cropanzano, 1991; Sapienza &Korsgaard, 1996). Butler (1991) found that managers who freely exchanged thoughts and ideas with their employees enhanced overall perceptions of trust. The majority of recent work relating trust to types of organizational relationships deals directly with managers and their immediate direct reports. Whitener, Brodt, Korsgaard, and Werner (1998) conclude five categories of behavior capture the variety of factors that influence employees' perceptions of managerial/ supervisory trustworthiness: behavioral consistency, behavioral integrity, sharing and delegation of control, communication, and demonstration of concern. Finally, communication and trust have both been linked to a range of perceptions of overall job satisfaction (Barnard, 1938; Clampitt &Downs, 1983; Goldhaber, Yates, Porter, &Lesniak, 1978; Lewis, Cummings &Long, 1981; Morley, ShockleyZalabak, &Cesaria, 1997; Pincus, 1986; Shockley-Zalabak &Morley, 1989, 1994).
Dimensions of a Proposed Organizational Trust Model
As the foregoing research review suggests, the nature of organizational trust is complex, communication-based, dynamic and multi-faceted. Congruent with this perspective, Mishra's (1996) model for organizational trust identifies four distinct dimensions broadly supported in various literatures: competence, openness, concern, and reliability. An additional dimension, identification, is proposed in this research as an addition to the Mishra model based on a review of the communication and job satisfaction literature. This fifth dimension highlights the importance of whether or not organizational members associate with an organization's goals, values, norms, and beliefs. Recently, several researchers have