7 Trust , transaction cost economics , and mechanisms

Introduction Organizational scholars increasingly recognize trust as an important factor in intraand inter-organizational relations, significantly influencing everything from the behavior of teams to the performance of strategic alliances and supply chains. Ten years have passed since the publication of two early articles on organizational trust: Bromiley and Cummings (1995) and Cummings and Bromiley (1996). In reflecting on the scholarly impact of these papers – and what such an impact might mean for future work in organizational trust – we discuss the concept of trust, briefly revisit the papers, consider the different ways in which the research has been used, and offer thoughts on the relevance of trust to organizational research. Bromiley and Cummings suggest that the inclusion of trust would expand and extend the research framework of transaction cost economics (TCE). Yet this call for TCE research to include the concept of trust has been largely ignored. Why? We summarize and analyze the apparent justifications for omitting or ignoring trust, leading to a critical examination of several theoretical aspects of TCE. We distinguish between TCE’s calculativeness, based on assuming others are self-interest-seeking with guile, and trust, which we define as beliefs or actions not determined by such calculativeness.