Vulnerability and the Asymmetric Nature of Trust In Interorganizational Exchange

Although vulnerability is central to many organizational theories of trust, little systematic research exists that specifically examines the relationship between vulnerability and trust. In this paper, we extend the concept of vulnerability to interfirm exchange relations and theorize its role in influencing interorganizational trust. We argue that existing theory on vulnerability and trust have implicitly emphasized an egocentric effect (how my vulnerability affects my trust in you), while overlooking an alter effect (how my vulnerability affect your trust in me). We also suggest that the same egocentric and alter effects of vulnerability on trust should influence both parties in an exchange relationship. Such a dyadic approach recognizes that exchange partners concurrently occupy the roles of trustor and trustee, thereby developing a more complete view of trust in interfirm exchange relations than currently exists. Drawing on transaction cost theory we conceptualize three different forms of vulnerability – market, investment, and transactional – that are hypothesized to influence trust in buyer-supplier relationships. Specifically, we predict that boundary-spanner trust in partner organizations is a function of both buyer and supplier vulnerability in the relationship. We test the hypotheses using data gathered from a mailed survey of buyer-supplier dyads. The results reveal that vulnerability substantially influences interorganizational trust, but that the egocentric and alter effects vary across the dyad, suggesting an asymmetric view of trust in interfirm exchange.