Network Trust and Trust Behaviors Among Executives in Supply Chain Interactions

Abstract

We integrate the results of a social network survey and a forecast information sharing experiment to examine the roles of trust and trustworthiness in impacting high-ranking executives’ decisions in supply chain interactions. The members of our executive sample have, on average, 17 years of work experience. A significant portion of them holds positions at the C-level in world-leading organizations that span a wide range of industries. By examining the roles of trust and trustworthiness in the decision making of high-ranking executives, we find strong external validation for as well as demonstrate how these nonpecuniary, behavioral factors impact the outcomes of business interactions. We employ a multimethod research design that allows us to investigate the extent to which the executives’ trust beliefs toward a relevant network of exchange partners (which we define as their “network trust”) impact their trust behaviors when engaging in business interactions with members of this network. We determine the conditions pertaining to the executives’ professional experiences that strengthen or weaken the impact of network trust on the executives’ trust behaviors in supply chain interactions. For example, executives with more diverse professional experiences rely more on network trust to shape their trust behaviors. Conversely, executives with prior positive trust experiences rely less on network trust in their trusting behaviors. We quantify that improved trust and trustworthiness can yield up to 41%, 6%, and 5% gain in the expected profit of the supplier, the retailer, and the supply chain. Our results offer tangible implications for how organizations can better leverage executives’ knowledge about how much to rely on network trust in business interactions to achieve better outcomes. This paper was accepted by Serguei Netessine, operations management.