The differential impact of trust types on inter-firm relationships: Some empirical evidences from the Japanese eyeglass industry

Abstract

By considering the business context of Japanese firms, this study aims at investigating two forms of trust (that is rational and relational) and how they are affected by the nature of the relationship between business partners. It also examines the impact of trust, directly on cooperation and indirectly on performance. A survey of a sample of 68 Japanese eyeglasses manufacturers was conducted and analysed by Structural Equation Modelling. Relational-specific adaptation was found to impact strongly on a partner's relation-based trust. On the other hand, coercive power was found to have a negative effect on relational and rational trust. From the study, two important facets of Japanese inter-firm trust were revealed. First, that the generation paths of trust forms are different; and second, that relational trust has a stronger explanatory power in cooperation and performance than rational trust.