Which trust and when? Conceptualizing trust in business relationships based on context and contingency

Abstract

This is a conceptual paper that sheds light on how trust works by distinguishing 'placed trust' from 'trust as response'. This distinction has implications for management practice and provides directions for future research. The paper reviews, critiques and re-interprets different understandings of trust across several strands of management literature. Trust, as a means of coping with uncertainty by reducing perceived risk, is contrasted with two other options, regulation and opportunism. Trust reduces risk by placing obligations on the trustee to be trustworthy and it is argued that trust is calculating by contrasting it with naiveté. Consideration is then given to its role in creating customer satisfaction, service quality and commitment. The distinction conceptualized between the initiatory act of trusting and the response of trusting enables retail and distribution management to optimize use of trust in the service encounter.