Trust In Interorganizational Relationships Research Articles

The role of trust in the governance of business process outsourcing relationships

PurposeBusiness process outsourcing (BPO) has become so prevalent that a new term, the extended enterprise, has arisen to describe this approach to structuring an organization. The purpose of this paper is to integrate the information systems and the interfirm governance literatures to develop a framework for the role of trust in the governance of extended enterprises.Design/methodology/approachThis paper uses transaction cost economics (TCE) to identify the elements and stages of BPO relationships. This paper then integrates those elements with the types of trust identified in the information systems (IS) literature to develop a framework.FindingsTCE identifies three elements that influence the design and function of interfirm relationships: the transaction, the transaction environment and the parties (the client and the vendors). TCE also recognizes three stages in the transaction: contact, contract, and control. The IS literature identifies three types of trust: trusted systems, trusted institutions, and trusted partners. The paper links the two literatures into a framework identifying the type of trust related to each of the TCE elements; it then uses these linkages to identify the types of trust appropriate for each stage of the BPO relationship.Originality/valueThis paper integrates the IS and interfirm governance literatures concerning trust in interorganizational relationships in an effort to offer a framework for building and sustaining trust between BPO vendors and clients and to identify potential directions for future research.

Inter-organisational cost management: Towards an evolutionary perspective

This paper investigates how evolutionary theories might further our understanding of inter-organisational cost management. Core concepts of institutionalisation, capabilities, and learning and change are explored in the context of a longitudinal case study. Through the case, we describe the introduction of heuristics as a basis for cost management. Our evolutionary perspective interprets the heuristics as search routines leading to unpredictable modifications to activities, costs and organisational boundaries. Initial analysis indicates that the learning and change evident in these modifications is facilitated by previously instituted capabilities and relatively high levels of trust in inter-organisational relationships. The paper makes three main contributions. First it highlights the blurring of the boundaries between intra- and inter-organisational phenomena. The processes of institutionalisation, capabilities in resource utilisation, and learning and change appear to spill over from the organisational domain to the inter-organisational domain and vice versa. Second, the temporal dimension of evolutionary theories distances us from the apparently instantaneous cost minimising boundary decisions of other theoretical perspectives. Nevertheless, we caution against an overly deterministic view of path dependence. Third, further reflection on the empirical evidence leads to the suggestion that existing routines may blind us to conflicts of interest and power asymmetries in inter- and intra-organisational relationships, opening up the possibility that what previous studies have interpreted as trust, may have in fact been stability in behaviour afforded by inter- and intra-organisational routines.