Abstract
In the knowledge-based network economy, trust is becoming an increasingly important issue. Both economists (Arrow, 1974) and sociologists (Luhmann, 1979) have pointed at the role of trust as a lubricant in managing uncertainty, complexity, and related risks. Trust reduces transaction costs, and increases spontaneous sociability (see Creed & Miles, 1996; Kramer, 1999). Trust can also have a critical role in enhancing knowledge creation and transfer within the organizational context (Kogut & Zander, 1992; Grant, 1996). Trust is an intriguing and paradoxical issue: in the modern society we need trust more than ever, yet we have less natural opportunities for trust to evolve (Lahno, 2002; Blomqvist, 2005).
Key Terms in this Chapter
Virtual Organization: Formed by business partners and teams who work across geographical or organizational boundaries with the help of information and communication technologies (Rachman & Bhattachryya, 2002).
Institutional Trust: Reflects the security one feels about a situation because of guarantees, safety nets and other structures (structural assurance), and the belief that things are normal and customary and that everything seems to be in proper order (situational normality) (McKnight et al., 1998).
Social Category: Represents a “cognitive shortcut” that allows people to rely on previously held or stereotypical beliefs rather than specific knowledge about the other party (Williams, 2001).
Impersonal Trust: Refers to indirect relationships where trust is not based on direct personal contact but mediated by a social organization or structure (Shapiro, 1987; Pixley, 1999).
Trusted Third Party (TTP): Represents a type of trust-guarding institution. It refers to a situation where two exchanging parties use a third (trusted) party to secure their own interactions.
Category-Based Trust: Refers to trust based on salient information regarding a trustee’s membership in a social category, influencing judgments about his trustworthiness (Kramer, 1999).
Collective Trust: An ongoing system of risk-taking enabled by goodwill and positive expectations of other members of the social system.