Trust and distrust in buyer-supplier relationships

In buyer-supplier relationships, trust is a crucial component, fostering cooperation and mutual benefits. Traditionally, trust and distrust were considered opposite ends of a single continuum, where ‘high trust’ meant ‘low distrust’ and vice versa.

However, recent research suggests that they can coexist as distinct concepts, a nuance that can hold significant implications for operations and supply chain management.  For example, if trust and distrust can coexist, this duality means that efforts to build trust may not necessarily eliminate distrust, and reducing distrust may not inherently increase trust.

In this study, we define trust in a supplier context as the belief that the buyer cares about the supplier’s interests. Conversely, distrust is the suspicion that the buyer might act in a way that harms the supplier.

Key influencing factors: relational norms and structural power

Relational norms are shared expectations about behaviour within a relationship. They promote mutual interests and serve as safeguards against opportunism. These norms play a vital role in fostering trust by encouraging cooperative behaviours and open communication. For example, a buyer who is flexible with contract terms or willing to share valuable information can enhance the supplier’s trust.

Power dynamics in buyer-supplier relationships significantly influence trust. Structural power is determined by the dependency one party has on another. It can vary across four types of relationships:

1. Independent relationships: Here, both parties have low dependency on each other. Trust is minimal since neither party is vulnerable to exploitation.
    
2. Buyer-dominant relationships: The supplier is more dependent on the buyer, leading to a higher potential for exploitation by the buyer. In such scenarios, the supplier is less likely to trust the buyer due to the power imbalance.
    
3. Supplier-dominant relationships: The buyer depends more on the supplier, reducing the likelihood of the buyer taking advantage. This dynamic tends to foster higher trust from the supplier.
    
4. Interdependent relationships: Both parties rely heavily on each other, which tends to balance power and create a stable environment for building trust. Both are motivated to maintain trust to ensure mutual benefits and avoid harm.

Key findings

As the concept of distrust in business has not been researched as thoroughly as trust has, we adopted an exploratory approach in this study. We created hypotheses by considering supplier distrust as the opposite of trust. We tested these ideas using a scenario-based role-playing experimental method.

Key findings from our study show that:

• Relational norms enhanced supplier trust, but had limited influence on supplier distrust
• Buyer-dominance increased supplier distrust
• In the setting of supplier dominance, relational norms alleviated supplier distrust.

Managerial implications

1. Trust building: Managers should focus on behaviours such as open communication, joint problem-solving and genuine concern for the supplier's interests. Such norms help create an environment where trust supports long-term collaboration and mutual success. 
    
2. Managing distrust: Recognising that distrust can coexist with trust, managers must address the underlying causes of distrust, such as power imbalances. Efforts should be made to balance power where possible and establish clear, mutually agreed-upon norms.
    
3. Strategic use of power: Managers should be mindful of how power dynamics affect relationships. While power imbalances can lead to distrust, they do not automatically prevent the possibility of trust. How power is exercised and perceived matters more. Exercising power in a supportive manner (rather than coercive) can alleviate distrust and promote a positive, collaborative relationship.
    
4. Relational norms as a tool: Establishing strong relational norms can mitigate the adverse effects of power asymmetries and build a foundation for long-term trust. For instance, a buyer with more power might not necessarily exploit a supplier if strong relational norms are in place.
    
5. Adjust relationship configuration: Distrust may exist at the beginning of a relationship where trust is absent, making collaboration very difficult. However, if buyers make efforts to be supportive, supplier trust can be gradually built, increasing the scope for collaboration.
    
6. Trust and control: Managers should understand that control measures aren't necessarily about a specific supplier or buyer being untrustworthy, but more about reacting to the broader power dynamics in the business relationship. Recognising this can help reduce tension and facilitate mutual understanding.

Conclusion

Our findings show that supplier trust and distrust can coexist, and that increasing trust doesn’t necessarily reduce distrust. Trust is primarily built on behavioural attributes, whereas distrust is imposed by exchange structures.

Managers need to be aware that trust is built on relational norms, whereas distrust is driven by power imbalance. They should, therefore, cultivate trust by promoting strong relational norms, while also addressing the root causes of distrust through balanced power dynamics. By doing so, they can ensure more effective and mutually beneficial relationships in the supply chain.

Read the journal article: “Trust and distrust in buyer-supplier relationships: An exploratory experimental study” Jie Chen and Michael Lewis, International Journal of Operations & Production Management.