An Examination of the Nature of Trust in Buyer-Seller Relationships

Authors: Patricia M. Doney and Joseph P. Cannon Reporter:Paging-Taso

Journal of Marketing Vol.61(April 1997),35-51

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Outline
Introduction Literature Review Research Hypotheses Results Discussion Conclusion

Introduction(1)

Rapidly changing competitive environments are forcing business marketing firms to seek more creative and flexible means for meeting competition. Many firms have responded to these challenges by building collaborative relationships with customers and suppliers. (Dertouzos, Lester, and Solow 1989) Such collaborative relationships rely on relational forms of exchange characterized by high levels of trust. (Dwyer, Schurr, and Oh 1987;Morgan and Hunt 1994)
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Introduction(2)

Trust can be engendered in a supplier firm and its salesperson. Anderson and Narus(1990) suggest that trust of an individual differs in nature form that of an organization. Understanding such differences is particularly important in business marketing situations in which the sales force plays a key role in implementing the suppliers marketing strategies and managing customer relationships.
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Introduction(3)

The purpose of this study is to provide new insight into how trust develops and how it influences industrial buying behavior. First, we isolate five cognitive process through which trust can be built. Second, we evaluate both trust of a supplier firm and its salesperson. Third, we examine the impact of trust on the buying firms current supplier selection decision. Finally, we provide a understanding of trust by placing both targets of trust in a larger nomological net of constructs.
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Literature Review(1)

Trust has received a great deal of attention in social psychology (e.g., Deutsch 1960;Lewicki and Bunker 1995;Lindskold 1978), sociology (e.g., Lewis and Weigert 1985; Strub and Priest 1976), and economics (e.g., Dasgupta 1988; Williamson 1991), as well as marketing (e.g., Anderson and
weitz 1989; Dwyer, Schurr, and Oh 1987; Ganesan 1994; Moorman, Deshpande and Zaltman 1993). Each discipline offers

unique insights into the nature of trust, its definition, and the process through which it develops.

Literature Review(2)

We define trust as the perceived credibility and benevolence of a target of trust. (cf. Ganesan 1994; Kumar, Scheer, and Steenkamp 1995). The development of trust relies on five distinct processes which trust can develop in business relationship (1)Calculative process (2)Prediction process (3)Capability process (4)Intentionality process (5)Transference process
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Literature Review(3)

Table 1Trust-Building Process, Generic Drivers, and Factors that invoke Each 8 process

Literature Review(4)

Figure 1: Antecedents and Consequences of Trust of a Supplier Firm and Salesperson

Research Hypotheses(1)

Developing Trust in a Supplier Firm: Characteristics of the Supplier H1Buying firm trust in the supplier firm is positively related to the suppliers reputation. H2 Buying firm trust in the supplier firm is positively related to the suppliers size. Developing Trust in a Supplier Firm: Characteristics of the Relationship H3 Buying firm trust in the supplier firm is positively related to a suppliers willingness to make investments specific to a buying firm. H4 Buying firm trust in the supplier firm is positively related to more confidential information sharing by a supplier firm. H5 Buying firm trust in the supplier firm is positively related to the length of time a supplier firm and buyer firm have been in contact.
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Research Hypotheses(2)

Developing Trust in a Salesperson: Characteristics of the Salesperson H6 Buying firm trust in the suppliers salesperson is positively related to the buyers perceptions that the salesperson has expertise. H7 Buying firs trust in the suppliers salesperson is positively related to the buyers perceptions that the salesperson has power in the supplier firm. Developing Trust in a Salesperson: Characteristics of the Relationship H8 Buying firm trust in the suppliers salesperson is positively related to perceived likability. H9 Buying firm trust in the suppliers salesperson is positively related to perceived similarity. H10 Buying firm trust in the suppliers salesperson is positively related to frequent business contact. H11 Buying firm trust in the suppliers salesperson is positively related to frequent social contact. H12 Buying firm trust in the suppliers salesperson is positively related to length of time the salesperson has called on the buying firm.

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Research Hypotheses(3)

Relationship Between Trust in the Supplier and Trust in the Salesperson H13 Buying firm trust in the salesperson is positively related to buying firm trust in the supplier firm. H14 Buying firm trust in the supplier firm is positively related to buying firm trust in the salesperson. Consequences of trust H15 Buying firm trust in a supplier firm is positively related to the buying firms selection of that supplier in a particular buying decision. H16 Buying firm trust in a suppliers salesperson is positively related to the buying firms selection of that supplier in a particular buying decision. Role of Trust in Future Purchase Intentions H17 Buying firm trust in a supplier firm is positively related to the buying firms anticipation of future interaction with the supplier.
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Results(1)

The sample frame comprised 678 members of the National Association of Purchasing Management. 210 completed questionnaires (a 31% response rate). Respondents were primarily male(76%) and averaged 15 years purchasing experience.

The suppliers primary business was most frequently listed as manufacturing(62%) or distribution(30%).
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Results(2)
H2 H3 H13
H6 H8 H9 H10 H17

Table 2Results of Three-Stage Least Squares Estimation

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Results(3)

We find that current supplier selection is not influenced by trust of the supplier firm or its salesperson. The key criteria for supplier selection are delivery performance and relative price/cost.

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Results(4)

This findings could reflect the fact that professional buyers are focus on objective evidence rather than on subjective assessments of trust. However, Our results also indicate that trust of the supplier firm and trust of the salesperson (operating indirectly through trust of the supplier) are related to anticipated future interaction.

Table 3Results of Maximum Likelihood Logistic Regression on Purchase Choice

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Discussion(1)

Our theory and results suggest that the calculative process of building trust could be applied more readily to supplier firms than salespeople. In addition to transferring trust from salespeople, buyers appeared to form trust in selling firms on the basis of characteristics of the firm (e.g., size) and actual behaviors (e.g., investing in customer specific assets).

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Discussion(2)

Lewicki and Bunker (1995) propose that there are different levels of trusting relationships. Relationships built on calculative trust are at the lowest and most fragile level. The highest levels of trusting relationships are based on internalizing the others desires and intentions. This suggest that the interpersonal trust engendered by salespeople and transferred to the supplier firm plays a key role in developing and maintaining enduring buyer-seller relationships.
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Discussion(3)

The framework provided by the five trust-building processes gives new theoretical insight into how trust is generated. A second contribution trust is engendered differ between salespeople and their employers.

A third contribution to theory emerges from the relatively large number of relationships considered in this research.
Finally, the study extends other research in the area of trust by exploring its role in a new context.

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Discussion(4)

Suppliers should engage in trust-enhancing activities. Its important for suppliers to manage customer perceptions of firm size. Buyers also could use size as a basis for transferring trust to unknown suppliers, relying on the experience of others. This suggests that marketers should emphasize customer satisfaction.
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Discussion(5)

Such Specific investments contribute to forging strong buyer trust in the selling firm, they can be expected to pay off in the long run. In addition, the results indicate that a buyers trust in a supplier firm is based on the suppliers salesperson. Therefore, the company should teach its salespeople how to develop trust.

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Discussion(6)

Similarity and likability also can bolster the buyers confidence in predicting the suppliers future behavior. Salespeople might be taught to exhibit likability be being friendly and making efficient use of the customers time. To project similarity, salespeople probably should establish common ground with the buyer.

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Discussion(7)

Salespeople also must master the technical skills necessary to convey expertise with respect to their products. Moreover, salespeople should contact customers often. Finally, salespeople should be rewarded for such trust-building behaviors, because they strengthen the link between the buying firm and the supplier.
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Conclusion

Supplier firms must make significant investments to develop and maintain customer trust. Our results suggest that though the process of building customer trust is expensive, timeconsuming, and complex, its outcome in terms of forging strong buyer-seller bonds and enhanced loyalty could be critically important to supplier firms.

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