Performance in the Open. How Operational Transparency Affects Interorganizational Trust Development

In interorganizational relationships, trust acts as coping mechanism for incomplete information. As organizations interact over time, the primary form of trust shifts from calculative to relational; trust is increasingly based on experience rather than economic calculus. The recent introduction of information technologies that increase transparency of operational processes across the partners in relationships reduces information asymmetries. This multiple case study of six industrial buyer-supplier dyad types investigates the resulting changes in interorganizational trust composition. My findings indicate that competence-based trust is replaced by automated performance control in the short- to medium-term and that goodwill-based trust is constantly measured against this performance control. Moreover, parts of goodwill-based trust, namely openness and honesty, are automated into the IT-system and become controllable. These changes in trust composition are accompanied by a newly emergent institutional trust into the transparency-inducing IT-system. These developments are not symmetrical; customer trust in suppliers is clearly changing while the composition of supplier trust towards customers is stable. I contribute to theory by delineating the relationship between increased operational transparency, interorganizational trust and control. My findings provide a more nuanced view into the trust-control nexus in the interorganizational governance literature, challenge the long-term orientation of interorganizational trust development theories and have implications for social network management.