Mechanisms and Dynamics in the Interplay of Trust and Distrust: Insights from project-based collaboration

Trust and distrust are two distinct organizing principles that play a critical role in interorganizational projects where highly interdependent organizations collaborate to build tailor-made and technologically complex solutions. Whereas an emerging body of research has debated the conceptual distinction between trust and distrust, this paper emphasizes the processual nature of trusting and distrusting and the interplay between them. Drawing upon insights from project-based collaboration in a complex products and systems industry, we explore the distinct cognitive and behavioral mechanisms through which trust and distrust work and orient firms towards optimism and watchfulness in the interaction. Our findings show that trust and distrust can act both as substitutes and complements through three interconnected dynamics—undermining, enabling, and compensating. These dynamics develop and recursively interrelate through interfirm interactions within single projects and in the broader network. We conclude by presenting our contributions to interorganizational trust literature and by proposing that the interplay of trust and distrust can have both positive and negative effects on the pursuit of project-based relationships.