Document(16)

Interorganizational Trust: Origins,Dysfunctions and Regulation of Rigidities

Sara Thorgren and Joakim Wincent1

Lulea University of Technology, SE-971 87 Lulea, Sweden, and 1Umea School of Business, Umea University,

and Lulea University of Technology, SE-971 87 Lulea, Sweden

Corresponding author email: [email protected]

This conceptual paper extends research on the downsides of developing trust to partners

in interorganizational relationships. The idea developed captures that, althoughinterorganizational trust generates benefits, a parallel process also produces undesired

rigidities. Firms’ flexibility in meeting a changing environment may thus be hampered

rather than enabled by the created interorganizational relationship. First, we theorize on

the micro-processes of how and why such rigidities develop already at low levels of trustand accumulate in parallel to the positive trust effects as trust builds stronger over time.

Second, we propose that the trust dysfunctions can be distinguished and moderated

separately from trust benefits. In doing so, we identify and discuss the moderatingpotential of a set of handling tactics when trust develops rigidities in the relationship:

competing, accommodating, avoiding, collaborating and compromising tactics. We

discuss implications in relation to research on trust, inertia and interorganizational

governance.

Introduction

Over the past decades, scholars have produced asignificant body of research on the positive effectsof establishing trust between cooperating organi-zations. It is acknowledged that trust, referring toa positive expectation that organizational part-ners will not act opportunistically despite situa-tions of uncertainty and apparent vulnerabilityand thus a confidence in the partners’ integrityand reliability (Madhok, 1995; Mayer, Davis andSchoorman, 1995; Rousseau et al., 1998), sig-nificantly contributes to exchange benefits ininterorganizational relationships, including re-duced negotiation costs, risk of betrayals, trans-action costs and search costs (e.g. Buckley et al.,2009; Gulati, 1995; Luo, 2002; McEvily, Perroneand Zaheer, 2003; Ring and Van de Ven, 1994;Smith, Carroll and Ashford, 1995; Squire,Cousins and Brown, 2009; Zaheer, McEvily andPerrone, 1998). While the evidence of the positiveexchange benefits is undisputed in receivedliterature, there have been recent attempts

recognizing that trust may, in fact, also bringcosts and risks. Although this position is rela-tively under-researched, academic contributionsclearly point out negative trust effects such aslack of objectivity and considering of alterna-tives, inhibited creativity, overconfidence andignoring of evidence speaking against one’spartners’ trustworthiness (e.g. Gargiulo andErtug, 2006; Patzelt and Shepherd, 2008; Wincentet al., 2010a; Zahra, Yavuz and Ucbasaran, 2006).The idea we develop and elaborate upon in this

conceptual paper captures that, although trustcreates a process that produces benefits (condi-tions facilitating value-creating exchanges be-tween trusting parties), a parallel process alsoproduces undesired rigidities. Such rigiditiesimply that the firm’s flexibility in meetingchanging external circumstances may be ham-pered rather than enabled by the created inter-organizational relationship (cf. Barnett andCarroll, 1995; Miller and Friesen, 1980). Therelationship rigidity thus becomes an obstaclethat prevents firms from timely response to

British Journal of Management, Vol. 22, 21–41 (2011)DOI: 10.1111/j.1467-8551.2010.00717.x

r 2010 The Author(s)British Journal of Management r 2010 British Academy of Management. Published by Blackwell Publishing Ltd,9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA, 02148, USA.

mailto:[email protected]

environmental changes (by ‘blindness’ to detectwhen the relationship is not effective and wherethere is a need of changing or dissolving therelationship, but also for the difficulty in actuallychanging or dissolving the relationship if neces-sary). By using insights from inertia theory(Barnett and Carroll, 1995; Hannan andFreeman, 1984; Hannan, Polos and Carroll,2002a, b, c), and specifically extending the re-search of inertia in interorganizational relation-ships initiated by Kim, Oh and Swaminathan(2006), we posit that this parallel process occursat the same time that organizations are buildingand harvesting benefits from trust.In arguing for such a parallel trust process we

build this paper around two main issues. First, wetheorize on the micro-processes of how and whysuch rigidities develop already at low levels oftrust and accumulate in parallel to the positivetrust effects as trust builds stronger over time.Second, we propose that the trust dysfunctionscan be distinguished and moderated separatelyfrom trust benefits. In doing so, we identify anddiscuss the regulatory potential of a set ofhandling tactics (competing, accommodating,avoiding, collaborating and compromising tac-tics) established in prior research (see Barker,Tjosvold and Andrews, 1988; Montoya-Weiss,Massey and Song, 2001; Rahim, 1983; Thomasand Kilmann, 1974) that may be used when trustdevelops rigidities in the relationship. The identi-fied tactics reveal the opportunities of separately,but simultaneously, moderating the parallelpositive and negative trust effects in a set oflisted situations in which rigidities could beconsidered particularly problematic. This meansthat it would be possible to find ways to reducesuch negative effects of high trust, while stillmaintaining its positive effects.In order to make our points, the paper is

structured as follows. First, we provide atheoretical background in which we present thetraditional view of trust and its benefits, priorresearch on the downsides of trust and a back-ground to why we will use R&D alliances toillustrate and exemplify our proposed ideas thatapply to interorganizational relationships ingeneral. Second, we develop a framework forhow rigidities parallel trust benefits and howthese effects can be separately moderated by a setof handling tactics. Finally, we present a discus-sion and conclusion where we summarize the

study, provide implications and outline directionsfor future research.

Theoretical background

The traditional view of trust and its benefits

Research on trust, which originated decades ago(see for example Deutsch, 1958; Rotter, 1971; Zand,1972), is based on the idea that in every relation-ship, including exchanges of one kind or another, itis impossible to monitor every little detail. Ininterorganizational relationships, where no organi-zation has formal authority over the other (Thorg-ren, Wincent and Ortqvist, 2009a, 2009b), thechances of monitoring details are further reduced.In such situations, partners are often interdepen-dent, but their exchanges are voluntary andunmonitored. The well-acknowledged view of trustas ‘comprising the intention to accept vulnerabilitybased upon positive expectations of the intentionsor behaviour of another’ (Rousseau et al., 1998,p. 395) means that with trust interorganizationalrelationships will be perceived as less risky; theinterdependence less bothersome; and thus ex-changes are enabled without being fully monitored(see for example Currall and Judge, 1995; Das andTeng, 1998). Further, strongly acknowledgingvulnerability means that the greatest relevance oftrust falls to sensitive situations where potentialinterference with individual interests, aims andvalues exists (e.g. Das and Teng, 1998, 2001;Krishnan, Martin and Noorderhaven, 2006).Trust is associated with greater understanding

and familiarity between parties (Gulati, 1995).This is important for cognitive closeness, whichrefers to the matching between partners’ mentalmodels and in how information is processed (e.g.Karamanos, 2003; Porac and Thomas, 1990).Thus, cognitive closeness in an interorganiza-tional relationship enables the use of heuristicsand simpler and faster decision making (e.g.McEvily, Perrone and Zaheer, 2003). Moreover,the positive expectations and beliefs concerningbehaviour in a trusting relationship will cause thepartners to be more willing to take risks that maybe associated with more commitment and ob-ligations (Perry, Sengupta and Krapfel, 2004;Uzzi, 1996). This will be important for relationalcloseness, referring to the overall resource com-mitments, reciprocity, and frequency and inten-sity of interactions (cf. Hansen, 1999; Tiwana,

22 S. Thorgren and J. Wincent

r 2010 The Author(s)British Journal of Management r 2010 British Academy of Management.

2008). Interorganizational trust stimulates rela-tional closeness because the relationship costs arereduced together with the potential risk ofconflict and need for contractual safeguards(e.g. Gulati, 1995; Ring and Van de Ven, 1994;Wincent, 2008; Zaheer and Venkatraman, 1995;Zaheer, McEvily and Perrone, 1998). Cognitiveand relational closeness are both considered toimprove conditions that facilitate exchanges andincrease cooperation (Smith, Carroll and Ash-ford, 1995). Drawing upon Mayer, Davis andSchoorman’s (1995) framework on trust, firms’experiences of exchange-facilitating conditionsfurther strengthen trust by enhancing previouslyheld perceptions about the partner’s trustworthi-ness. Such perceptions can strengthen trustbecause not only are the partner qualitiesassessed, but so is the relationship and itsevolution, particularly when combined with thenotion that a partner’s trustworthiness is oftendifficult to assess adequately early in a relation-ship (Sheppard and Sherman, 1998). This impliesthat partners that exhibit trust may be stimulatedto experience increases in trust (Lewicki andBunker, 1995). In other words, prior research hasprovided us with knowledge on the positivereinforcement process of trust.

Prior research on the downsides of trust

Research on trust suffers from optimistic bias(Gargiulo and Ertug, 2006). Although the darksides of trust are occasionally mentioned in priorresearch, there are only a few studies that haveexamined them theoretically or empirically. Ander-son and Jap (2005) elaborated on how closerelationships have a dark side as they can causedifficulties to detect (or possibly a tendency to alsodeny) problems in the relationship as they providethe parties with incentives to maintain the relation-ship, to build strong interpersonal relationships andto make relationship-specific adaptations and in-vestments. In a similar vein, Gargiulo and Ertug(2006, p. 174) argued that the net benefits from trust(lower monitoring, greater commitment and greaterexchanges in terms of scale and scope) have aninverted U-shape relationship. That is, at a certainlevel of trust, the net benefits start to diminish. Theirargument was that this is so because trust can leadto ‘blind faith’ that exposes the trustor to mal-feasance; satisfaction with the other party to suchan extent that underperformance is not detected;

and the taking on of unnecessary obligations whichwill constrain behaviour.Moving on to more specific topics and contexts

on the dark sides of trust, Langfred (2004)empirically examined when trust can be harmfulin teams. The theoretical idea underlying thatstudy is that when team members trust oneanother they do not exhibit monitoring to thesame extent. The results demonstrated that inteams that have high individual autonomy thisreduced monitoring because of trust among teammembers may result in performance loss. Zahra,Yavuz and Ucbasaran (2006) highlighted theliability of trust in another context, namely thecreation of new businesses within establishedcompanies. For example, if employees trust eachother and management there is a risk that itresults in lack of objectivity and strategic blind-ness because of too similar thinking. With regardto trust in a context of interorganizationalrelationships, Patzelt and Shepherd (2008) con-stitute an exception by shedding light on thedownsides of trust in demonstrating that trust isassociated with greater likelihood of persistingwith underperforming alliances.To the background of the limited theory

development of the dark sides of trust in general,and in interorganizational relationships in spe-cific, this paper makes several theoretical exten-sions. First, it contributes to developing theoryon how and why trust in interorganizationalrelationships may cause negative effects in termsof rigidities. Second, it contributes with newinsight to how these specific negative effects canbe suppressed, without necessarily suppressingthe positive effects. In theory, the suggestedsolution to overcome the dark sides in general(not with a specific focus on rigidities) is to findan ‘optimal’ level of trust, which is neitherinsufficient nor excessive (Gargiulo and Ertug,2006; Jeffries and Reed, 2000; Wicks, Bermanand Jones, 1999). That is, it is the level of trustthat is subject for regulation, not its effects. Inthis study we acknowledge that in practice itcould be problematic to know when an optimallevel of trust is reached, and even to deliberatelyreduce trust in the relationship without comple-tely damaging the relationship. As such, reducingthe level of trust is not necessarily the answer tolimiting the negative side effects of high trust.Prior research builds on a notion that the netbenefits display an inverted U-shaped relation-

Interorganizational Trust 23


ship and that the negative effects and positiveeffects cannot be regulated separately. In thisstudy we further make a contribution by propos-ing that instead of aiming for a hard-to-identifyoptimal level of trust, specific strategies can beused in situations to regulate trust benefits andnegative effects in terms of rigidities. Thesestrategies are specific and possible to use inpractical situations, while the theorizing aroundthem also reveals underlying mechanisms behindtrust processes and their effects. This means thatthis study is distinct from prior research on thedownsides of trust by furthering knowledge onhow and why trust may develop rigidities ininterorganizational relationships and by provid-ing a solution that is feasible in practice.

R&D alliances as illustrative context

In this paper, R&D alliances are used as a specificcontext of interorganizational relationships. Thereason for illustrating the proposed ideas in thissetting is that we consider rigidities an undesiredoutcome for firms in interorganizational relation-ships in general, but for firms in R&D alliances inparticular. The rationale to why rigidities may beproblematic in R&D alliances is that firmsinvolved in such arrangements are particularlyvulnerable to changes in external circumstancesand need to be flexible in their means to meetchanging demands, while they also need thelubricant in cooperative relationships that trustcan constitute. As development is crucial for theircompetitive and growth strategies, yet expensive,uncertain and time consuming to upholdindividually, R&D alliances or other externaltechnology sources including ‘any agreed-uponcooperative R&D arrangement between firms,such as joint ventures, consortia, technologypartnerships and informal networking arrange-ments’ (Nakamura, 2003, p. 47) are frequentlyused to access capabilities and spread the risksand costs of R&D development (see for exampleHagedoorn, Roijakkers and Kranenburg, 2006).Most firms consider themselves dependent uponpartners in order to succeed with their R&Ddevelopment (Edler, Meyer-Krahmer and Reger,2002). Despite high risks of unwanted knowledgetransfer, not sufficiently considering alternativesand other possible negative trust effects, given theincreasing pace of development and short pro-duct life cycles in these industries high levels of

trust are still of utmost importance for obtainingas high exchange benefits as possible (see Li et al.,2008; Wincent, Anokhin and Ortqvist, 2010).Without the highest trust benefits possible, theturbulence and time constraints in these environ-ments may cause severe difficulties for realizingthe objective with the R&D alliance to the extentthat it is not worthwhile maintaining or evenjoining such cooperation (Wincent, Anokhin andBoter, 2009). To reduce interorganizational trustto a level where negative effects of trust are notpresent to the same extent might not be anoption, even if practically feasible. High inter-organizational trust for obtaining necessaryexchange benefits while also causing negativeeffects thus brings a paradox. On the one hand,technology-intensive firms in R&D alliances willnot obtain the desired exchange benefits withouthigh levels of interorganizational trust. On theother hand, these firms may still face significantobstacles and suffer from negative effects by hightrust. This implies that these firms cannotsuccessfully manage trust effects by reducing thelevel of trust to any of their partners (i.e.deliberately lowering the level of trust will resultin fewer exchange benefits), nor is it likely thatthey can build an integrated focal networkstructure consisting of a mix of close relation-ships and arm’s-length relationships to create an‘aggregate’ optimal mean level of trust (Uzzi,1997). Managing a network with a mix of hightrust relationships and low trust relationships isnot always feasible and the best option (e.g. it isnot always a realistic option to build ‘back-up’R&D relationships and spread the risks in such ahigh turbulent environment). Consequently, firmsneed to consider additional options to managetrust relationships in R&D alliances. Therefore,in this paper we build a framework which mayapply for interorganizational relationships ingeneral, while we use R&D alliance relationshipsto provide illustrative examples of situations inwhich the trust effects may become particularlyevident and how they may be moderated.

Rigidities paralleling undisputed trustbenefits

An inertia approach to trust

While problems of inertia have been outlined inprior research, antecedents to interorganizational



inertia have been of less focus. Although im-plicitly assumed, a review of the literature revealsonly one recent study that has at least touchedupon this issue. In a time when organizationsextensively establish interorganizational relation-ships for competitive purposes, Kim, Oh andSwaminathan (2006) initiated the exploration ofinertia in a network context. Their conceptualmodel takes into account the organization’sinternal characteristics (age, size, prior networkchanges), the characteristics of dyadic relation-ships (duration, size, multiplexity), the networkposition (structural holes, status) and the externalenvironment (competition, conformity pressure)for explaining resistance to changing and dissol-ving interorganizational relationships. Theirmodel is comprehensive in terms of building onand integrating prior work on inertia into aunified model, spanning intra-organizational,interorganizational and environmental aspects.However, even though they use a relationshipperspective to develop the mechanisms at play intheir model, they do not explicitly explore howtrust is related to inertia, besides noticing thattrust develops in long-enduring and multiplexrelationships which, in turn, are factors consti-tuting constraints on relationship change.

Interorganizational closeness and rigidities

In this paper we contend that both the relationaland cognitive closeness that trust creates may playa role in developing rigidities in interorganizationalrelationships. The theoretical background for thisclaim originates from inertia theory, which de-monstrates that when there are strong inertialforces organizations respond relatively slowly tothreats and opportunities (see for example Hannanand Freeman, 1984; Hannan, Polos and Carroll,2002a, b, c). The core of the inertia conceptincludes both resource ;and routine rigidity (Gil-bert, 2005). Both resource and routine rigiditiescause difficulties in making changes, resources forchanges in ‘resource investment patterns’, androutines for changes in ‘the organizational pro-cesses that use those resource investments’ (Gil-bert, 2005, p. 741). Such rigidities are also relevantin an interorganizational setting and for inter-organizational relationships such as R&D alli-ances. Organizations develop a collectiveunderstanding on how tasks should be executedin the interorganizational relationship (cf. Zollo,

Reuer and Singh, 2002); they develop routinesconcerning which partner does what in therelationship and how this is to be executed.However, these patterns may become rigid andmake it difficult to implement changes. From aninertia perspective, several studies have providedinsights on the importance for organizations toengage in exchanges that ensure the resources thatthey need (Gilbert, 2005). However, to gain theneeded resources also requires certain actions fromthe organization in return; hence, there will bemutual resource investments. Because of thisinterdependence due to resources, changes maybe difficult to implement. As such, the develop-ment of routine and resource rigidities in inter-organizational relationships may make it difficultto respond in a timely manner to environmentalchanges such as technological and market changes(Kandemir, Yaprak and Cavusgil, 2006) as well aschanges in resource munificence (Castrogiovanni,1991).The influence of trust on relational closeness

can ultimately contribute to rigidities in resourcesand routines. The alliance literature suggests thatthe opportunities to pool resources are oneprominent advantage of interorganizational re-lationships (see for example Chung, Singh andLee, 2000; Harrison et al., 2001; Wincent et al.,2010b). The reduced need for monitoring andsafeguards in high trust relationships enablesexchange and relationship routines to be builtthat impose only small costs upon the partners(Gulati, 1995; Ring and Van de Ven, 1994;Zaheer and Venkatraman, 1995). The opportu-nity to narrow one’s own scope of operations andrely on partners for other operations, however,creates interdependence between the alliancepartners. A risk exists, therefore, that thisrelational closeness will be subject to relationallock-in (Gargiulo and Ertug, 2006). Thus, anychange in the interorganizational relationshipwould be considered in light of the costs it wouldincur (both by changing the existing conditionsand by establishing new relationships). There-fore, the resulting resource interdependence andinformal relationship routines between partnersin relationships such as R&D alliances couldconstrain the capacity and motivation to imple-ment interorganizational change.In addition, the influence of trust on cognitive

closeness may also contribute to resource androutine rigidities. Interorganizational relation-



ships present several learning opportunities (cf.Jones and Hendry, 1994). In a relationship wherepartners trust one another, it is likely that‘common’ benefits through joint activities canbe earned, as well as ‘private’ benefits by learningskills from partners (Khanna, Gulati and Nohria,1998). For example, in an R&D alliance withpositive expectations about one another, thepartners have the opportunity to learn criticalskills and know-how from each other. In R&Dcooperation, these may be skills that are other-wise difficult to acquire on a market and couldnot be accessed in the firm’s own operations.These critical skills, however, are one of theprominent features that distinguish one organiza-tion from others. As a result of high trust andtransparency, the positive assessments of eachother is likely to lead the partners’ operations tobecome more and more similar to one another,but more and more dissimilar from other non-partner organizations. This phenomenon willalso create interdependence because much ofthe exchanged information and skills will beconfidential to external parties, and consideringthat it originates from R&D operations most of itwill be tacit and hard to replicate for those on theoutside. Further, discussions and learning will beon such a specific level that partners will beinclined to continue interacting with these samepartners for resources. Moreover, because of thepositive expectations held on each other, routineswill arise for how the partners can learn aboutand earn private benefits. Because of the hightrust, it is likely that they are influenced andprogrammed to value the same parameters andprefer similar behaviour based upon learningfrom a particular partner and will repeat patternsobserved. Thus, from cognitive closeness comesthe risk of cognitive lock-in (Gargiulo and Ertug,2006); i.e. the interorganizational relationshipcan become isolated from new influences andgenerate clouded perceptions that together in-hibit the competence, capacity and motivation tochange the relationship. The above considera-tions of relational and cognitive lock-in mechan-isms suggest the following proposition.

P1: The influence of interorganizational truston interorganizational closeness can ultimatelycreate rigidities in routines and resources inparallel with creating conditions facilitatingexchanges.

Relationship rigidities and reinforcement of trust

Once rigidities are caused by interorganizationaltrust, we argue that this further strengthens trustindirectly. This argument relates to the well-accepted Mayer, Davis and Schoorman (1995)model on trust evolution (for other trust devel-opment models, see for example Butler, 1991;Kasper-Fuehrer and Ashkanasy, 2001; Sheppardand Sherman, 1998; Whitener et al., 1998), whichconveys that trustworthiness cues influence thelevel of trust (see also Gillespie and Dietz, 2009).In extending the idea that organizations may beboth forward-looking and backward-looking intheir assessment of partner trustworthiness, wesuggest a self-fortifying reinforcing feedbackloop: once cognitive and relational lock-in effectshave caused rigidities, they can stimulate apositive assessment of trustworthiness and thusindirectly create an even stronger associationbetween rigidities and trust.The reason for expecting this is that rigid

routines and rigid resource exchanges will signalhigh partner trustworthiness, and create evenmore positive partner expectations and willing-ness to accept vulnerability. From an inertiatheory perspective, the reasoning behind thisargument is that rigidities signal a successfulhistory (Barnett and Carroll, 1995; Hannan andFreeman, 1984) and a promising future. Positiveexpectations of intentions and behaviour arenourished when it is perceived that the otherparty has taken risks and adapted to the ex-change relationship (Das and Teng, 1998). Bothrigid resources and routines may signal suchconditions. The established resource exchangesand routines have inevitably required the part-ners to take risks in the relationship. Theserigidities also signal that partners not onlypossess resources important for common and/orprivate benefits to be earned in the relationship,but also that these resources will be shared andtransferred efficiently (i.e. there has been asuccessful adaptation to the relationship). In anR&D alliance, this could be evident whenpartners invest in relation-specific assets (e.g.IT, laboratory or technology investments) thatwould be of limited value without the alliancepartner. Assessing future behaviour, developedrigidities in resources and routines may alsoinfuse positive expectations among the partners.With routines that may be difficult to change and



mutual resource investments, partners may assessthat acting in a distrustful way does not outweighthe consequences that would follow (e.g. Rous-seau et al., 1998; Sheppard and Sherman, 1998).Thus, resource and routine rigidities maystrengthen the positive perceptions about thepartner’s intentions and behaviour for futuresuccessful exchanges and, in turn, reinforce trust.In addition, in an interorganizational relation-

ship characterized by rigidities it is likely thatthere are both favourable and less favourableoutcomes. Organizations may, however, be posi-tively biased in their evaluation of such cues dueto the otherwise well-functioning resources androutines of the relationship. In relationshipswhere resource and routine rigidities are devel-oped through trust, the partners have gainedexperience and developed expertise and compe-tence in how to gain benefits from this specificrelationship, and are probably biased to repeatthese patterns and structures (cf. Amburgey andMiner, 1992; Haleblian, Kim and Rajagopalan,2006; Kelly and Amburgey, 1991). Unfavourableoutcomes may be attributed to other externalfactors than partner perceptions (cf. Hatzakis,2009; Tomlinson and Mayer, 2009). Consequently,negative outcomes may not be fully included in thetrustworthiness assessment, meaning that mainlypositive trustworthiness cues reinforce the currenttrust. Taken together, these considerations point tothe following proposition.

P2: Interorganizational trust is indirectly strength-ened by resource and routine rigidities as theysignal positive partner trustworthiness cues.

Moderation of trust benefit–rigidityconsequences

In the preceding sections, we argued that theinterorganizational closeness developed frominterorganizational trust may lead to resourceand routine rigidities and that a positive feedbackloop connects rigidities back to trust, i.e. themore rigidities, the more trust is built in therelationship and in turn the more rigidities willdevelop. Acknowledging that rigidities are pro-blematic when trust also has several positiveoutcomes, we next develop regulatory proposi-tions on how undesired rigid outcomes and

desired benefits are weakened or strengthened,respectively. Our issue of regulation is distinctfrom prior research. We do not aim to proposehow to regulate the level of trust per se (cf.Gargiulo and Ertug, 2006; Wicks, Berman andJones, 1999), but rather how the indirect effectscaused by trust can be moderated. We recognizethat regulating trust effects is non-trivial. In ourfocus on when, where and how such regulationworks, we emphasize some important issues fromprior research to point out where such regulationis possible to accomplish.Our approach on such regulation takes its

stance in that the greatest relevance of trust is insensitive situations where potential exists tointerfere with individual interests, aims andvalues (e.g. Krishnan, Martin and Noorderha-ven, 2006). The reasoning is that if tensions arisedue to differences in values, beliefs, perceptionsand methodologies, interorganizational trust canenable efficiency by providing some reliability tothe relationship. Following these acknowledgedclaims in the trust literature, we believe there arereasons to assume that although trust generatesbenefits in sensitive situations (where partnersmay otherwise block one another’s interests), thisis also where rigidities in routines and resourcesmay become particularly prominent and proble-matic and thus where regulatory effects would beparticularly evident (e.g. Anderson and Jap,2005; Krishnan, Martin and Noorderhaven,2006; Zahra, Yavuz and Ucbasaran, 2006).For illustrative purposes and clarification wedescribe four potential sensitive situations incooperative interorganizational relationships inTable 1: problem sharing, benchmarking, nego-tiation, and evaluation (see also McKnight andChervany (2001) for a more thorough examina-tion of situations related to trust behaviour).Research also indicates that these situations areparticularly common in interorganizational rela-tionships such as R&D alliances (see for exampleEisner, Rahman and Korn, 2009; Fey andBirkinshaw, 2005; Grevesen and Damanpour,2007). The second column of Table 1 describeshow trust can benefit such situations, while thethird column gives examples of how rigidities cancause difficulties in contexts such as R&Dalliances. In essence, Table 1 illustrates how trustmay create obstacles that prevent organizationsengaged in interorganizational relationships from– individually or jointly – responding in a timely



manner to changes outside their constellation.For example, when markets change and there is achange in composition of customers or theirpreferences (Jaworski and Kohli, 1993) it isproblematic if rigidities cause difficulties inadapting to these changes because they havebecome rigid in routines and resources in therelationship. Moreover, rigidities may also causeproblems when there are changes in underlyingtechnologies. For instance, if there are changes in

standards or specification of end products, thereare probably also changes in which organizationspossess the most competitive technological com-petences. Thus, it will be problematic if partnersare not questioning advice provided and activelyand objectively evaluating which partners wouldbe best for them at any given point in time. Evenif they do that, however, the rigidities may causethem difficulties to dissolve the relationship ormake changes in it, which gives them a dis-

Table 1. Illustrative benefits and rigidities in trust situations

Situations where trust is

particularly

important for creating

interorganizational value

Examples of beneficial outcomes Examples of rigidity issues

Problem sharing

(e.g. when partners get together to

open up and share significant

problems or weaknesses around

technical issues, products,

production, markets and

marketing)

Problems may be easily shared and solved;

the parties will quickly be on the same

page and perceive it to be relatively safe to

listen to one another and work together to

find the best solutions for the problems

they experience

There may be suboptimal problem sharing;

partners may lose their scepticism and be too

internally oriented when it may be better to

search outside the constellation for the best

equipped actor for the problem at hand. There

is a risk of unintentional restriction to the

exposure of ‘old information and solutions’.

Moreover, through low monitoring partners

may forget to question and filter proposed

solutions and given information because of the

safety and faith embedded in the relationship

Benchmarking

(e.g. when partners meet to show

and discuss strengths and

possibilities for learning or

improvements carried out by aid

of exchanging information, enable

provision and access to knowledge

resources and advice provision)

The greater willingness to be vulnerable

and the higher predictability in the

relationship, the need for monitoring and

safeguards may decrease because partners

are confident in one another. This

enhances the transfer of knowledge by

reducing the costs of coordinating the

benchmarking procedures. Also, the

actual exchange may increase in scope and

quality because of faith and the small

perceived risk of opportunistic behaviour

and the motivation to nourish future

exchanges

Less need for monitoring and safeguards may

lead to inadequate knowledge transfer;

transferred knowledge is not thoroughly filtered

and there is less active information-seeking

behaviour generating new and unexpected

findings and combinations. Thus, knowledge

may be sent and absorbed in a routine manner,

but questioning whether this knowledge is

correct, whether it is what the organization

needs, or whether there is a need for change of

content, form or source may be neglected

Negotiation

(e.g. when partners join for

negotiations around production,

information technology and

marketing, or issues relating to

the interorganizational

organization and objectives)

There may be easier negotiations, with

more predictability and less risk of

opportunistic behaviour; faith will result

because fewer conflicts may arise. Instead

communication and joint actions may be

enhanced

It may be more difficult and sensitive to address

problems in the relationship because of a fear of

destroying the good parts of the relationship.

Due to the absence of cynicism and scepticism,

problems may also possibly be interpreted as

temporary, giving incentives to not approach

problems immediately after detection. Hence,

problems may be left unaddressed for extended

periods

Evaluation

(e.g. when partners meet to

evaluate output, finances, network

organization, governance and

continuation, and make strategic

decisions)

Open and honest communication may be

stimulated because of hopes for the future.

The relationship may be constructively

evaluated and developed with joint goals

in mind

Overly positive evaluations may be a result of

little vigilance, clouded perceptions and the risk

that the organization prioritizes continuing the

relationship before it scrutinizes current

conditions (process and outcome) when

considering the costs of establishing a new

relationship. Hence, the relationship may

continue under non-optimal forms



advantage in comparison to competitors that arenot locked-in in a relationship. From this itfollows that regulation of rigidities is highlyrelevant in such situations.When trust and rigidities develop in an inter-

organizational relationship, we argue that it wouldbe possible to deliberately approach sensitivesituations (where these rigidities are particularlyprominent and problematic) such as those pre-sented in Table 1 with specific tactics that cansimultaneously regulate the issues pertaining torigidities and the positive outcomes. We particu-larly draw upon the conflict-handling literature toapproach sensitive situations such as those pre-sented in Table 1, where trusting partners addressvulnerability, interdependence and risks. In devel-oping propositions of how benefits can be keptintact while avoiding the risks accompanyingrigidities, we acknowledge the five-tactic categor-

ization (competing, accommodating, avoiding,collaborating and compromising tactics) elabo-rated in prior research (see Barker, Tjosvold andAndrews, 1988; Montoya-Weiss, Massey andSong, 2001; Rahim, 1983; Thomas and Kilmann,1974), but extend it to interorganizational relation-ships. More specifically, not interested to directlyregulate trust levels, we apply the tactics asmoderators of the relationship between closenessand its outcomes as argued in Proposition 1, inregard to both rigidities and benefits. The fivetactics and how we posit they can be applied tointerorganizational interaction are described inTable 2. The regulation effects of each conflict-handling tactics for trust benefits and rigidities (asargued for in Propositions 3–7 below) are illu-strated in Figure 1 by the dotted lines and theirnew values (b) in comparison to the straight, solidlines displaying the unregulated effect (a).

Table 2. Tactics and interorganizational interaction

Conflict-handling tactic Definitiona Interorganizational interaction

application

Interorganizational interaction

example

1. Competing The pursuit of own

concerns at others’

expense

Organizations employing this strategic

intention try their very best to win

issues and secure their own interest at

the cost of others in the

interorganizational interaction

A party might conceal its actual costs

to appear as a competitive partner in a

joint project. In this way, it

strengthens its own market position,

but at the same time risks project

failure if the related costs become

unmanageable

2. Accommodating Neglecting own

concerns for the

satisfaction of

others’ concerns


intention are obliging in their

interaction around interorganizational

issues

A party might decide to agree on a

joint solution they believe is in the best

interest of the other party, as a gesture

of goodwill aimed at maintaining the

interorganizational link and building

social credit for future issues

3. Avoiding No immediate

pursuit of either own

or others’ concerns


intention avoid confrontation and

show indifference toward interaction

around interorganizational issues

A party might want the

interorganizational relationship to be a

legitimizing arrangement in theory

rather than in practice. It thus shows

no interest in being active in taking

and following joint decisions

4. Collaborating Attempts to find

solutions fully

satisfying both own

and others’ concerns


intention aim to find integrative

solutions in interaction around

interorganizational issues

Each part may be open about the value

they can add to the relationship by

revealing comprehensive and truthful

information about themselves and

suggest how this could be integrated to

a joint solution with the other party

5. Compromising Attempts to find

solutions partially

satisfying both own

and others’ concerns


intention aim to find expedient

solutions in interaction around

interorganizational issues

A party may restrict its provision of

too much detailed information at once

because this can be to their

disadvantage if they still have to

negotiate and compromise to find an

acceptable solution

aDefinitions build upon the recognized work by Thomas and Kilmann (1974).



Competing tactic regulation

The first tactic proposed to moderate therelationship between interorganizational close-ness and benefits and between interorganizationalcloseness and rigidities is a competing tactic. Acompeting tactic applies when a party entersvulnerable, interdependent exchange situationswhere the risk of conflicting aims, goals andvalues exists and the party’s intent is to pursue itsown concerns, even though it may be at theexpense of others (Thomas and Kilmann, 1974).In an interorganizational setting, when represen-tatives of several organizations meet, this tacticmeans that they enter a situation with the intentof leaving with a solution that indicates they‘won’ in some sense. Whereas ‘winning’ couldoccur by steadfastly holding on to a certainposition, it could also occur by means such asconcealing information (Montoya-Weiss, Masseyand Song, 2001). Although one may intuitively

believe it is fairly unlikely that this tactic is usedwhen partners trust each other, joint R&Dinvestments imply changes in areas such as tooland process development, common computerizedcodes and joint software – practices that areimportant for any organization (Larson, 1992) –whereby it still can be a tactic that organizationsemploy in negotiation situations for example. Asa brief example, consider an R&D alliance andthe situation that the partners have negotiationsaround screening and evaluating options abouthow to develop patent and patenting domainmaps that can be used to produce future productsfrom a jointly developed technology. Eventhough the partners trust each other, it iscommon that the partners approach these nego-tiations with the intent to gain more advantagesor a better stake at the cost of its partners.Overall, the literature on R&D alliances ac-knowledges a host of situations where such acompeting tactic can be used (including goal

Figure 1. Tactics regulating interorganizational trust benefits and rigidities: (a) competing tactic regulation; (b) accommodating tactic

regulation;(c) avoiding tactic regulation; (d) collaborating tactic regulation; (e) compromising tactic regulation



setting discussions, setting provisional resourcedistribution agendas, strategic technology plan-ning and project selection).Based upon inertia-based models on decision

making (see for example Amburgey and Miner,1992), we argue that the competing tactic may beuseful for reducing the undesired outcomesassociated with rigidities, but that it is alsoexpected to erode the benefits that trust cangenerate in such situations. The background isthat a party taking the initiative of a competingtactic will be prepared to make any changes in therelationship that are necessary to pursue its ownconcerns (Thomas and Kilmann, 1974). How-ever, when a party uses this tactic, all parties willbecome alert to new ways of investing andorganizing resources. The use of this tactic willinform other parties that they would do best tocheck that they are not exploited in the relation-ship (Kelly and Amburgey, 1991) or whether theycould earn a higher return on investments inanother relationship (cf. White and Lui, 2005).Hence, partners may seriously consider otheropportunities external to the relationship (see forexample White, 2005). At the same time, how-ever, this tactic will also stimulate uncertaintyperceptions within the relationship that will affectthe link between interorganizational closenessand benefits: the competing approach will simplyimply difficulties in assessing the future continua-tion of the relationship. Acknowledging resourcedependence mechanisms and mechanisms relatedto the rigidities that arise due to joint dependenceof routines and exploitation processes (Gilbert,2005), the atmosphere will become less safe; theneed for monitoring and safeguards will increase;negotiations will become harder; and there will beless open and honest communication (Richmond,Wagner and McCroskey, 1983). Consequently,attention is brought to vulnerability issues andthe potential risks of conflicting interests (Fried-man et al., 2000). This means that such a tacticincreases negotiation costs and perceived risk ofbetrayal, which will weaken the link betweeninterorganizational closeness and exchange-facil-itating conditions. Overall, this may have themoderating effect that both the desired andundesired outcomes generated by interorganiza-tional closeness are weakened by the use of acompeting tactic. This competing tactic regula-tory effect is illustrated in Figure 1(a), where thedotted lines illustrate how the regulated level of

benefits and rigidities (b) are both lower com-pared to the unregulated level (a). This suggeststhe following proposition.

P3: Approaching sensitive situations in aninterorganizational relationship between trust-ing partners with a competing tactic moderatesthe relationships between interorganizationalcloseness and outcomes in such a way that itweakens rigidities in routines and resources,but at a cost of weakened exchange-facilitatingconditions.

Accommodating tactic regulation

The second tactic proposed to moderate therelationship between interorganizational close-ness and outcomes is an accommodating tactic.An accommodating tactic is the complete oppo-site of a competing tactic. It refers to a statewhere the actor neglects its own concerns in avulnerable situation in order to satisfy the other’sconcerns (Thomas and Kilmann, 1974). Thistactic may be used to display goodwill or whenan issue is considered of little importance, andthus there will be more to gain from beingreasonable and satisfying the other party eventhough it means forgoing one’s own concerns(Montoya-Weiss, Massey and Song, 2001). Anaccommodating tactic in an interorganizationalsetting means that one party may agree todecisions that primarily benefit another partyand provide few immediate returns, and may beevident in a wide range of sensitive situations, notleast in evaluation situations in the interorganiza-tional relationship. As a brief example, such atactic may be used among R&D alliance partnersthat have invested in relation-specific assets andhave a high degree of dependence in their jointresearch and development (cf. Gulati and Sytch,2007). When evaluating and deciding on how tocontinue the cooperation, some organizationsmay choose to employ an accommodating tacticto not risk that they lose the relationship whichhas high potential to generate relational rents(Dyer and Singh, 1998). Other examples could befound in early stages when the agreement is set upin the development of a broad framework ofbroad objectives and principles. Here a firm mayneglect and give up some interests to satisfy thepartner although this may be at the cost of ownmatters.



We argue that an accommodating tactic maystrengthen the links to both undesired anddesired outcomes from interorganizational close-ness. First, this tactic is expected to strengthenthe relationship between interorganizational clo-seness and rigidities in routines and resourcesbecause, when a party uses an accommodatingtactic, no proactivity or own input is infused tothe relationship. The tactic is not focused oncreating value in the situation, but rather inmaintaining the relationship. The party takingthe initiative for the tactic may make suchadaptations to the other party that its owninterests become completely neglected (see forexample Fry, Firestone and Williams, 1983). Onthe other side, the party whose interests are takeninto account may not find any incentives to bealert to any changes either. As the inertialiterature acknowledges that not accounting forcontingencies and constraints related to organi-zational environments will influence narrownessof routines and exploitation processes that act asbarriers to needed organizational changes (Han-nan and Freeman, 1984), this will nourish thecreation of rigidities. Research and theorywitness a vast support for the existence of inertiaand that it can be detrimental when it starts todevelop. For example, Amburgey and Miner(1992) illustrated how firms repeat their previousactions for mergers, without questioning theirdecisions or behaviour. However, this tactic mayalso stimulate positive consequences by reducingpossible uncertainty regarding the future of therelationship. An accommodating tactic manifeststhe willingness to serve the other party’s interestsand enhances interaction and communication(see Richmond, Wagner and McCroskey, 1983;Wayne et al., 1997). This means that partnersmay simultaneously make use of the benefitsthrough simplified exchange structures and thericher exchanges that interorganizational close-ness fosters. The regulatory effect of an accom-modating tactic is displayed in Figure 1(b), wherethe dotted lines illustrate how the regulated levelof benefits and rigidities (b) are both higher thanthe unregulated level (a). This suggests thefollowing proposition.

P4: Approaching sensitive situations in aninterorganizational relationship between trust-ing partners with an accommodating tacticmoderates the relationships between interorga-

nizational closeness and outcomes in such away that it strengthens rigidities in routines andresources, at the same as it also strengthensexchange-facilitating conditions.

Avoiding tactic regulation

The third tactic proposed to moderate the rela-tionship between interorganizational closenessand outcomes is an avoiding tactic. An avoidingtactic means that the actor is not active in anysense whatsoever; the actor does not activelypursue its own or the other party’s concerns – itsimply side-steps issues (Montoya-Weiss, Masseyand Song, 2001; Thomas and Kilmann, 1974). Inan interorganizational setting, this means thatone party may attend meetings and exchangesituations, but play a passive role. There may attimes be an interest in buying time or focusing onsome other issue in the relationship (see forexample Rahim, 2002), e.g. in negotiation situa-tions. When partners working with joint R&Dprojects trust each other, one partner may showinterest in deepening and widening the relation-ship, possibly by switching to more explorationthan exploitation activities in the relationship (cf.Lavie and Rosenkopf, 2006). This avoiding tacticmay then be used by a partner that hesitates toengage in projects beyond what they already havetogether.The avoiding tactic is expected to moderate the

relationship between interorganizational close-ness and desired and undesired outcomes bydemolishing beneficial outcomes, but still alsokeeping rigidities in routines and resources intact.Regarding rigidities, we argue that they stayintact if an avoiding tactic is applied in situationsthat could be characterized by conflicting inter-ests. According to inertia theory, this may occurbecause avoidance does not lead to any new ideasand openness in the situation, but still possiblyblocks change by the avoidance of any suchdecisions and may eventually result in suboptimalsolutions (see for example Friedman et al., 2000).In a relational context, Gargiulo and Benassi(2000) highlighted the trade-off between having asafe network and having a non-safe one. Throughcohesive networks, they show that norms en-couraging secure cooperative behaviour candevelop but also restrict the initiation of relation-ships beyond the existing ones, making it difficult



to adapt to environmental changes. Moreover,Uzzi (1997) concluded that there is a point wherenot speaking up can become detrimental. Insteadof being solely beneficial, the trust, exchange ofinformation and joint efforts, may cause feuds,exploitation and little circulation of new ideas.Moreover, an avoiding tactic may also weakenthe link from closeness to exchange benefits. Thereason is that avoidance will stimulate uncer-tainty perceptions regarding the future continua-tion of the relationship. When a part is not activeit will be difficult to see the future returns and itmay be difficult to believe that a norm of reci-procity governs the exchanges in the relationship(see Blau, 1964; Muthusamy and White, 2005).Based on this reasoning, Figure 1(c) illustratesthe regulatory effect of an avoiding handlingtactic, where the dotted line indicates how theregulation results in a lower slope such that thelevel of benefits is reduced and the rigidities arekept intact (b) in comparison to the unregulatedlevel (a). This suggests the following proposition.

P5: Approaching sensitive situations in an inter-organizational relationship between trustingpartners with an avoiding tactic moderates therelationships between interorganizational close-ness and outcomes in such a way that itkeeps rigidities in routines and resources un-affected, and also weakens exchange-facilitatingconditions.

Collaborating tactic regulation

The fourth tactic proposed to moderate therelationship between interorganizational close-ness and outcomes is a collaborating tactic. Acollaborating tactic is the opposite of an avoidingtactic. Entering a sensitive situation with acollaborating tactic where there are conflicts ofinterest means that the actor is actively trying tofind solutions that will satisfy all parties (Thomasand Kilmann, 1974). In an interorganizationalsetting, this means that when several parties meet,they will explore alternatives and solutions indepth in an effort to reach full satisfaction. Thistactic may be used for situations where learning,merging of perspectives and integrative solutionsare important, e.g. in situations of benchmarkingand problem sharing. For example, when a firmin an R&D alliance has problems with con-formance of the partner’s quality requirements

for joint development operations, it is likely thatthe partners are willing to discuss the problemsand how they can work for a solution (seefor example Selnes, 1998). In such situations,some partners may choose to use a collaboratingtactic.We argue that a collaborative tactic moderates

the relationship between interorganizational clo-seness in such a way that beneficial outcomes arenurtured, whereas undesired lock-in effects re-sulting in rigidities are mitigated. Duysters andLemmens (2003) pointed out the risk of single-minded relationship behaviours that focus uponconstraining to secure own benefits instead ofalso enabling others. In R&D and technicalcollaboration, the technology profiles of partnerscan become too similar and there can beproblems for realizing potential innovation.When a party uses a collaborating tactic it infusesopenness to the situation and the relationship,which is necessary when actively engaging infinding fully satisfying solutions (Blankenburg-Holm, Eriksson and Johanson, 1999). Fullysatisfying solutions are not easily achieved andthe parties must inevitably be open towardchanges of existing patterns and structures. Withan open and complete discussion on causes,alternative solutions and consequences of solu-tions, any adaptation of interests are made inorder to create value in the situation (see forexample Fischer and Ury, 1991). Consequently,with a collaborative tactic, sensitive situationswill be viewed in a clear light, which reduces thedevelopment of rigidities. Moreover, the colla-borative tactic may stimulate benefits. Similar tothe accommodating tactic, the collaboratingtactic stimulates the reduction of possible un-certainty perceptions regarding the future of therelationship. When a party displays that it hasconcerns for others than itself, this providespromise for the future and will further theenabling of deep and rich exchanges (Li et al.,2008). Following this, Figure 1(d) illustrates theregulatory effect of a collaborating handlingtactic, where the dotted lines indicate how theregulation results in a curve shift such that thebenefits increase whereas the rigidities are re-duced (b) in comparison to the unregulated level(a). This suggests the following proposition.

P6: Approaching sensitive situations in an in-terorganizational relationship between trusting



partners with a collaborating tactic moderates therelationships between interorganizational close-ness and outcomes in such a way that it weakensrigidities in routines and resources, while itstrengthens exchange-facilitating conditions.

Compromising tactic regulation

The fifth tactic proposed to moderate the rela-tionship between interorganizational closenessand outcomes is a compromising tactic. Acompromising tactic falls between the competingand accommodating tactics and between avoid-ing and collaborating as well (Thomas andKilmann, 1974). The actor is not trying to satisfysolely his/her own or the other’s concerns, but isalso not as inactive as the avoiding tactic nor asactive as the collaborating tactic. Rather, thecompromising tactic is an attempt to find asolution that is acceptable to all parties involved,but does not necessarily fully meet all aims, goalsand values (Montoya-Weiss, Massey and Song,2001). This tactic may be used when issues are ofmoderate importance, e.g. in evaluation situa-tions. As an example, R&D partners may use thistactic when evaluating the relationship by meet-ings intended for discussion of problem trackingtemplates and relationship evaluation forms orother checklists, which occur in most post-alliance get-togethers where a possible continua-tion and upcoming strategic decisions in theirjoint relationship are on the agenda. On manyoccasions, a firm may not be willing to fullysatisfy the partner’s needs because of conflictswith the own goals, whereas it still finds itimportant to find an acceptable path for thefuture since they are also cooperative partners.We argue that a compromising tactic is

expected to reduce rigidities, while it maintainsbeneficial outcomes. Similar to the collaborativetactic the infused openness by this tactic willreduce the risk that parties become burdenedwith rigidities in routines and resources. Theactiveness in finding solutions will necessitateopenness that can reduce the risks associated withrigidities, which implies that the capacity andmotivation to change is not likely to be influencedor constrained by relationship isolation andhindering of new information and perspectivesfrom reaching the relationship (Gargiulo andErtug, 2006; Maurer and Ebers, 2006). When aparty uses a compromising tactic, we also argue

that the beneficial outcomes will be kept intact(and not increase as with a collaborating tactic).With intermediate activity and effort, there is noreason to expect that this tactic will createuncertainty perceptions regarding the relation-ship future. Neither is there a reason to expect thecompromising tactic to increase the certaintyaround the relationship continuation, as with thecollaborative tactic where investments and ad-justments to the relationship are more substantialin finding fully satisfying solutions. Thus, weexpect that a compromising tactic will keep thebeneficial outcomes intact. Figure 1(e) shows theeffects of a compromising tactic regulation, wherethe dotted lines illustrate how rigidities arereduced and benefits are kept intact (b) incomparison to the unregulated level (a). Thissuggests the following proposition.

P7: Approaching sensitive situations in an in-terorganizational relationship between trustingpartners with a compromising tactic moderatesthe relationships between interorganizationalcloseness and outcomes in such a way that itweakens rigidities in routines and resources,while exchange-facilitating conditions remainunaffected.

Discussion

We have built this conceptual paper highlightingsome of the downsides of trust in interorganiza-tional relationships around two main issues.First, we theorized how and why trust candevelop negative effects in terms of rigidities inthe relationship while it also creates positiveeffects in terms of facilitating exchanges. Second,we proposed that these positive and negativeeffects can be moderated separately from oneanother (e.g. rigidities can be suppressed whilethe positive trust effects are kept intact). The ideais that handling tactics (competing, accommodat-ing, avoiding, collaborating and compromisingtactics) can moderate positive and negative effectsseparately and differently. In some situations,certain strategies may be more likely and possibleto apply, where the uses of others are restricted toother situations. For example, we outlined thataccommodating tactic regulation increases ex-change benefits at the cost of rigidities. Althoughneglecting own concerns in order to satisfy the



partner’s concerns may not be an ideal strategy,firms engage in more than one interaction overtime, whereby this use is not necessarily adisaster. It is the firm’s orientation to use onestrategy before others over time that is likely tomatter. We next turn to discussing the theoreticaland practical implications of our study andhighlight some considerations for future research.

Implications for theory and practice

Our study has several implications. First, becausewe outline a possible negative path parallel to theundisputed positive effects trust generates, wemove beyond the one-sided models proposed inthe trust literature. Although agreeing to thescholarly notion that trust may have a dysfunc-tional side (Jeffries and Reed, 2000; Patzelt andShepherd, 2008; Zahra, Yavuz and Ucbasaran,2006), we add to those that have argued that thisdarker side mainly appears at a certain trust leveland implies an inverted U-shaped relationship(Gargiulo and Ertug, 2006; Wicks, Berman andJones, 1999) between trust and its net benefits. Assuch, our approach goes beyond the traditionalsolution to solve excessive trust problems, whichhas suggested reducing the trust level and thusincreasing the net benefits. Moving beyond suchregulation, we believe our approach is particu-larly valid for relationships such as those foundin R&D alliances, where it is difficult todeliberately reduce trust levels without destroyingthe relationship. Moreover, in some contexts itmay not even be an option to deliberatelydispense with the positive effects from highertrust levels. To that background, we propose thatscholars and practitioners should acknowledge aset of other alternatives and other techniques tosuppress trust dysfunctions compared with whathas previously been highlighted. We base oursuggestion on the acknowledgement of a paralleldysfunctional process to trust benefits. Wesuggest that lack of attention to this parallelprocess can lead to unwanted outcomes such asalliance failure and lost individual competitive-ness among the alliance partners, as well asdifficulties facing rapid environmental challengesand dynamism. Whereas prior research high-lighted that the positive trust effects are visibleand easy to detect by alliance evaluation toolssuch as alliance management guidelines, manualsand checklists (Kale and Singh, 2007; Kale, Dyer

and Singh, 2002), we notice that the negativetrust effects in terms of resource and routinerigidities in the relationship may be harder todetect for those involved in the relationship andfall outside the common factors for how inter-organizational relationships are typically evalu-ated. As such, the rigidities not only may bedirectly harmful for the firms engaged in theinterorganizational relationship, but may alsocause relationship failure because the relationshipcannot maintain its value for the partners and acontinuation is not justified. This means that wehighlight an issue that may be worth payingsignificant attention to for trust management ininterorganizational relationships.Second, we contribute to trust research by de-

monstrating that trust can be developed throughroutine and resource rigidities. Trust building isconsidered to be strengthened by exposure topositive exchange experiences (see for exampleBoyle and Bonacich, 1970; Doney, Cannon andMullen, 1998; Inkpen and Currall, 1998). Focusingon a process that co-occurs, the path we con-ceptualize in this paper offers an extended ex-planation that has not been acknowledged in priorliterature. Developing interorganizational close-ness enables parties to obtain exchange benefitsat the same time that it influences routine andresource rigidities. We showed how these rigidities,in turn, strengthen trust drivers. Ultimately, thismeans that interorganizational trust can be devel-oped through resource and routine rigidities. As adirect consequence of prior traditional research,often-mentioned trust development activities areconsidered: direct communication; open and hon-est sharing of information; and keeping secretsamong the parties; but also creating a reputation ofbeing a trustworthy partner. Our model, however,implies that trust could also be developed byintegrating on another’s operations, creating effi-cient cooperative routines, and acquiring andintegrating each other’s specific skills.Third, by introducing regulating moderating

variables in terms of handling tactics, our modeland propositions extend prior research approacheson how to simultaneously uphold trust benefitsand mitigate rigidities without restricting trustlevels. The propositions demonstrate how organi-zations can manage interorganizational relation-ships and trust (once it is established) such that thepartners can adapt and change. This view repre-sents a departure from the traditional view of trust



building (cf. Butler, 1991; Mayer, Davis andSchoorman, 1995; Sheppard and Sherman, 1998;Whitener et al., 1998), which does not pay muchattention to evident incompatible partner prefer-ences and interests in trust relationships. Incontrast to this view, our approach differs becauseit suggests that managers benefit from activelymanaging the trust relationship throughout itsduration by approaching it with appropriatetactics. Managers thus secure that their interestsare met simultaneously as their organizationsavoid being negatively affected by routine andresource rigidities. This notion thereby challengesthe commonly held view of trust as something thatis given and easy to profit from once it is developedand settled. Moreover, it adds to the literaturefocusing on trust benefits by indicating that suchbenefits may be difficult to reach without signifi-cant attention and effort expended in managing thedevelopment of the relationship.Fourth, by drawing upon insights from inertia

theory our model also has the potential to addunderstanding to that theoretical framework. Wehave extended the inertia concept to interorgani-zational relationships. In doing so we havedemonstrated how inertia, in this context, canbe manifested by rigidities in resources androutines. Moreover, we have proposed that trustcan exacerbate such inertia. Trust has not beenaddressed in prior research on inertia antece-dents. Instead variables such as organizationalsize, age and complexity have been taken intoaccount (Gresov, Haveman and Oliva, 1993;Hannan and Freeman, 1984). Trust as an inertiaantecedent suggests that also social aspectsshould be acknowledged when theorizing oninertia in interorganizational settings, and notonly structural aspects such as partner attributes,relationship duration and network structure (cf.Kim, Oh and Swaminathan, 2006).Fifth, on a more general level this study also

links to literature on interorganizational relation-ship governance. Cooperative interorganizationalrelationships are rarely governed by a hierarchicalpower structure. Instead the partners must findsome governance structure to promote the pur-poses with the relationship, which often is tofacilitate the creation of both ‘common’ and‘private’ benefits (Khanna, Gulati and Nohria,1998). In an effort to understand interorganiza-tional governance, trust and control are typicallyseen as complements or substitutes (Das and Teng,

1998; de Man and Roijakkers, 2009; Poppo andZenger, 2002; Thorgren, Wincent and Anokhin,2010). Literature suggests that both trust andcontrol have their shortcomings. For control-basedgovernance models, one issue is the difficulty inprotecting everything through legal and ownershipsafeguards; there may still be cooperative hazardssuch as a risk that unintended knowledge leakagecreates competitors out of former partners or thatthere is an unfair share of joint innovation returns(Helm and Kloyer, 2004; Narula, 2004; Oxley andSampson, 2004). For the trust approach, theliterature indicates that it may be very challengingto actually build trust to partners and reach thekind of self-organization in the relationship thatprevents opportunistic behaviour. Our studynuances the picture of trust by demonstrating thattrust may also have a downside in terms ofresulting in rigidities. As such, when discussingthe problems of trust as a governance mechanism,it would be too narrow only to see the problemwith trust to be its building, maintenance andrepair. There is also a need to see the challengeswith the trust approach once partners havemanaged to build trust to another.Moreover, to some extent a motive behind

cooperation is that it enables monitoring ofenvironmental changes (Hagedoorn, 1993). Inefforts to gain access to external resources forlearning and renewal prior research shows,however, how firms facing uncertain environ-ments prefer flexibility over control. Strategicalliances, typically non-equity, are preferred as agovernance mode when the industry is character-ized by high technological change (Hagedoornand Duysters, 2002; van de Vrande, Vanhaver-beke and Duysters, 2009). Because of rapidtechnological changes, firms want governancemodes that enable rapid strategic responses.Therefore it is somewhat ironic that interorgani-zational trust, which is sometimes considered as asubstitute to more integrated governance modesbased upon ownership, may cause partners tobecome inflexible and slow in strategic responses.At the same time, this study shows that it ispossible to get round drawbacks in terms ofproblematic rigidities by using handling tactics.

Directions for future research

Overall, we recommend researchers use compre-hensive research methods to make our model on



undesired rigidities stemming from trust morespecific. Such efforts will contribute to a clearerunderstanding of the dysfunctional side of trustprocesses in interorganizational relationships.Our model explicates how trust can be detri-mental by the routine and resource rigidities itcan cause as trust benefits are simultaneouslyobtained. This simultaneous process, however, isnot necessarily something organizations areaware of. In fact, our model informs that evenif sensitivity is paramount, firms may allow suchrisk for inflexibility. Our framework does notspecify the reinforcing magnitude of the feedbackloop from rigidities to trust for each round.Obviously, this magnitude needs further exam-ination. We also expect time to be important andwe cannot theoretically specify the time neededand the exact dynamics of our framework.Therefore, it is relevant for researchers to furtherempirically examine how it is possible to regulateeffects so that trust benefits are maintained, whilerigidities – and therefore the risk of reducedability to respond to environmental changes – aremitigated.Methodologically, we recommend researchers

use a longitudinal case study design, whereseveral interorganizational relationships exhibit-ing trust are identified. By collecting rich datathrough in-depth, qualitative studies, deeperinsight can be provided into how trust can resultin lock-in mechanisms and the reinforcing cyclesof rigidities. Moreover, we also recommend thatresearchers take an in-depth approach to exam-ining the specific propositions. First, examiningwhere interorganizational closeness causes re-source and routine rigidities (Proposition 1)could benefit from collecting longitudinal archi-val data among interorganizational partners (e.g.investments, joint applications, agreements, in-ternal and public reports, cooperative evalua-tions) to uncover more fine-grained informationon how such rigidities are manifested in practice.Second, observing decision makers and actorsinteracting in interorganizational relationshipsand conducting qualitative, in-depth interviewscould provide richer insight into how rigiditiessend trustworthiness cues to partners (Proposi-tion 2). Third, experimental studies or scenarioscould be useful for manipulating behaviour andresponses in sensitive situations where trust ispresent. These studies could measure the stage ofregulating effects on beneficial as well as rigid

outcomes from different handling tactics (Propo-sitions 3–7). Finally, despite the challenges withoperationalizing the constructs used, a quantita-tive study would be helpful for providing media-tion and causality tests for the proposed indirectrelationship between rigidities and trust.

Conclusion

We integrated inertia theory and trust literatureto outline a theoretical rationale on whenundesired rigidities in interorganizational rou-tines and resources are likely to be created andreinforced and how this process occurs simulta-neously as trust benefits are generated. To thisbackground, we applied a conflict-handlingframework that made it possible to suggest howthe negative effects caused by rigidities can bemoderated by different relationship tactics thatcould be used across a variety of situations wherethis trust problem is likely to occur, and framehow the benefits will be affected by the tacticsemployed by the use of five relationship strate-gies: competing, accommodating, avoiding, col-laborating and compromising handling tactics.Our approach thus suggests a possible path tocope with the challenge of how to maintain thebenefits that high levels of trust can generate in arelationship, while at the same time reducing therisk of not allowing for rapid strategic responsesby the routine and resource rigidities such hightrust levels cause through lock-in mechanisms.

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Sara Thorgren is an assistant professor in entrepreneurship at Lulea University of Technology. Herresearch interests include interorganizational relationships with a particular focus on trust processesand entrepreneurship in contexts of strategic relationships.

Joakim Wincent is Professor of Business Administration at Umea School of Business, UmeaUniversity, and Professor of Entrepreneurship at Lulea University of Technology. His currentresearch focuses largely on strategic relations, open innovation, co-opetition, emotion and stressmanagement in innovative processes.



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