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Translating trust into action: Predicting organisational behaviour in complex environments

Our Rural Landscape

June 2007
ISBN 978-1-74199-277-9

Authors:

Geoff Kaine, Jean Sandall and Megan Higson
Acknowledgments:

This research is the product of discussions with colleagues in Australia, New Zealand and Europe extending over several years. We extend a special thanks to Alan McDermott and Tony Pleasants from AgResearch in New Zealand, and John Casti from the Technical University of Vienna in Austria for their lively contributions to discussion of the issues in this research.

This paper is part of a larger project Linking Policy and Practice funded by the Victorian Government's Our Rural Landscapes Initiative

Table of Contents

  • 1. Introduction
  • 2. Achieving policy outcomes in a complex environment
    • 2.1 Natural resource issues are complex
    • 2.2 Natural resource policy is fragmented
    • 2.3 Trust: a mechanism for promoting cooperation in natural resource policy
  • 3. Trust
    • 3.1 Characteristics of trust
    • 3.2 Types of trust
      • 3.2.1 Characteristic-based trust
      • 3.2.2 Process-based trust
      • 3.2.3 Institutional-based trust
      • 3.2.4 Relationships among types of trust
  • 4. Measuring Zucker's types of trust
    • 4.1 What measures have been developed?
    • 4.2 Measuring types of trust in the context of natural resource policy
      • 4.2.1 Identifying and scoring indicators of types of trust
      • 4.2.2 Using the scores on indicators to determine which types of trust are present between organisations
  • 5. Trust and cooperative behaviour
    • 5.1 Typology of cooperative behaviour
    • 5.2 Contextual limits on cooperative behaviour
    • 5.3 Types of trust and cooperative behaviour
    • 5.4 Context, types of trust and cooperative behaviour
  • 6. Conclusion
  • 7. References

1. Introduction

The absence of trust from public administration literature may be a reflection that an alternative to trust as a mechanism is regulation. So a bureaucracy is quite likely to under use trust, even underestimate it. But with growing attention to horizontal forms of governance, the issue of trust becomes more important. (Edelenbos &Klijn 2007, p.27)

Edelenbos & Klijn's observation reflects increasing recognition that trust may be a critical, yet relatively untapped mechanism for promoting cooperation among the various organisations that share responsibility for achieving natural resource policy outcomes. This project was designed to explore one way that policy processes might better tap into the potential of trust for promoting cooperation among such organisations. Specifically, the purpose in this project was to develop a method for quantifying relationships between particular types of trust and particular inter-organisational behaviours.

Such a method would improve the capacity of individual organisations to understand and predict the behaviour of other organisations that share responsibility for achieving natural resource policy outcomes. This would provide a basis for maintaining and building inter-organisational trust, thereby promoting cooperation among organisations and reducing the risk of unanticipated and counterproductive consequences in natural resource policy.

The project contributes towards the Our Rural Landscapes project objective 5.1 "Strategies for solving complex problems,".

This paper will proceed as follows. We begin by describing the context in which natural resource policy outcomes must be achieved. In the process, we provide a rationale for the idea that trust is likely to promote cooperation among organisations that share responsibility for achieving natural resource policy outcomes. After describing the fundamental characteristics of trust, we outline three types of trust that provide a basis for predicting differences in organisational behaviour. In the remainder of the paper the focus is on describing a method for quantifying the relationships among types of trust and particular organisational behaviours. In the closing section of the paper we draw some conclusions about the implications of the method for promoting cooperation in natural resource policy and make some suggestions for future work.

2. Achieving policy outcomes in a complex environment

2.1 Natural resource issues are complex

Natural resource issues are widely characterised as wicked issues. Such issues defy simple understanding because they are symptoms of many problems that can change and interact with each other in unpredictable ways (Ackoff 1979; Sandall 2006). Environmental degradation, for example, can been seen as a symptom of problems such as social inequality (Corry 1993; Pepper 1993), globalisation (Elliot 1998; Shiva & Bedi 2002), market failure or imperfections (Young 1982; Godden 2006), inadequate scientific knowledge (Pearman 1986; Smith, Wilson, Nadolny & Lang 2000) and misguided or mismanaged government policy (Dryzek 1987; Holling & Meffe 1996; Hillier 2003). Each of these problems, in turn, can be seen as symptoms of other problems that can change and interact with each other in unpredictable ways, and so on. Thus natural resource issues involve multiple levels of problems that can change and interact with each other in unpredictable ways, both within and across levels; they are, therefore, complex (Casti 1986; Cilliers 2002).

The complex nature of natural resource issues helps to explain why the prospect of unanticipated and counterproductive consequences is a pervasive and enduring risk associated with government initiatives to manage such issues. Examples of unanticipated and counterproductive consequences that have been recorded to date include declining ecosystem resilience as a result of initiatives aimed at increasing the stability and predictability of ecosystem behaviour (Holling & Meffe 1996; Walker & Salt 2006), increasing poverty and environmental degradation in lesser developed countries as a result of initiatives aimed at promoting economicdevelopment (Shiva 1989; Corry 1993), and increasing fragmentation in government policy-making and implementation in Anglo-American countries as a result of initiatives aimed at improving accountability and efficiency in the provision of government services (Davis & Rhodes 2000; Gregory 2000; Beckwith & Moore 2001; Johnson, Linehan & Kaine 2005). The last of these examples provides the context for this project.

2.2 Natural resource policy is fragmented

Increasing fragmentation in government policy-making and implementation in Anglo-American countries has increased the degree to which achieving natural resource policy outcomes is dependent on attaining cooperation among diverse government and non-government organisations (Lynn Jr. 1998; Howlett 2000; Lane 2000; Howden & Gooey 2005). This general trend is reflected in Victoria. To illustrate, a natural resource outcome aimed for in Victoria's Environmental Sustainability Framework is 'A reversal, across the entire landscape, of the long-term decline in extent and quality of native vegetation, leading to net gain' (The State of Victoria Department of Sustainability and Environment 2005, p.8). Achieving this outcome is dependent on attaining cooperation among organisations such as the Department of Sustainability and Environment, the Department of Primary Industries, Trust for Nature, the Victorian Catchment Management Council, catchment management authorities, the Municipal Association for Victoria, local government councils, the Victorian Farmers Federation and Environment Victoria.

While each of the above organisations would have interests in cooperating with others to achieve a given natural resource policy outcome, such as the net gain outcome described above, each would also have responsibilities to other organisational objectives. For example, while local government councils have an interest in cooperating with others to administer native vegetation retention controls under the Planning and Environment Act (1987), they also have responsibilities to other organisational objectives such as managing waste, storm water, water use, water quality, pest plants and animals and meeting the expectations of local communities (Municipal Association of Victoria 2004).

Similarly, while the Victorian Farmers Federation has an interest in cooperating with others to protect native vegetation and biodiversity, it also has responsibilities to other organisational objectives such as protecting the social and economic interests of its 21 000 farmer members (Victorian Farmers Federation 2003). When misalignments occur between an organisation's interests in achieving a given policy outcome and its responsibilities to other organisational objectives then, if the organisation pursues the policy outcome, it will increase its exposure to the risk of failing to achieve its other organisational objectives. This creates an incentive for the organisation to pursue its other organisational objectives at the expense of the policy outcome, and the other organisations involved (Hamel 1991; Lui & Ngo 2005). In other words, such misalignments promote opportunism among organisations that share responsibility for achieving policy outcomes; this, in turn, enhances the risk of unanticipated and counterproductive consequences.

2.3 Trust: a mechanism for promoting cooperation in natural resource policy

Misalignments between the interests that individual organisations might have in achieving policy outcomes and their responsibilities to other organisational objectives are inevitable in natural resource policy. As alluded to above, reasons for this include the complex nature of natural resource issues, the existence of competitive markets for public services and the fragmentation of legislative responsibility for natural resource policy outcomes (Saul 1997; Szirom, Lasater, Hyde & Moore 2002; Briggs 2003; Johnson, Linehan & Kaine 2005; Walker & Salt 2006). Does this imply that opportunism is inevitable among organisations that share responsibility for achieving natural resource policy outcomes? Studies into the influence of trust on inter-organisational relationships suggest that opportunism is not inevitable if inter-organisational trust can be built and maintained (Zucker 1986; Mc Allister 1995; Lane & Buchanan 1998; Korczynski 2000; Zineldin & Jonsson 2000; Lui & Ngo 2005; Roth & Kaine 2005; Rus & Iglic 2005; Edelenbos & Klijn 2007). In short, studies suggest that building and maintaining trust among such organisations will promote cooperation over opportunism.

In the next section, we discuss the fundamental characteristics of trust. We then describe the three different types of trust and propose some ways for identifying the existence of particular types of trust in the context of natural resource policy. The section closes with a discussion of the relationships among different types of trust.

3. Trust

3.1 Characteristics of trust

A review of studies into the influence of trust on relationships suggests that trust can be distinguished by three characteristics. The first characteristic is the involvement of more than one party in an exchange where the potential for opportunism among parties exists (Zucker 1986; Chiles & McMackin 1996; Lane & Buchanan 1998). This creates a risk that the parties involved could experience a real loss should the other parties engage in opportunism. Accordingly, the second characteristic of trust is the willingness of the parties involved to take such a risk (Rousseau, Sitkin, Burt & Camerer 1998; Edelenbos & Klijn 2007). This willingness is based on the third characteristic of trust, which is a relatively stable expectation that the other parties involved will not engage in opportunism should the chance present itself (Garfinkel 1963; Lane & Buchanan 1998; Moore 1998).  In combination, these characteristics increase the capacity of the parties involved to predict the behaviour of others and reduce the risk that they will experience a loss as a result of cooperating with each other.

In the context of natural resource policy, an exchange might involve two organisations. The first organisation, which has legislative responsibility for developing a regional water management plan, might commission the second organisation to implement the plan. This would entail an exchange of financial resources for expertise in implementation. From the perspective of the first organisation, if there are few organisations with relevant expertise in implementation and the second organisation is aware of this, then the potential exists for the second organisation to engage in opportunism by charging exorbitant rates for its expertise.

From the perspective of the second organisation, the potential exists for the first organisation to engage in opportunism by attributing shortfalls in the performance of the plan to the second organisation, even though such shortfalls may be due to factors beyond the control of the second organisation. Hence, both organisations risk experiencing a real loss in the exchange should the other organisation engage in opportunism. Even so, both organisations are likely to be willing to take the risk, if they expect that neither organisation will take advantage of its chance to engage in opportunism.

3.2 Types of trust

A review of studies into the nature of trust indicates that it is possible to discern qualitatively different types of trust among organisations (Zucker 1986; Sako 1992; Gulati 1995; Moore 1998; McDermott 2001; Roth & Kaine 2005). Zucker (1986), for example, proposed that there are three qualitatively different types of trust, which she defined on the basis of how they are produced. Zucker (1986) named these types of trust characteristic-based, process-based and institutional-based trust. Further, Zucker (1986) argued that the extent to which the different types of trust are produced is highly contextual, depending on 'the concrete circumstances under which exchange typically takes place in a social system' (p. 100). Examples of concrete circumstances given by Zucker (1986) included the degree of social or geographic distance between exchange partners and the degree to which individual exchanges are interrelated. In this section, we describe the key features of the three types of trust as defined by Zucker (1986), and discuss the relationships among them.

3.2.1 Characteristic-based trust

You had to be careful, some people said; or so such people argued. They said that you could no longer trust people, because you did not know where other people came from, who their people were; and if you did not know that, then how could you trust them? (McCall Smith 2007, p.22)

Characteristic-based trust is built on similarity in the characteristics of the parties involved in an exchange. Zucker (1986) proposed that the more similar a party considers another party to be to itself; the more likely they are to take for granted that the other party views the world similarly and operates according to similar standards of behaviour. This proposition explains the commonsense of the opening statement to this section, which was made by Mma Ramotswe, a fictional character from Alexander McCall Smith's No. 1 Ladies Detective Agency Series.

To illustrate the sorts of characteristics upon which similarity might be sought in characteristic-based trust, Zucker (1986) cited historical instances where similarity in exchange partners has been sought on the basis of family background, national origin, ethnicity and sex. Interestingly, Zucker noted that, in the formative years of American bureaucratic organisations, it was common to allocate positions on the basis of family background. Evidently, the specific characteristics upon which similarity might be sought are likely to vary, depending on the nature of the social system concerned.

When we applied the logic of characteristic-based trust to the context of contemporary natural resource policy, as described above, it seemed plausible that relevant characteristics might include organisational competencies, values, objectives and procedures (Sarkar, Aulakh & Cavusgil 1998; Lui & Ngo 2005). In other words, in the context of contemporary natural resource policy, characteristic-based trust could plausibly exist among organisations that consider each other to be similar in terms of their organisational competencies, values, objectives and procedures.

3.2.2 Process-based trust

Process-based trust is built-up over time as a result of repeated exchanges among parties. Through repeated exchanges the parties involved develop mutual values, practices, symbols, vocabularies and expectations about appropriate standards of behaviour that become taken for granted over time. Thus process-based trust is built on the relationship histories of the parties involved. At the same time, Zucker (1986) proposed that, because information on the relationship histories of potential exchange partners may be elicited through reputation, process-based trust may exist between potential exchange partners even if they have not had direct experience with each other. This means that, if an organisation or brand name has a positive reputation then prospective partners are likely to trust it, even though they may not have had direct experience with it.

According to Zucker (1986), process-based trust can also be built on informal expressions of good faith into the future, such as willingness to offer an informal warranty.  Following this logic, plausible expressions of good faith among organisations that share responsibility for achieving natural resource policy outcomes might include: one organisation inviting another to participate in its decision-making committees or two organisations coming to an informal understanding about their relative jurisdictions in relation to a particular policy issue. In order for such expressions of good faith to promote process-based trust, they must be seen to be honoured over time.

Collectively, the three foundations upon which process-based trust can be built might be described as reputation effects (Son, Tu & Benbasat 2006), as the credibility of expressions of good faith into the future will depend to some degree on the reputations of the organisations involved. Such a collective term is useful for distinguishing the foundations of process-based trust from the foundations of characteristic-based or institutional-based trust. Therefore, in the remainder of the paper we use the term reputation effects as a collective term to describe the foundations of process-based trust.

Zucker (1986) suggested that organisations can invest in process-based trust by managing their relationships with others so as to create and maintain a positive reputation (e.g. by offering and honouring expressions of good faith and maintaining product quality) and by signalling their reputation to others (e.g. through advertising).  

The reputation effects of process-based trust as described by Zucker (1986) would seem to translate well to the context of contemporary natural resource policy. Therefore we proposed that, in the context of natural resource policy, process-based trust could plausibly exist among organisations that consider each other to have positive relationship histories and positive reputations. For example, organisations may have a reputation for providing preferential treatment to other organisations. Additionally, process-based trust could plausibly exist among organisations that have negotiated informal expressions of good faith into the future. Thus organisations may have avoided opportunistic behaviour in the past, or may promise to avoid opportunistic behaviour in future.

3.2.3 Institutional-based trust

Institutional-based trust is built on formal social institutions.  Formal social institutions include contracts, legislation, regulation, codes of conduct, standard operating procedures, membership of professional associations, educational qualifications, insurance cover, formal guarantees, and service level agreements (Bledstein 1976; Young 1982; Zucker 1986; Crawford & Ostrom 1995; Pantry & Griffiths 2001; Roxenhall & Ghauri 2004).  A key feature that distinguishes institutional-based trust from characteristic-based and process-based trust is the way in which expectations about appropriate standards of behaviour are defined.  For characteristic-based and process-based trust, expectations about appropriate standards of behaviour are mutually defined by the parties involved; for institutional-based trust, expectations about appropriate standards of behaviour are defined by formal social institutions (Zucker 1986).

Zucker (1986) indicated that, because institutional-based trust is so closely tied to formal social institutions, an organisation can invest in institutional-based trust by strategically complying with particular institutions and signalling its compliance to others.  This might involve, for example, purchasing public liability insurance, establishing cooperative norms for sharing information, negotiating and resolving conflict (these might be signalled through codes of conduct) or adopting a policy of only employing staff that hold professional certification and membership of appropriate professional organisations (Zucker 1986; Pavlou 2002; Son, Tu & Benbasat 2006).  

When we applied the logic of institutional-based trust to the context of contemporary natural resource policy, it seemed plausible that institutional-based trust could exist among organisations that consider each other to be compliant with formal social institutions which protect the interests of each organisation.  Formal socialinstitutions relevant to the context of natural resource policy might include: professional certification and membership of appropriate professional associations; insurances; contractual guarantees for goods and services; cooperative norms for sharing information, negotiating and resolving conflict; and appropriate legislative and regulatory responsibility and authority.

3.2.4 Relationships among types of trust

In her analysis of sources of trust during a formative period in American industrial development (1840-1920), Zucker (1986) found an increasing trend towards the production of institutional-based trust over the production of characteristic-based and process-based trust.  Zucker argued that this trend was driven by three socio-economic conditions: a large increase in the social diversity of immigrants; a large increase in internal migration across geographic and social distances; and a large increase in the instability of business enterprises.  These socio-economic conditions required organisations to conduct exchanges with other organisations in the absence of shared exchange histories, established reputations or shared social characteristics.  Hence, there was limited scope for characteristic-based or process-based trust to be produced or maintained.

Moreover, Zucker (1986) argued that the socio-economic conditions prevailing in the period under study created a need for social institutions that would allow organisations to form uniform expectations about appropriate standards of behaviour across geographic and social distances.  This need was met by formal social institutions such as rational bureaucracy, legislation and regulation, professional credentialing, and service industries such as banking, insurance, real estate and legal services.  The uniformity of expectations defined by formal social institutions such as these depends on the degree to which it is possible to define and articulate standards of behaviour in advance of exchanges and, therefore, independently of the idiosyncratic circumstances surrounding any given exchange.  

On the strength of these observations, Zucker (1986) drew three key conclusions about the relationships among characteristic-based, process-based and institutional-based trust.  The first was that the relationships among the three types of trust are not evolutionary.  That is, one type of trust does not necessarily lead to the emergence of another type.  The second was that none of the types of trust are ubiquitous.  That is, none of the types of trust are likely to exist in all circumstances.  The third was that, because changes in the type of trust produced are driven by long-term processes, such changes are unlikely to occur rapidly.  These conclusions are consistent with the findings of other studies (Giddens 1990; Lane & Bachman 1996; Korczynski 2000; Winder 2001).

When we applied Zucker's (1986) observations and conclusions to the context of contemporary natural resource policy, they explained why institutional-based trust is likely to be critical for promoting cooperation among organisations that share responsibility for achieving policy outcomes.  In particular, cooperation among such organisations requires exchanges to be made across geographic and social distances.  These exchanges are unlikely to take place in the absence of uniform expectations about appropriate standards of behaviour, which are the cornerstone of institutional-based trust.

At the same time, the complex nature of natural resource issues is likely to limit the degree to which it is possible to define and articulate standards of behaviour in advance of exchanges and, therefore, independently of the idiosyncratic circumstances surrounding any given exchange.  Under conditions where problems are changing and interacting with each other in unpredictable ways, predefined and uniform standards of behaviour are likely to become rapidly out of date and poorly matched to idiosyncratic circumstances surrounding individual exchanges.  These conditions create a need for types of trust that will allow expectations about appropriate standards of behaviour to be mutually adapted in line with changing and idiosyncratic circumstances.  In short, these conditions create a role for characteristic-based and process-based trust.

The scope for characteristic-based trust to be produced, in contemporary natural resource policy, is likely to depend on the whether or not there is social distance among the organisations involved.  If there is social distance among organisations, they are unlikely to identify similarities in each other's organisational characteristics (e.g. similarities in organisational competencies, values, objectives and procedures).   Diversity in the roles and responsibilities of organisations involved in natural resource policy would tend to create social distance and, therefore, place an upper limit on the extent to which organisations are able to identify such similarities.  This would, in turn, place an upper limit on the scope for characteristic-based trust to be produced between them.

The scope for process-based trust to be produced, in contemporary natural resource policy, is likely to depend on the extent to which the organisations involved have worked together previously or have information on the reputations of each other.  Geographic distance among organisations is likely to place an upper limit on the extent to which it is possible for organisations to establish and maintain working relationships.  Nevertheless, if the need for a working relationship has been established through imperatives such as formal social institutions, the potential exists for process-based trust to be produced over time, regardless of the starting point of the relationship (Zucker 1986; Korczynski 2000).

Given these propositions, the relative scope for the three different types of trust, in the context of natural resource policy, is summarised in Figure 1.  From the decision tree presented in the Figure, it can be seen that there will be scope for institutional-based trust to be produced between two organisations when it is possible for uniform standards of behaviour to be defined by formal social institutions in advance of exchanges (and, therefore, independently of the idiosyncratic circumstances surrounding any given exchange).  If this condition is met, then the left-hand side of the decision tree illustrates the conditions under which there is scope for institutional-based trust to be supplemented by characteristic-based and process-based trust.  

Specifically, there will be scope for institutional-based trust to be supplemented by characteristic-based and process-based trust to the extent that there is no social or geographic distance between the organisations.  If there is social distance but no geographic distance between the organisations, then there will be scope for process-based trust to be produced.  Conversely, if there is geographic distance but no social distance between the organisations, then there will be scope for characteristic-based trust to be produced.  If there is both social distance and geographic distance between the organisations, then there will be no scope for institutional-based trust to be supplemented by characteristic-based or process-based trust.

From the right-hand side of the decision tree presented in Figure 1, it can be seen that, if it is not possible for uniform standards of behaviour to be defined by social institutions in advance of exchanges, there will be no scope for institutional-based trust to be produced between the organisations.  However, to the extent that there is no social or geographic distance between the organisations, there will be scope for characteristic-based and process-based trust to be produced.  If there is social distance but no geographic distance between the organisations, then there will only be scope for process-based trust to be produced.  Conversely, if there is geographic distance but no social distance, then there will only be scope for characteristic-based trust to be produced.  If there is both social distance and geographic distance between the organisations then there will be no basis upon which to produce trust.

Zucker's typology then, provides a foundation for identifying the scope for three different types of trust to be produced between organisations in a given natural resource policy context.  In the next section, we describe a method for measuring which types of trust are actually present.  This creates an opportunity to compare the types of trust present with the types of trust that are possible in the given policy context.  Such a comparison could be used to identify opportunities for organisations to build further trust with each other, and on what basis.

Figure 1 – Scope for different types of trust to be produced
Figure 1 Flow chart showing Scope for different types of trust to be produced

4. Measuring Zucker's types of trust

4.1 What measures have been developed?

Zucker's (1986) typology has been widely used as a framework for understanding the production of trust in specific organisational contexts (Parkhe 1998; Hummels & Roosendaal 2001; Winder 2001; Möllering, Bachmann & Lee 2004; Watson 2005).  However, we were able to find only a few studies that have developed measures to quantify the specific types of trust proposed by Zucker (1986).  A summary of some recent studies and the measures that were developed is presented in Table 1.

An inspection of Table 1 reveals that the measures of trust that have been developed are highly context specific.  In particular, of the five studies, only two studies developed measures for all three types of trust.  Of the remaining studies, one developed measures for process-based and institutional-based trust while two only developed measures for institutional-based trust.  Moreover, the characteristics, reputation effects and institutions upon which the measures were based differed from study to study.  Two inferences can be drawn from these observations.  The first is that different types of trust are likely to be relevant in different contexts.  The second is that different characteristics, reputation effects and institutions are likely to be relevant in different contexts.  These inferences are consistent with Zucker's (1986) argument that the extent to which the different types of trust are produced is likely to be highly contextual, depending on the concrete circumstances under which exchange typically takes place.  

All this suggested that general measures of Zucker's three types of trust are unlikely to provide useful insights into the production of trust in specific contexts.  Rather, such insights are likely to depend on the degree to which it is possible to develop measures to match the concrete circumstances under which exchanges typically take place.  Therefore, we concluded that insights into the production of trust in the context of natural resource policy would require context specific measures to be developed.

Table 1 – Measures of Zucker's types of trust from recent studies

(Son, Tu & Benbasat 2006)

A descriptive content analysis of trust-building measures in B2B electronic marketplaces

Context

Identified process-based and institutional-based trust among Business to Business (B2B) market place providers and buyers and sellers in B2B e-marketplaces; characteristic-based trust not considered

Measurement scale

presence/ absence measures, 6 measures to identify trust between trading partners and 5 measures used to identify trust between trading partners and marketplace providers

Characteristic-based trust

Not measured

Process-based trust

Between trading partners:

  1. reputation systems publishing ratings of performance based on views of trading partners or the e-marketplace

Between trading partners and marketplace providers:

  1. affiliation with respected organisations
  2. disclosing e-market place profile/history, e.g. longevity, e-marketplace size and management team profile
  3. disclosing past performance, e.g. through testimonials, displaying awards earned, excerpts from news media outlets and well-known participants

Institutional-based trust

Between trading partners:

  1. use escrow services
  2. monitoring of products and services, e.g. through expert product appraisal, product guarantees and warrantees, product inspection and third-party product reviews
  3. insurance offered on uncompleted transactions or returns through no fault of either trading partner
  4. perceptions of cooperative norms of trading partners, e.g. through use of facilitated dispute resolution processes, codes of conduct and provision of information on how transactions are typically made in an e-marketplace
  5. member screening, e.g. through credit checking, letters of reference and participant performance reviews

Between trading partners and marketplace providers:

  1. provide evidence of third party assurance seals such as TRUSTe and WebTrust to address concerns about privacy and reliability of website
  2. statement of privacy policy
(Chen, Chen & Tsung 2006) Promoting relationship selling behaviors to establish relationship value: the case of international airlines
Context Investigated selling behaviours that international airlines (flying out of Taiwan) might engage in to promote trust and relationship value among customers.
Measurement scale 5-point Likert scale, ranging from 1='strongly disagree' to 5='strongly agree'
Characteristic-based trust
  1. I am impressed by the friendly and warm service provided by the service staff of this airline.
  2. The sincere and responsible attitude of this airline makes it worthy of my trust.
  3. This airline gives me an impression of trustworthiness.

Process-based trust
  1. Based upon my past and present experiences, I believe that the service providers of this airline deserve my trust.
  2. This airline has been concerned about me ever since I began travelling with it.
  3. I believe that this airline understands me and can provide good service over the long term, thus increasing my confidence.

Institutional-based trust
  1. This airline has provided me with good service at all times.
  2. I believe that this airline achieves the favourable promotion promise and obeys the DM agreement.
  3. This airline has an honest image in society.
(Rus & Iglic 2005) Trust, governance and performance: the role of institutional and interpersonal trust in SME [small and medium sized enterprise] development
Context Investigated whether there were differences in the level and type of trust (institutional versus interpersonal)  among entrepreneurs and managers in Bosnia and Slovenia
Measurement scale 5-point scale ranging from 1='almost not trust' to 5='a lot of trust'
Characteristic-based trust Not measured
Process-based trust Not measured
Institutional-based trust

In general,

  1. Do you have trust in state government?
  2. Do you have trust in state administration?
  3. Do you have trust in local government?
  4. Do you have trust in chamber?
  5. Do you have trust in banks?
(Gefen 2004) What makes an ERP [Enterprise Resource Planning] implementation relationship worthwhile: linking trust mechanisms and ERP usefulness
Context Investigated how trust is built during an ERP implementation, and the relative weight of this trust compared with the perceived qualities of the implemented ERP itself in determining clients' assessment that the business relationship with the vendor is worthwhile.
Measurement scale 7-point scale ranging from 1='strongly agree' to 4 = 'neutral' to  7 = 'strongly disagree'
Characteristic-based trust
  1. Vendor personnel have a similar lifestyle to ours.
  2. The appearance of Vendor personnel is similar to ours.
  3. Vendor personnel have similar values as ours.

Process-based trust
  1. Vendor has gone out on a limb for us.
  2. Vendor has made sacrifices for us in the past.

Institutional-based trust
  1. Vendor has quality certifications from credited institutions.
  2. Vendor has impressive credentials.
(Pavlou 2002) Institution-based trust  in interorganizational exchange relationships: the role of online B2B [Business to Business] marketplaces on  trust  formation
Context Investigated how institution-based trust develops in online B2B marketplaces to facilitate inter-organizational trust (buyers' trust in sellers).
Measurement scale 7-point scale ranging from 1='strongly disagree' to 4 = 'neither agree nor disagree' to  7 = 'strongly agree'
Characteristic-based trust Not measured
Process-based trust/td> Not measured
Institutional-based trust

Perceived monitoring

  1. There is an effective third-party authority in this B2B marketplace to monitor all sellers and help resolve conflicts.
  2. There is an effective third-party mechanism in this B2B marketplace to assure that all products are in accordance with the posted specifications.
  3. There is an effective third-party enforcing mechanism in this B2B marketplace to assure that all transactions are conducted properly.

Perceived accreditation

  1. Assessing the competencies of new sellers is an important part of this B2B marketplace's selection process.
  2. I believe that this B2B marketplace undertakes a thorough screening process before sellers are allowed to transact in its marketplace.
  3. I believe this B2B marketplace makes a substantial effort to assess the sellers' true competencies.

Perceived legal bonds

  1. This B2B marketplace imposes formal agreements that detail sellers' obligations.
  2. Participating in this B2B marketplace implies that sellers have formal contractual agreements with buyers.

Perceived feedback

  1. A considerable amount of information about the transaction history of most sellers is available from this B2B marketplace.
  2. If any seller misconducts in a transaction, a reliable feedback mechanism is provided by this B2B marketplace to inform buyers.
  3. There is an effective mechanism in this B2B marketplace to allow buyers to publicize their purchasing experience with other sellers.

Perceived cooperative norms

  1. This B2B marketplace promotes cooperative norms for sellers to resolve any transaction disputes.
  2. Sellers rarely take advantage of buyers in this B2B marketplace.
  3. Most sellers are willing to make cooperative adjustments to transact successfully.
  4. Buyers and sellers in this B2B marketplace exchange a considerable amount of information before transacting.
  5. This B2B marketplace provides ways for buyers to receive relevant information from sellers before purchase.
 

4.2 Measuring types of trust in the context of natural resource policy

In this section we propose a method for measuring types of trust between organisations that share responsibility for achieving natural resource policy outcomes.  The method involves two steps:

  1. Identifying and scoring indicators of each type of trust
  2. Using the scores for each type of trust to determine which types of trust are present between organisations

To illustrate the method, we will use a hypothetical example.  The example involves five organisations that share responsibility for achieving a natural resource policy outcome.  The organisations are described as a regional council, a regulatory authority, an environmental organisation, an industry association and a community organisation.

4.2.1 Identifying and scoring indicators of types of trust

To illustrate how indicators of different types of trust might be identified, we have drawn from Section 3.2 on types of trust.  Recall that in that in Section 3.2 we proposed some characteristics, reputation effects and institutions that could provide a foundation for characteristic-based, process-based and institutional-based trust to be produced in the context of contemporary natural resource policy.  For this hypothetical example, characteristics, reputation effects and institutions were arbitrarily selected from those proposed in Section 3.2.  These were used as indicators of the existence of characteristic-based, process-based and institutional-based trust.  The resulting indicators are presented in Table 2.
If this method was used to measure trust in a real world context, we would envisage that indicators of the different types of trust would be selected on the basis of detailed knowledge about the concrete circumstances under which exchanges typically take place in the context under study.  Such knowledge might be elicited, for example, from in-depth interviews with representatives from the various organisations that share responsibility for achieving a given policy outcome.

Having identified indicators of each type of trust, representatives from each organisation would then be asked to evaluate their partner organisations on the basis of each indicator.  For simplicity, representatives might be asked whether the indicator was either present or absent.  If this was the case, then for each pair of partner organisations, the indicators would be scored as categorical variables.  Note that the method we describe here could equally apply if representatives were asked to rate the extent to which the indicator was present using a scale.  If this was the case, then for each pair of partner organisations, the indicators would be scored as continuous variables.

Table 2 –Possible indicators of types of trust in the context of natural resource policy

TYPE

INDICATORS

1. Characteristic-based

 
  • Similarity in organisational values
  • Similarity in organisational objectives
  • Similarity in organisational competencies
  • Similarity in organisational procedures

2. Process-based
  • Positive relationship history
  • Positive reputation
  • Informal expressions of good faith into the future
  • Reputation for providing preferential treatment
  • Promise to avoid opportunistic behaviour

3. Institutional-based
  • Appropriate legislative responsibility and authority
  • Cooperative norms are in place for resolving conflict
  • Coverage by appropriate insurances
  • Willing to offer contractual guarantees for goods and services

4.2.2 Using the scores on indicators to determine which types of trust are present between organisations

Characteristic-based trust

If indicators are scored as categorical variables with the value '1'signifying that an indicator for characteristic-based trust is present and the value '0' signifying that the indicator is absent, then the scores given by a representative of one organisation to its partner organisations can be summarised in a table.  Table 3, for example, shows the scores that a representative of a regional council might give to its partner organisations on the indicators for characteristic-based trust.  The pattern of scores in the table suggests that the representative of the regional council considers the following.  First, that the organisational values, competencies and procedures of the regulatory authority are similar to those of their own organisation.  Second, the organisational values of the community organisation are similar to those of their own organisation.  Third, that the organisational values, objectives, competencies and procedures of the environmental organisation and the industry association are dissimilar to their own organisation.

Table 3: Indicator scores for characteristic-based trust (regional council)

  Regional Council
Indicators Regulatory Authority Community Organisation Environmental Organisation Industry Association
1.Similarity in organisational values 1 1 0 0
2. Similarity in organisational objectives 0 0 0 0
3. Similarity in organisational competencies 1 0 0 0
4. Similarity in organisational procedures 1 0 0 0

Once scores have been recorded for each organisation and indicator, the similarity between the actual partners and a partner that would be perfectly similar can be calculated as follows.  Let the symbol Cijk denote the scores given by each organisation (i = 1,…,n) to each of their partner organisations (j = 1,…,n) for each indicator (k = 1,…,m) of characteristic-based trust.  The similarity Cij between the actual and ideal scores would be represented algebraically as:

(1)                                                         Cij = 1.0 - (Σ ((1 - Cijk) /k) 2) for all k.

The resulting similarity coefficient is an adaptation of the squared Euclidean similarity measure (Aldenderfer & Blashfield 1989).  A coefficient score of zero '0' indicates none of the indicators of characteristic-based trust are present while a score of one '1' indicates all indicators of characteristic-based trust are present.

If the formula presented above is applied to the scores that the representatives of the organisations, in the hypothetical example, assigned to their partner organisations, then the resulting matrix is shown in Table 4.  The table represents how similar the representatives of the five organisations consider their partner organisations to be to their own organisation.  Thus the pattern of similarity coefficients in the table suggests that the representative of the regional council considers the regulatory authority to be most similar to their own organisation.  The pattern of similarity coefficients also suggests that the representative of the industry association considers the regulatory authority and the regional council to be most similar to their own organisation.

Table 4: Matrix of similarity coefficients for characteristic-based trust

Organisation Regulatory Authority Community Organisation Environmental Organisation Industry Association Regional Council
Regulatory Authority - 0.16 0.16 0.36 0.56
Community Organisation 0.06 - 0.00 0.00 0.06
Environmental Organisation 0.00 0.06 - 0.00 0.00
Industry Association 0.25 0.16 0.00 - 0.25
Regional Council 0.56 0.06 0.00 0.00 -

Having calculated the matrix of similarity coefficients for the hypothetical organisations, all that remains is to predict whether characteristic-based trust is present or absent among the partner organisations.  This might be done, for example, by proposing a threshold value for the similarity coefficient, above which characteristic-based trust would be predicted to be present.  Algebraically,

(2)                                                                  CTij = 1 if Cij > CT*

(3)                                                                  CTij = 0 if Cij ≤ CT*.

The symbol CTij denotes characteristic-based trust and the symbol CT* denotes the threshold value of the similarity coefficient, above which trust would be predicted to be present.

The predictions reported in Table 5 were made on the basis of applying a threshold value of 0.50 to the similarity coefficients derived for the hypothetical example.  Inspection of the table reveals that characteristic-based trust is predicted to be present only between the regional council and the regulatory authority.

Table 5: Pattern of characteristic-based trust between organisations

Organisation Regulatory Authority Community Organisation Environmental Organisation Industry Association Regional Council
Regulatory Authority - 0 0 0 1
Community Organisation 0 - 0 0 0
Environmental Organisation 0 0 - 0 0

Industry Association

 0 0 0 - 0
Regional Council 1 0 0 0 -

Process-based trust

The method for measuring process-based trust is similar to the method for measuring characteristic-based trust.  

If indicators are scored as categorical variables with the value '1'signifying that an indicator for process-based trust is present and the value '0' signifying that the indicator is absent, then the scores given by a representative of one organisation to its partner organisations can be summarised in a table.  Table 6, for example, shows the scores that a representative of an environmental organisation might give to its partner organisations on the indicators for process-based trust.  The pattern of scores in the table suggests that the representative of the environmental organisation considers the following.  First, that their organisation has a positive relationship with the community organisation and that the community organisation has a positive reputation.  Second, the community organisation has offered expressions of good faith into the future including a promise to avoid opportunistic behaviour. Third, that the environmental organisation does not have a positive history with the regulatory authority, industry association and regional council. Fourth, none of the organisations has a reputation for offering preferential treatment to favoured partners.

Table 6: Indicator scores for process-based trust (environmental organisation)

  Environmental Organization
Indicators Regulatory Authority Community Organisation Environmental Organisation Industry Association
1. Positive relationship history 0 1 0 0
2. Positive reputation 0 1 1 1
3. Expressions of good faith into the future 1 1 1 1
4. Reputation for providing preferential treatment 0 0 0 0
5. Promise to avoid opportunistic behaviour 0 1 0 0

Once scores have been recorded for each organisation and indicator, the similarity between the actual partners and an ideal partner that exhibits each indicator is calculated as follows.  Let the symbol Pijk denote the scores given by each organisation (i = 1,…,n) to each of their partner organisations (j = 1,…,n) for each indicator (k = 1,…,m) of process-based trust.  The similarity Pij between the actual and ideal scores would be represented algebraically as:

(4)                                                Pij = 1.0 - (Σ ((1 - Pijk) /k)2) for all k.

The resulting similarity coefficient is an adaptation of the squared Euclidean similarity measure (Aldenderfer & Blashfield 1989).  A coefficient score of zero '0' indicates none of the indicators of process-based trust are present while a score of one '1' indicates all indicators of process-based trust are present.

If the formula presented above is applied to the scores that the representatives of the organisations, in the hypothetical example, assigned to their partner organisations, then the resulting matrix is shown in Table 7.  The table represents how similar the representatives of the five organisations consider their partner organisations to be to relative to an ideal partner.  Thus the pattern of similarity coefficients in the table suggests that the representative of the environmental organisation considers the community organisation to be most similar to their ideal organisational partner.  The pattern of similarity coefficients also suggests that the representatives of the industry association and the regional council consider the regulatory authority to be most similar to their ideal organisational partners. The representative of the community organisation considers the environmental organisation and the regional council to be most similar to their ideal organisational partner.

Table 7: Matrix of similarity coefficients for process-based trust

Organisation Regulatory Authority Community Organisation Environmental Organisation Industry Association Regional Council
Regulatory Authority - 0.36 0.16 0.36 0.64
Community Organisation 0.06 - 0.64 0.36 0.64
Environmental Organisation 0.04 0.64 - 0.16 0.16

Industry Association

 0.64 0.16 0.04 - 0.64
Regional Council 0.64 0.36 0.36 0.36 -

Having calculated the matrix of similarity coefficients for the hypothetical organisations, all that remains is to predict whether process-based trust is present or absent among the organisations.  This might be done, for example, by proposing a threshold value for the similarity coefficient, above which process-based trust would be predicted to be present.  Algebraically,

(5)                                                                  PTij = 1 if Pij > PT*

(6)                                                                  PTij = 0 if Pij ≤ PT*.

The symbol PTij denotes process-based trust and the symbol PT* denotes the threshold value of the similarity coefficient, above which trust would be predicted to be present.

The predictions reported in Table 8 were made on the basis of applying a threshold value of 0.50 to the similarity coefficients derived for the hypothetical example.  Inspection of the table reveals, for example, that the environmental organisation is only predicted to have process-based trust in the community organisation.

In this example, the industry association is predicted to express process-based trust in the regional council but the reverse is not the case. Also, the industry association is predicted to express process-based trust in the regulatory authority but the reverse is not the case. If asymmetries in trust increases opportunistic behaviour as non-trusting organisations exploit the cooperative actions taken by the trusting organisations, then the presence of a number of asymmetries creates the potential for relationships among organisations to become chaotic, confusing and dysfunctional. The opportunistic behaviour of non-trusting organisations may directly extinguish the trust other organisations have in them. Depending on circumstances, the non-trusting organisations may also have the capacity to impair cooperation between trusting organisations, for example, by conveying misrepresenting critical information about other organisations (Wathne and Heide 2000).

Table 8: Pattern of process-based trust between organisations

Organisation Regulatory Authority Community Organisation Environmental Organisation Industry Association Regional Council
Regulatory Authority - 0 0 0 1
Community Organisation 0 - 1 0 1
Environmental Organisation 0 1 - 0 0

Industry Association

 1 0 0 - 1
Regional Council 1 0 0 0 -

Institutional-based trust

The method for measuring institutional-based trust is similar to the methods for measuring characteristic-based and process-based trust.  

If indicators are scored as categorical variables with the value '1' signifying that an indicator for institutional-based trust is present and the value '0' signifying that the indicator is absent, then the scores given by a representative of one organisation to its partner organisations can be summarised in a table.  Table 9, for example, shows the scores that a representative of a regulatory authority might give to its partner organisations on the indicators for institutional-based trust.  The pattern of scores in the table suggests that the representative of the regulatory authority considers the following.  First, that their organisation believes the industry association has appropriate legislative responsibility and authority, has cooperative norms in place for resolving conflict and is covered by appropriate insurances. Second, that the regional council also has appropriate legislative responsibility and authority and cooperative norms in place for resolving conflict. However, while the regional council is perceived as willing to offer contractual guarantees for goods and services it is not seen to be covered by appropriate insurances.  Third, the community organisation is perceived to be covered by appropriate insurances but not to have appropriate legislative responsibility and authority or cooperative norms in place for resolving conflict.

Table 9: Indicator scores for institutional-based trust (regulatory authority)

  Regulatory Authority
Indicators Community Organisation Environmental Organisation Industry Association Regional Council
1. Appropriate legislative responsibility and authority 0 1 1 1
2. Cooperative norms are in place for resolving conflict 0 0 1 1
3. Coverage by appropriate insurances 1 1 1 0
4. Willing to offer contractual guarantees for goods and services 0 0 0 1

Once scores have been recorded for each organisation and indicator, the similarity between the actual partners and an ideal partner that exhibits each indicator is calculated as follows.  Let the symbol Iijk denote the scores given by each organisation (i = 1,…,n) to each of their partner organisations (j = 1,…,n) for each indicator (k = 1,…,m) of institutional-based trust.  The similarity Iij between the actual and ideal scores would be represented algebraically as:

(7)                                                Iij = 1.0 - (Σ ((1 - Iijk) /k)2) for all k.

The resulting similarity coefficient is an adaptation of the squared Euclidean similarity measure (Aldenderfer & Blashfield 1989).  A coefficient score of zero '0' indicates none of the indicators of institutional-based trust are present while a score of one '1' indicates all indicators of institutional-based trust are present.

If the formula presented above is applied to the scores that the representatives of the organisations, in the hypothetical example, assigned to their partner organisations, then the resulting matrix is shown in Table 10.  The table represents how similar the representatives of the five organisations consider their partner organisations to be  relative to an ideal partner.  Thus the pattern of similarity coefficients in the table suggests that the representative of the regulatory authority considers the industry association and regional council to be most similar to their ideal organisational partner.  The pattern of similarity coefficients also suggests that the representatives of the industry association and the regional council consider the regulatory authority to be most similar to their ideal organisational partners. The representative of the community organisation considers the environmental organisation to be most similar to their ideal organisational partner.

Table 10: Matrix of similarity coefficients for institutional-based trust

Organisation Regulatory Authority Community Organisation Environmental Organisation Industry Association Regional Council
Regulatory Authority - 0.25 0.06 0.56 0.56
Community Organisation 0.06 - 0.56 0.25 0.25
Environmental Organisation 0.25 0.56 - 0.25 0.25

Industry Association

 0.56 0.00 0.0 - 0.56
Regional Council 0.56 0.25 0.25 0.25 -

Having calculated the matrix of similarity coefficients for the hypothetical organisations, all that remains is to predict whether institutional-based trust is present or absent among the partner organisations.  This might be done, for example, by proposing a threshold value for the similarity coefficient, above which institutional-based trust would be predicted to be present.  Algebraically,

(8)                                                                  ITij = 1 if Iij > IT*

(9)                                                                  ITij = 0 if Iij ≤ IT*.

The symbol ITij denotes institutional-based trust and the symbol IT* denotes the threshold value of the similarity coefficient, above which trust would be predicted to be present.

The predictions reported in Table 11 were made on the basis of applying a threshold value of 0.50 to the similarity coefficients derived for the hypothetical example.  Inspection of the table reveals, for example, the regulatory authority has institutional-based trust in the industry organisation and regional council but not in the community or environmental organisations. Note that, in this example, the industry association is predicted to express institutional-based trust in the regional council but the reverse is not the case. Such asymmetry in institutional-based trust again raises the possibility that the potential for opportunistic behaviour may be increased as the non-trusting organisation may exploit cooperative actions taken by the trusting organisation.

Table 11: Pattern of institutional-based trust between organisations

Organisation Regulatory Authority Community Organisation Environmental Organisation Industry Association Regional Council
Regulatory Authority - 0 0 1 1
Community Organisation 0 - 1 0 0
Environmental Organisation 0 1 - 0 0

Industry Association

 1 0 0 - 1
Regional Council 1 0 0 0 -

5. Trust and cooperative behaviour

In this section we describe a typology of different degrees of cooperative behaviour among organisations and the contextual factors that are hypothesised to influence those behaviours.  We then discuss the potential influence of the different types trust on the propensity of organisations to exhibit different degrees of cooperative behaviour.

5.1 Typology of cooperative behaviour

Oliver (1991) drew on evidence from the institutional and resource dependence literature to argue that organisational behaviour in response to social institutional pressures can vary from passive conformity to active resistance depending on the nature of those pressures.  In other words, Oliver (1991) argued that organisations exhibit different degrees of cooperative behaviour in response to pressures from government agencies, regulatory structures, professional associations, interest groups and public opinion.  Oliver (1991) proposed a typology of strategic responses to institutional pressures that represented different degrees of resistance to those pressures. That is, a typology of different degrees of cooperative behaviour (Lui and Ngo 2005).

Oliver's (1991) typology of cooperative behaviours included, in decreasing order of cooperativeness: acquiescence, compromise, avoidance, defiance and manipulation. Acquiescence is the most cooperative behaviour and involves acceding to the requirements of another.  Acquiescence may take the form of habit, imitation or compliance (Oliver 1991).  Compromise is partial compliance and involves reconciling the competing requirements of different organisations.  Compromise may take the form of balancing, pacifying or bargaining (Oliver 1991).  Avoidance is non-compliance with the requirements of another through the use of evasive tactics.  Avoidance may take the form of concealment, buffering or escaping (Oliver 1991).  Defiance is active non-cooperation with the requirements of another and involves outright rejection of another's requirements.  Defiance may take the form of dismissal, challenge or attack (Oliver 1991).  Manipulation is the most uncooperative behaviour.  Manipulation involves acting to change or exert power over the content of another's expectations.  Manipulation may take the form of co-option, influence or control (Oliver 1991).

Oliver's (1991) typology of cooperative behaviours was developed in the context of organisational responses to pressures from social institutions such as government agencies, regulatory structures and public opinion. Lui and Ngo (2005) extended the typology to include cooperation among organisations in a competitive commercial context.  In essence, Lui and Ngo (2005) argued that organisations that are partners in a commercial exchange are themselves sources of external pressure and mechanisms for the transmission of social intuitional pressures.  

Lui and Ngo's (2005) extension of Oliver's (1991) typology is presented in Table 12. They highlighted the importance of acquiescence as a strategy which organisations use to enhance their relationship with partners. With respect to compromise, they drew attention to bargaining as a tactic organisations use to seek concessions from their partners. They also identified reducing contact with another organisation as an avoidance tactic to delay responding to a partner and so circumvent cooperation.  Further, Lui and Ngo (2005) suggested that extreme cases of defiance may involve the termination of a relationship with a partner organisation.  

In the context of contemporary natural resource policy, community and private organisations are subject to pressures from a range of social institutions such as regulatory and legal agencies, professional and industry associations, interest groups and so on.  The very objectives of many of these organisations define them as the sources of, and mechanisms for, the transmission of various social institutional pressures.  This suggests that Oliver's (1991) typology could be used to provide insights into cooperative relationships among organisations that share responsibility for achieving natural resource policy outcomes.

Table 12: Typology of cooperative behaviour (Adapted from Lui and Ngo 2005, 1127)

Action types Oliver (1991) original concepts Lui and Ngo (2006) extended concepts Example tactics in natural resource management
Acquiesce To imitate or comply as a habit. Represents organizations acceding to institutional pressure in various forms. Follow the request/action of the initiator, even at the expense of one's own short term interests. Firms may do this out of habit (established norms) or strategically to enhance the relationship with the partnering firms. Compliance, alliance, coordination, joint problem solving:Involvement of State government agencies in joint problem solving produced the MDB Salinity and Drainage Strategy (CAS 2005)
Compromise To balance, pacify and bargain Represents the thin edge of the wedge in organizational resistance to institutional pressure. Conform to the minimum while partially seeking to change the request/action of the initiator. Firms bargain with their partners, trying to seek concession from them. Bargain, negotiate, share information:Sharing of information through stakeholder consultation in preparation of Forestry CRAs (Mobbs 2003)
Avoid To conceal, buffer and escape. Represents organizational attempts to preclude the necessity of conformity. Also to circumvent conditions that makes conforming behaviour necessary. Do not intend to fulfil the request, but conceal this non-cooperation instead of showing defiance. Firms reduce their contact with their partners on the issue so that they can delay their response. Stall, delay, evade, conceal information:Stalling of IWC debate on whaling (Anon 2005)
Defy To dismiss, challenge and attack. Represents a more active form of resistance to institutional pressure. Dismiss and challenge the action of the other partners. This involves rejecting and denouncing the cooperative relationship. This is similar to opportunistic behaviour depicted in transaction cost theory. In extreme cases, this may lead to the termination of the cooperative relationship. Withdraw:Withdrawal from Nuclear Non-proliferation Treaty (Kirgis 2003)
Manipulate To co-opt, influence and control. Represents the purposeful and opportunistic organizational attempt to actively modify institutionally their actions. >Act to influence or change the action of partners, with the aims of overpowering the initiators, and shaping and redefining their actions.

Threaten, coerce:Withholding of funding to prevent public comment on climate change (Skatssoon 2006)

Similarly, organisations that share responsibility for achieving natural resource policy outcomes could be viewed as partners in transactions that are potentially competitive; in the sense that the objectives of one more organisations can only be achieved at the expense of achieving the objectives of other organisations.  This suggests that Lui and Ngo's (2005) extension of Oliver's (1991) typology could also provide insights into cooperative relationships among organisations that share responsibility for achieving natural resource policy outcomes.  This is reflected in our extension to Table 12, where we draw attention to some instances where such organisations have exhibited behaviours consistent with of Oliver's (1991) and Lui and Ngo's (2005) typologies.

In this section we have described Oliver's (1991) and Lui and Ngo's (2005) typologies of cooperative behaviour and drawn some implications for their relevance to the context of contemporary natural resource policy .  In the next section we consider the contextual factors that are likely to limit the extent to which the range of behaviours defined by these typologies will be expressed by organisations in practice.

5.2 Contextual limits on cooperative behaviour

Oliver (1991) identified ten factors that are likely to limit the potential for organisations to exhibit cooperative behaviour in practice.  These factors are likely to affect both the willingness of organisations to cooperate and their capacity to do so.  Interestingly, many of these factors were also identified by Zucker (1986) as foundations for the three types of trust she proposed.  Oliver (1991) argued that institutional pressures on organisations are of two kinds – social and economic.  Laws requiring organisations to limit pollution or protect the health and safety of staff are examples of social pressures.  Demands for efficiency and financial accountability are examples of economic pressures.  According to Oliver (1991), the willingness of organisations to conform to such pressures will tend to depend on whether they view such pressures to be legitimate or not.

The willingness of organisations to conform to institutional pressures will also depend on the consistency of such pressures with each organisation's objectives and the constraints they place on the discretion of organisations to make critical organisational decisions. The greater the inconsistency between the institutional pressures and an organisation's objectives, the more likely the organisation will dismiss, challenge or attack those pressures (Oliver 1991).

Further, the willingness of an organisation to conform to institutional pressures will also be limited if such pressures constrain substantive organisational decisions such as resource acquisition and allocation, product or service selection, or organisational administrative (Oliver 1991).  Under such conditions organisations are likely to exhibit avoidance, defiant or manipulative behaviours.

Oliver (1991) added that the willingness of organisations to conform to institutional pressures will also depends on the process by which the pressure is exerted.  Oliver (1991) described two kinds of processes for exerting institutional pressure – coercive and voluntary. Coercive processes are imposed by authority such as legal obligations and government regulation. The willingness of organisations to conform to coercive processes will depend on the degree of vigilance and enforcement, and the severity of punitive actions (Oliver 1991).

Voluntary processes entail the diffusion of norms, expectations, policies and practices among organisations. Oliver (1991) argued that when the diffusion of norms, expectations, policies and practices among organisations is low, then willingness to accommodate the norms, expectations, policies and practices of partner organisations is likely to be correspondingly low.  Moreover, according to Oliver (1991), organisations that are dissimilar in terms of norms, expectations, policies and practices are more likely to exhibit compromise, avoidance or defiance behaviours if neither can claim to be representative of commonly accepted standards and practices.  This is because neither organisation can legitimately claim their standards and practices should be accepted because they are widely used by other organisations.

Further, Oliver (1991) argued that the capacity of an organisation to conform to institutional pressures will also depend on the multiplicity of partners to an exchange and their degree of dependence on their partners.  The greater the variety of pressures placed on an organisation by different partners the greater the chances that those pressures will be incompatible. Consequently, the more likely the organisation will ignore or defy the demands of one partner in conforming to the demands of another.  In such circumstances, compromise may be the most cooperative behaviour available to an organisation. Relatedly, the more dependent an organisation is on a partner organisation the greater the incentive for the organisation to acquiesce to the pressures imposed by that partner.

Oliver (1991) proposed that, all else being equal, the willingness of organisations to cooperate with partners will increase with the level of uncertainty organisations have about their environment; as organisational decision makers seek to create certainty, stability and predictability.  When organisations are highly interconnected they are highly interdependent and this requires that organisations coordinate and negotiate with each other in order to achieve organisational objectives.  At the same time the potential for cooperation to reduce environmental uncertainty and promote functioning in interconnected environments will be limited by the multiplicity of partners an organisation must interact with and the variety in their requirements.  Under such circumstances then, compromise and avoidance behaviours are likely to predominate.

In the next section we discuss the relationships between these contextual limits on cooperative behaviour and the types of trust identified by Zucker (1986).

5.3 Types of trust and cooperative behaviour

Lui and Ngo (2005) found a statistically significant association between inter-organisational trust, the trustworthiness of an organisation and the degree of cooperative behaviour exhibited by organisations.  They measured the extent of cooperative behaviour exhibited by organisations as the proportion of interactions between organisations that were characterised as acquiescent (Lui and Ngo 2005).  In addition, they measured trustworthiness using indicators of organisational similarity and organisational reputation.  Finally, they found a statistically significant association between the presence of a satisfactory prior relationship and the extent of cooperative behaviour exhibited by organisations (Lui and Ngo 2005).

The findings of Lui and Ngo (2005) have two important implications concerning the potential influence of different types of trust on cooperative behaviour.  First, their findings suggest there is a potential association between each of the different types of trust, as described by Zucker (1986), and the extent of cooperative behaviour.  Lui and Ngo (2005) reported significant and strong correlations between their measures of organisational similarity, satisfactory prior relationships, organisational reputation and inter-organisational trust.  Lui and Ngo (2005) measured organisational similarity on the basis compatibility in organisational goals and objectives, technical capabilities and procedures, and similarity in the professional or trade skills of employees.  Theoretically, such a measure should correlate with characteristic-based trust and hence with inter-organisational trust.  Similarly, satisfactory prior relationship and reputation, the latter measured by variables such as organisational reputation for honesty and concern for partner, should correlate with process-based trust and hence with inter-organisational trust.  Lui and Ngo (2005) found significant and strong associations between organisational similarity, satisfactory prior relationships, organisational reputation and their measure of the extent of cooperative behaviour.  Hence, Lui and Ngo's (2005) findings suggest that there is likely to be an association between Zucker's (1986) types of trust and the extent of cooperative behaviour exhibited by organisations in practice.

Second, Lui and Ngo's (2005) findings suggest the extent of cooperative behaviour increases with the number of different types of trust that are present.  In particular, Lui and Ngo (2005) reported statistically significant regression between the extent of cooperative behaviour and their measures of organisational similarity, satisfactory prior relationships and inter-organisational trust.  Given that their measures of organisational similarity and satisfactory prior relationships reflected characteristic-based and process-based trust respectively, this result indicates that both forms of trust have the potential to uniquely contribute to the extent of cooperative behaviour (as measured by the proportion of behaviours that are acquiescent).  This means that, depending on the context, the presence of one type of trust could reinforce the presence of other types of trust and increase the extent of cooperative behaviour.

In the next section we discuss how contextual limitations and types of trust present might come together to influence cooperation among organisations that share responsibility for achieving natural resource policy outcomes.

5.4 Context, types of trust and cooperative behaviour

Oliver (1991) proposed that the willingness of organisations to conform to the pressures of partners depended on the consistency of these pressures with the organisations objectives and the constraints these pressures placed on the discretion of the organisation to make critical organisational decisions. The greater the inconsistency in objectives, policies and practices of organisations the less likely they are to cooperate and the greater the likelihood they will exhibit avoiding, defiant and manipulative behaviours. This will be reinforced by the fact that these incompatibilities are likely to create conflict over the appropriate allocation of resources and product or service selection – critical organisational decisions.

Relatedly, the greater the inconsistency in objectives, policies and practices of organisations that share responsibility for achieving natural resource policy outcomes the less likely characteristic-based trust will appear among these organisations. As argued earlier, the scope for characteristic‑based trust to be produced among these organisations is likely to depend on the whether or not there is social distance among them.  Diversity in the roles and responsibilities of organisations involved in natural resource policy would tend to create social distance and, therefore, place an upper limit on the extent to which organisations are able to identify such similarities.  This would, in turn, place an upper limit on the scope for characteristic‑based trust to be produced between them. In such circumstances the prospects for cooperative behaviour may only be improved through the development of institutional-based or process-based trust.

Institutional-based trust could develop if norms, policies and practices around engagement on the natural resource issue could be established. However, as argued earlier, the complex nature of natural resource issues is likely to limit the degree to which it is possible to articulate standards of behaviour independently of the idiosyncratic circumstances surrounding any given exchange.  Under conditions where problems are changing and interacting with each other in unpredictable ways, predefined and uniform standards of behaviour are likely to become rapidly out of date.  At the same time, efforts by authorities to establish norms, policies and practices could rapidly come to be regarded as illegitimate and so provoke counterproductive behaviours if coercive processes are employed to force their spread among organisations (Oliver 1991).

Further, the greater the number of organisations involved and greater the inconsistency in their objectives, the smaller will be the scope for identifying common norms, policies and practices. Hence, the slower the rate of voluntary diffusion is likely to be (Oliver 1991). In short, the prospects for institutional-based trust to promote cooperative behaviour among organisations that share responsibility for achieving natural resource policy outcomes could be limited. This creates a need for types of trust that will allow expectations about appropriate standards of behaviour to be mutually adapted in line with changing and idiosyncratic circumstances.  In principle, process-based trust would appear to offer reasonable prospects of meeting this need.

Process-based trust arises from experience of, and reputation for, a history of trustworthy interaction. Unlike characteristic-based and institutional-based trust, process-based trust does not rely on the presence of some kind of similarity between organisations – shared expectations, norms and practices or compatible objectives, capabilities or procedures. Hence, while the emergence of characteristic-based trust promotes cooperation among organisations that are similar, process-based trust can arise among quite dissimilar organisations depending on the quality of their interaction.

As argued earlier, the scope for process‑based trust to be produced, in contemporary natural resource policy, is likely to depend on the extent to which the organisations involved have worked together previously or have information on the reputations of each other.  Geographic distance among organisations is likely to place an upper limit on the extent to which it is possible for organisations to establish and maintain working relationships. Nevertheless, if the need for a working relationship has been established through imperatives such as formal social institutions, the potential exists for process‑based trust to be produced over time, regardless of the starting point of the relationship.

For example, the context of dissimilar organisations involved in a contemporary natural resource issue could be characterised as one with multiple organisations seeking to satisfy misaligned objectives. Each is seeking to influence critical decisions in other organisations. There may be conflict over the legitimacy of key social and economic pressures. These drivers towards non-cooperative behaviours may be reinforced by a lack of shared norms, policies and practices and asymmetric dependency between organisations. This leads to the conclusion that, in the absence of process-based trust, these organisations will tend to exhibit defiant and manipulative behaviours.

In contrast, the context of similar organisations involved in a contemporary natural resource issue could be characterised as one with multiple organisations with relatively aligned objectives. Each is seeking to coordinate with critical decisions in similar organisations. There may be broad acceptance of the legitimacy of key social and economic pressures. The environment may be uncertain but organisations may be strongly interconnected. These drivers towards cooperative behaviours may be reinforced by shared norms, policies and practices. This leads to the conclusion that, in the absence of process-based trust, these organisations are more likely to exhibit compromising or avoidance behaviours. The validity of this conclusion depends on whether or not these similar organisations see themselves as competing with each other to provide services to the other organisations involved in the natural resource issue.

The possible influence of the types of trust on cooperative behaviour that have been discussed here are summarised in diagrammatic form in Figure 2. The diagram describes a series of hypothetical relationships between the presence of each type of trust and the corresponding degree of cooperative behaviour. Each type of trust is hypothesised to increase the degree of cooperative behaviour and to reinforce the effect on cooperation of the other types of trust. The hypothetical relationships between types of trust and degree of cooperation presented in the figure are consistent with the findings of Lui and Ngo (2005).

An examination of the diagram also highlights how asymmetries in the types of trust between organisations could interact to increase opportunistic behaviour. For example, assume there is asymmetry in characteristic-based trust between two organisations. The organisation exhibiting characteristic-based trust in the partner organisation is more likely to engage in acquiescent and compromise behaviours than the partner organisation. The partner organisation is more likely to engage in avoidance and defiance behaviours than the organisation exhibiting characteristic-based trust in the partner. This creates a situation where the partner organisation can use opportunistic tactics such as withholding information and providing misrepresentative information to exploit cooperative tactics such as information sharing and joint problem solving (Wathne and Heide 2000). If exposed, such exploitative behaviour could ultimately result in the termination of the relationship.

Figure 2 - Flow chart showing hypothetical example of relationship between types of trust and degree of inter organisational cooperation for a natural resource issue

Figure 2 - Hypothetical example of relationship between types of trust and degree of inter organisational cooperation for a natural resource issue

6. Conclusion

Natural resource issues are complex and government initiatives to manage such issues often meet with unanticipated and counterproductive consequences. This is due in no small part to increasing fragmentation in government policy-making and implementation which means the achievement of natural resource policy outcomes will depend on attaining cooperation among diverse government and non-government organisations.  Attaining such cooperation is likely to be difficult given that misalignments between the interests that individual organisations might have in achieving policy outcomes and their responsibilities to other organisational objectives are inevitable in natural resource policy.

Studies into the influence of trust on inter-organisational relationships suggest that high levels of cooperation can be achieved if inter-organisational trust can be built and maintained.  In this project we have explored the potential of trust for promoting cooperation among organisations that share responsibility for achieving natural resource policy outcomes.  The specific purpose of the project was to develop a method for quantifying relationships between particular types of trust and particular inter-organisational behaviours.

In this paper we have discussed the fundamental characteristics of trust. We then described a typology of three different types of trust and discussed the relationships among them. Next, we outlined a method for identifying the presence of each types of trust among organisations in the context of contemporary natural resource policy.  Finally, we presented a typology of cooperative behaviours and considered the potential relationships between the different types of trust and different types of cooperative behaviours.

The ideas and methods presented in this paper offer a means for quantifying relationships between particular types of trust and particular inter-organisational behaviours. The application of these ideas and methods offers an opportunity to understand and predict the behaviour of other organisations that share responsibility for achieving natural resource policy outcomes.

In particular, the application of the ideas and methods presented here could assist policy makers to:

  • identify opportunities for creating and reinforcing trust among organisations;
  • understand how different types of trust may be created among organisations;
  • predict the type of cooperative behaviour that organisations are likely to exhibit;
  • identify limits to the cooperation that is possible among organisations; and
  • identify asymmetries in the types of trust between organisations and their consequences.

In short, the ideas and methods presented here would improve the capacity of policy processes to tap into the potential of trust for promoting cooperation among organisations that share responsibility for achieving natural resource policy outcomes.  This provides a basis for reducing the risk of unanticipated and counterproductive consequences in natural resource policy.

We anticipate that the next stage in this research would be to apply the method to a real world policy context.  This would provide an opportunity to test the practical value of the method for identifying the types of trust that exist among organisations and for predicting inter-organisational behaviour.

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