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Edited by Reinhard Bachmann and Akbar Zaheer
7 Trust, transaction cost economics, and mechanisms Philip Bromiley and Jared Harris Introduction Organizational scholars increasingly recognize trust as an important factor in intra- and inter-organizational relations, signiﬁcantly inﬂuencing everything from the behavior of teams to the performance of strategic alliances and supply chains. Ten years have passed since the publication of two early articles on organizational trust: Bromiley and Cummings (1995) and Cummings and Bromiley (1996). In reﬂecting on the scholarly impact of these papers – and what such an impact might mean for future work in organizational trust – we discuss the concept of trust, brieﬂy revisit the papers, consider the diﬀerent ways in which the research has been used, and oﬀer thoughts on the relevance of trust to organizational research. Bromiley and Cummings suggest that the inclusion of trust would expand and extend the research framework of transaction cost economics (TCE). Yet this call for TCE research to include the concept of trust has been largely ignored. Why? We summarize and analyze the apparent justiﬁcations for omitting or ignoring trust, leading to a critical examination of several theoretical aspects of TCE. We distinguish between TCE’s calculativeness, based on assuming others are self-interest-seeking with guile, and trust, which we deﬁne as beliefs or actions not determined by such calculativeness. Deﬁning trust All research on organizational trust faces the question of how to deﬁne trust. What do scholars mean when they use the term trust? Trust’s many meanings in common usage...
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