Actors’ Interaction: Content, Process and Trust

The interactions and exchanges of the actors in the employment relations system occur within groups, within organisations, and between groups and organisations. These may be formal institutionalised procedures, forums for engagement and less formal interactions (Craig & Solomon, 1996 ).

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2.3.9.1 The content of the exchange

What is the content of exchanges within the employment relationship? Whilst the initial contract focuses on tangible rewards, the on-going nature of the relationship opens the opportunity for intangible rewards. Exchange theorists have attempted to categorise the content of exchanges. Foa (1971) developed the most comprehensive theory with a classification into money, goods, labour (services), information and love which included regard, devotion, esteem, status and respect (Cropanzano & Mitchell, 2005; Schlosser, 2014). Colquitt, et al., (2013) proposed that the dimensions of justice could be included in resources to be exchanged. Mitchell, Cropanzano, & Quisenberry (2012) simplified the classification by proposing two categories of resources: economic, which are relatively concrete to satisfy material needs and socio-emotional, which satisfy social and esteem needs. However, Emerson (1976) provided the ultimate simplification proposing that the content of an exchange could be anything that was valuable or rewarding for a person. This led Turner (2014) to note that actors, within a social context, determine what resources are valuable in that context and voluntarily seek out exchanges to acquire those valued resources.

What is exchanged is related to the power relationships between the parties and the content of what is exchanged will be evaluated according to the norms of fairness (discussed above under organizational justice) and the norms of reciprocity. Gouldner (1960) first framed a norm of reciprocity; however, Sahlins extended the norm by introducing three orientations towards reciprocity: generalised reciprocity where one party supplies benefits but is not concerned regarding reciprocation; balanced reciprocity, where both parties are interested in the exchange of positive and negative benefits; and negative reciprocity, where the exchange partners attempt to maximise their own interests at the expense of others (Coyle- Shapiro & Conway, 2004; Cropanzano & Mitchell, 2005; Hu, Tetrick , & Shore , 2011). During the lifetime of a relationship, events may occur that are so memorable or traumatic that they form part of the context of all exchanges going forward, effectively changing the exchange rules of the relationship (Ballinger & Rockmann, 2010). In employment relations terms, a prolonged and violent strike could constitute such an event.

2.3.9.2 Exchange processes

In employment relations, there are processes of interaction related to the resolution of differences which may be grouped as the formal processes of negotiation, consultation, joint- decision making and dispute resolution which includes conciliation, arbitration and industrial

41 action. There are also more informal interactions to fulfil social and psychological needs (Craig & Solomon, 1996; Kaufman, 2004).

Exchange theorists offer insights into the patterns and outputs of interactions but much of the focus has been on the more informal interactions following Blau’s (1964) distinction into economic and social exchanges. However, Lawler (2001) brought the processes of exchange closer to employment relations and proposed that workplace relationships involve four exchange transaction types, namely: negotiated, reciprocal, productive and generalized. In the discussion below, we consider the first three as relevant to this study. This more nuanced differentiation allows for the accommodation of the more formal processes of employment relations and informal processes in on-going relationships. In the workplace, multiple exchange processes may be used which allows for the development of a variety of relationship characteristics (Coyle-Shapiro & Conway, 2004; Cropanzano & Mitchell, 2005; Turner, 2014). Negotiated exchanges deal with differences in interests and goals, or over processes. This type of exchange accommodates the formal processes of employment relations, from negotiation through aspects of dispute resolution, all of which lead to an agreement being concluded. Since the content of the exchange is explicit, the terms are agreed by both parties prior to a contractual, binding agreement being concluded, and parties may easily evaluate the agreements for fairness and monitor the execution of the contract. Such exchanges are considered low risk (Lawler, 2001; Mitchell, Cropanzano, & Quisenberry, 2012). Lawler and Yoon (1993) and Lawler (2001) argue that successful agreements produce positive emotions. Lawler and Yoon (1993) propose that the distributive and integrative negotiation processes outlined by Walton and McKersie (1965) have different consequences for relationships. In distributive negotiation, the goals of the parties may be in conflict. In integrative bargaining there is less of a fundamental conflict in the goals of the parties. Therefore, it is likely that integrative bargaining will produce more successful agreements and thus more positive emotions (Lawler & Yoon, 1993).

A reciprocal exchange, as defined in exchange theory, involves the unilateral movement of valued resources in a series of longitudinal, sequential, non-negotiated exchanges where the value evolves over time. Since resources are provided, not with an explicit, but with rather a tacit expectation that there will be a unilateral return of appropriate benefits, these exchanges are considered high risk (Coyle-Shapiro & Conway, 2004; Cropanzano & Mitchell, 2005; Lawler, 2001; Molm, 2003; Turner, 2014).

42 Emerson (1976) first identified a productive exchange as one where goods and services are produced by an organised social group. Lawler (2001) proposed that a productive exchange is one where products are produced under certain conditions. Firstly, the parties cooperate and coordinate their efforts; secondly, there is a degree of interdependence with a shared sense of responsibility; thirdly, the actions of each party are not always clearly discernible; and lastly, the success is shared. Turner (2014) suggests that the more successful a productive exchange, the more positive the emotions.

2.3.9.3 Risk and trust

Repeated exchanges between economic actors result in the development of relational factors, which include relationship patterns and the emergence of characteristics of these relationships. A valued possible characteristic is trust, which is purported to be fundamental to social order, social capital, and psychological and social contracts. Economic entities function optimally on a combination of contracts and trust, with trust reducing the need for contracts. This saves the cost of the specification and monitoring of contracts and promotes support and cooperation (Cook, 2005; Field, 2003; Nooteboom, 1996; Nooteboom, Berger, & Noorderhaven, 1997; Searle & Dietz, 2012). Trust may be placed in individuals, groups, organisations, institutions, or systems (Nooteboom, 2010).

Critical to the understanding of exchanges and the emergence of relationship characteristics, is the notion of risk. Risk exists in all exchanges. The level of risk involved determines the extent of the trust that emerges in the relationship, while a successful exchange demonstrates the trustworthiness of the exchange partner. Reciprocal processes carry the greatest risk and thus have the highest potential for the development of trust. However, negotiated exchanges, which carry the least risk, may, after repeated, successful exchanges, demonstrate the trustworthiness of the parties, produce trust and may evolve into reciprocal exchanges, with the potential to further strengthen trust. Since productive exchanges are embedded in larger structures, successful exchanges that generate positive emotions and engender trust, also produce trust in and commitment to the larger structures, that is institutional trust (Coyle- Shapiro & Conway, 2004; Cropanzano & Mitchell, 2005; Lawler, 2001; Molm, 2003; Molm, Collett, & Schaefer, 2007; Turner, 2014).

Trust may be defined as predictability and reliability coupled with fairness and honesty (Allen, 1990; Purcell, 1981). In employment relations, trust is considered an important characteristic necessary for cooperation (Swanepoel & Slabbert , 2012) and grows from experiences or beliefs about predictability, benevolence and fairness (Cunningham & MacGregor, 2000). For

43 Mather (2011) trust in the employment relationship is more concerned with predictability. Predictability does not necessarily suggest a positive outcome, merely a consistency that reduces risk (Mayer , Davis, & Schoorman, 1995).

Sabatelli and Shehan (1993) link the evolution of trust to the reliable observance of norms or rules that have been agreed or that meet the expectations of the parties. To capture the nuance of trust, Mitchell, Cropanzano, and Quisenberry (2012) refer to the developmental trust model of Lewicki which considers the three stages of trust as calculus-, knowledge- and identity-based trust. In the early stages of a relationship, there is no relationship history and therefore, there is risk. As exchanges within the relationship continue, prediction and understanding improve and, if the exchanges prove beneficial, then trust may emerge. This can be termed calculus-based trust. Many relationships do not evolve any further. There may be no need as, if, as in a negotiated exchange, the terms of the relationship are explicit and contractual. Further, there may have been a breach of expectations or obligations and the parties remain cautious or even conflictual (Mitchell , Cropanzano, & Quisenberry, 2012). If, however, the relationship evolves, knowledge-based trust may emerge as understanding develops, behaviour becomes more predictable and the propensity to risk is increased between parties. The relationship may progress further, to identity-based trust which represents the highest relationship quality. Here, there is real understanding, emotional connection, and strong identification with the goals and values.

It is possible to differentiate between interpersonal trust, institutional trust and institutionalised trust. Interpersonal trust arises between individuals or groups and for Purcell (1981) this precedes institutional or organisational trust. Trust in the organisation, institutional trust, arises from relationships with multiple number of groups within the organisation (DeConinck, 2010). Whereas institutionalised trust relates to a different concept and refers to the messages of trust or distrust that are conveyed through organisational structures, systems, policies, procedures and management practices (Fox, 1974; Searle & Dietz, 2012).