Trust, commitment, cooperation and the development of norms of behaviour

Network relationship building is a cumulative process based on trust and commitment. These need to be demonstrated by all actors because relationships take time and effort to establish (Blankenburg Holm et al., 1996; Brass et al., 2004; Day, 1995; Dyer and Singh, 1998; Granovetter, 1973; Gulati, 1998; Gulati et al., 2000 Håkansson and Johanson, 1993;

Johanson and Mattsson, 1987). Relationships are significant to the network partners and are lasting; they are also informal in nature, although specific or single activities may be formalised. The relationships built are mutually orientated, which implies that each actor is interested and respectful of the other, and will have knowledge and be aware of the other’s objectives. Mutuality results in actors becoming interdependent on other actors within the network in order to access and share resources for business transactions (Blankenburg Holm et al., 1996; Håkansson & Johanson, 1993; Johanson & Mattsson, 1987). The relational nature of transactions within the network provides both opportunities and constraints for an actor in terms of their development because it can reduce exchange costs, give access to other actors, and may result in gain of power over partners – although it may also result in loss of power over partners (Johanson & Mattsson, 1987).

Trust is an important antecedent for network effectiveness and is recognised by many researchers as important in building effective networks (Brass et al., 2004). Trust relates to the willingness of one actor not to exploit weaknesses in the other, and may result in referrals to other potential actors that may have the necessary skills to undertake the tasks required (Gulati, 1998; Gulati et al., 2000). This is because actors who are tied are more likely to understand each other and hold similar information, which in turn will diminish uncertainty and promote trust (Granovetter, 1973; Gulati, 1998; Gulati et al., 2000).

The formation of trust will aid the relationship through difficult moments, especially those experienced when starting up. Trust needs to permeate the actor at different levels and not be restricted to the CEO/Board level of both actors. Trust may be facilitated via equity swaps, sharing of knowledge and information to achieve objectives, developing links between the various levels of each actor, ensuring integrity, and formalising the relationship with defined responsibility and accountability (Day, 1995). Moreover, an environment that facilitates trust will ultimately encourage higher-than-normal returns on relational activities because lower transaction costs will be experienced by reducing negotiation costs and promoting better performance between actors (Brass et al., 2004; Dyer & Nobeoka, 2000; Dyer & Singh, 1998). However, it is difficult to measure trust and to assess its impact on performance between actors (Brass et al., 2004).

The success that comes with cooperating with partners is based on whether an organisation can be trusted and is also dependent on the extent to which work between actors is coordinated. There is a distinction between trust of personal ties and trust of an organisation – it may be possible to not trust an individual within an organisation yet still trust the organisation. Trust may reduce the extent to which conflicts occur (Brass et al., 2004). Cooperation between actors with dense ties provides stability because dense ties reduce uncertainty and provide a means for reducing risk. Cooperating also implies flexibility as well as participation that takes into account the needs of the other, resulting in a more richly connected network (Wilkinson & Young, 2002). Shifts in relationships between actors tend to be gradual and infrequent because most relationships remain in place long term (Gadde & Mattsson, 1987).

Social networks facilitate and enforce trust; they also motivate good behaviour (Uzzi, 1997). Actors are aware that they have much to lose from opportunistic behaviour, which in turn enhances confidence in the other actors. Predictability of potential actors based on understanding and awareness (knowledge-based trust), combined with concerns over their own reputation (deterrence-based trust), creates safeguards which substitute the need for a detailed contract. At the outset, a cautious approach resulting in the use of a detailed contract may be used; later this may be replaced by looser practices. The more experience an organisation has with its partners, the less it will rely on hierarchal structures in organising new relationships (Gulati, 1998; Gulati et al., 2000; Hoang & Antoncic, 2003).

Relational problems will still arise even though actors trust each other. However, these can be resolved through the learning of behavioural norms, where those that deviate from these are punished in some way. Punishment for transgressors is based on the potential of loss of reputation, repeat business and contact with that organisation. The network structure can also help enforce norms and punishments as information on uncooperative members may be circulated, resulting in other members withdrawing services or resources as sanctions against a party (Brass et al., 2004; Dyer & Nobeoka, 2000; Hoang & Antoncic, 2003; Young & Wilkinson, 1997). Information circulated within the network also provides a way of learning about other actors through their relations with other parties. The effect of third

parties is one of motivating cooperation between two actors who are connected (Brass et al., 2004; Hoang & Antoncic, 2003).

The relevance for this study of understanding trust, commitment, cooperation and the development of norms is that these concepts are informal and mutually orientated and may result in increased network returns. By investigating these constructs in each of the three embedded NZAS networks, relational capabilities may be explained between the central broker and core actors; these constructs could also be used to explain organising dynamics of the networks. The next section examines sharing of resources, communication, and knowledge and information transfer.