Trust and relational embeddedness: Exploring a paradox of trust pattern development in key supplier relationships

This paper explores the role of trust as an enabler and constraint between buyers and suppliers engaged in long-term relationships. According to the relational view, cooperative strategies require trust-based mutual commitments to co-create value. However, complete pictures of the positive and negative outcomes from trust development have yet to be fully developed. In particular, trust as an originator of path dependent constraints resulting from over embeddedness is yet to be integrated into the relational view. We use a case-based methodology to explore whether trust is an optimizing phenomenon in key supplier relationships. Two cases where trust development processes demonstrate a paradox of trust-building behaviors cultivate different outcomes constraining value co-creation.

► We evaluate trust development patterns at two highly trusted buying firms that pursue distinct trust development strategies. ► We find that trust is essential to gain access to unique resources and to reduce excessive governance costs. ► Inappropriate trust development leads to relational inertia, resource misallocation, and potentially malfeasance. ► The behaviors that led suppliers to value the buying firm as a partner sowed the seeds for relationship dissatisfaction.