Trust, commitment and relationships in supply chain management: a path analysis

Abstract

PurposeThe primary purpose of this study is to examine the relationships between the level of trust and several relevant constructs drawn from transaction cost analysis (such as asset specificity, behavioral uncertainty, and partner's opportunism) and social exchange theory (informational sharing).Design/methodology/approachA comprehensive questionnaire based on various theories on trust and commitment was mailed in 2001 to supply chain practitioners in the Midwest region. A total of 171 valid returns were received out of 1,800 mailings (9.5 percent). A path analysis was used to estimate parameters or relationship between relevant constructs and trust, and trust with the level of commitment.FindingsA firm's trust in their supply chain partner is highly associated with both parties’ specific asset investments and social exchange theory. Information sharing has a primary impact on reducing (improving a partner's uncertainty behavior which, in turn, would improve the level of trust. Finally, the level of commitment is strongly related to the level of trust, supporting Morgan and Hunt's hypothesis.Research limitations/implicationsThis research used supply chain practitioners in one region as a target population. It is highly recommended to duplicate this study in other regions to verify the findings.Originality/valueThis is the first research paper linking various variables to trust and trust to commitment in supply chain management using path model.