Trust building process for new market entrants: a case study of a Japanese cosmetics company’s business expansion in China

Abstract

Purpose This study adopts a three-component view of trust bases (cognition, affection and institution) and examines how these trust components function and interact during a business expansion in an unfamiliar foreign context. Design/methodology/approach A longitudinal case study of a Japanese cosmetics company was conducted trying to collaborating with its Chinese partners to develop business in China. The data sources consist of semi-structured interviews and archival data, including industry reports, newspaper articles and internal documents. Findings Findings show that a trustee’s actions to activate the three trust bases created stable business relationship with trustors. Additionally, the business expansion was driven over time through the order of manifestation of these trust bases. Institution-based trust develops first, followed by a combination of institution- and cognition-based trust, before the final combination of institution-, cognition- and affection-based trust. Research limitations/implications Based on an in-depth single case study, this study provides a process-based explanation of the configuration pattern of three trust components over time. A generalized process-based explanation and the interaction effects of each trust component require further qualitative empirical studies in varied contexts. Practical implications The study provides managers with insights into how to activate trust based on the importance of configuring the three trust bases covered in this paper. Originality/value This paper adds to the scant literature attempting to explain the dynamic processes by which the trust structure forms compared to the more common variable-based statistical analyses.