Economic incentives or communication: how different are their effects on trust.
| Autor | Iwai, Tatiana |
| Cargo | Report |
Introduction
Trust plays a fundamental role in all human interactions, including economic transactions (Fehr, 2009). It is associated to several benefits, such as positive effects on cognitive, attitudinal and behavioral processes, generating superior collective performance results in organizations (Dirks & Ferrin, 2001). These various positive consequences notwithstanding, researchers have been examining numerous episodes where trust may be violated. Lying, broken promises, breaches of contracts and rules change after the fact are some cases of trust violations reported (Bies & Tripp, 1996). This paper advances the understanding of this subject by investigating the effects of economic incentives and face-to-face communication on the cognitive and behavioral responses to an alleged trust violation.
When a trust violation occurs, it disconfirms positive expectations regarding another's conduct and, hence, it may change the perception of the offended party about the reliability of the relationship (Tomlinson, Dineen, & Lewicki, 2004). Reactions to violations of trust can be divergent, ranging from people choosing to get even, while others prefer to give another chance and reconcile. There is a growing recognition of the importance of understanding why people react differently to such violations in order to better manage their future exchange relationships (Dirks, Lewicki, & Zaheer, 2009). Past research has been focused primarily on verbal allegations or other offender tactics that might repair trust once it has been lost after a broken promise (Kim, Cooper, Dirks, & Ferrin, 2013; Kim, Dirks, Cooper, & Ferrin, 2006; Kim, Ferrin, Cooper, & Dirks, 2004; Lount, Zhong, Sivanathan, & Murnighan, 2008; Tomlinson et al., 2004). Yet little attention has been paid to explore antecedents and characteristics of the relationship that might influence how a violation is perceived and ultimately managed.
How parties construe an alleged trust violation may depend on the nature of past relationship, once parties take into account the relationship as a whole when they evaluate a negative outcome. In other words, the history of a relationship matters. Although the literature addressed the role of prior violations and quality of past relationship (Elangovan, Rizzi, & Szabo, 2007; Tomlinson et al., 2004), no prior work has explored the effects of the mechanism to foster cooperation on the interpretation of an alleged trust violation.
A history of cooperation may be based in two widely studied experimental settings: structural and motivational solutions (Agarwal, Croson, & Mahoney, 2010; Boone, Declerck, & Kiyonari, 2010; Kollock, 1998; Van Lange, Balliet, Parks, & Van Vugt, 2013; Zeng & Chen, 2003). While the first one focuses on economic incentives for cooperation; the second one focuses on interpersonal processes (e.g., communication). Therefore, both may lead to cooperative behavior and are valid mechanisms of governance, but each one works in a diverse way to achieve cooperation (Falk & Kosfeld, 2006; Malhotra & Murnighan, 2002).
Although the literature was quite prolific in both veins, there is still a lack of understanding about its effects in situations of trust violation. Does the type of mechanism foster cooperation affect the attribution process of a negative episode? And to what extent it can influence the risk taken in subsequent interactions with the same partner?
In this paper we investigate how these two ideal types of relationship, based on economic incentives or based on interpersonal processes, might influence how parties make attributions about the causes of a negative outcome (Heider, 1958; Weiner, 1986) and how this interpretation of causality might affect trusting beliefs and trusting intentions about the partner and on the victim willingness to bear risk after an alleged trust violation. We designed and implemented an experiment in which we manipulate different relational histories in order to test how parties react to an alleged trust violation, i. e. a negative shock that they cannot observe if it was caused by nature or by opportunistic behavior of the counterpart. As expected, results show that relationships based on interpersonal process tend to be more resilient to external shocks than relationships in which cooperation was based on economic incentives.
The contributions of this paper are threefold. First, we examine the effects of prior relationship - based on economics incentives or interpersonal processes--on how parties interpret and react to a trust violation. Second, we show that relationships based on interpersonal relations (e.g. face-to-face communication) are more resilient to external shocks. Finally, we add to a growing body of work that apply experimental methods to address strategy related inquiries in the contracting and interfirm exchange literatures (Agarwal et al., 2010; Harmon, Kim, & Mayer, 2015; Lazzarini, Miller, & Zenger, 2004).
This paper is organized as follows. First section summarizes the literature on economic incentives and communication as mechanisms to support cooperation, as well the concept of perceived trustworthiness, from which we derive the hypotheses that guide the experiment and discussion. Second section presents the experimental design and how variables are measured and the hypotheses are tested. In the third section, we present and discuss the results. Finally, we discuss some managerial implications, as well as the limitations of this study and offer suggestions for future research.
Theory and Hypotheses
Economic incentives and communication as mechanisms to support cooperation
Across the years, researchers have studied possible solutions to improve cooperation in situations where individual and collective interests are in conflict. In this discussion, a distinction between two broad categories of solutions is often made: structural and motivational solutions (Kollock, 1998; Komorita & Parks, 1994; Messick & Brewer, 1983; Van Lange, Joireman, Craig, & Djik, 2013).
Broadly speaking, structural solutions change the economic incentives so that the dilemma can be modified or entirely eliminated. They involve any tangible changes in the parameters of the game structure that enhance the partner's payoff for cooperative behavior (Zeng & Chen, 2003). Changes in the payoff structure, reduction of group size, changes in the allocation rules, sanction systems and introduction of provision points are some examples of structural solutions (Davis & Holt, 1993; Ledyard, 1995). All of them have in common the fact that cooperative behavior has an instrumental value in the sense that it results of an enlargement of the payoff for cooperation. Therefore, when explicit incentives (tangible rewards for cooperation or tangible punishment for opportunism) are present, conflict between personal and collective interest decreases. Indeed, Balliet, Mulder and Van Lange (2011), in a recent meta-analysis, show that sanctions and rewards exhibit substantial positive effect on cooperation.
The social dilemma literature offered two main explanations for this effect. One explanation is that rewards and sanction systems reduce the attractiveness of opportunism, due to penalties provided to non-cooperative behavior. Another explanation is the indirect effect on expectations regarding other's choices, since the existence of penalties for defection assures that others will not exploit cooperators (Balliet & Van Lange, 2013; Barclay & Kiyonari, 2014; Tenbrunsel & Messick, 1999).
In sum, cooperation results from a calculation which weighs the costs and benefits of a given action orientation, choosing the course of action which produces the higher gains (Zeng & Chen, 2003). According to this logic, when the agent acts in a cooperative fashion, he assumes that current gains resulting from opportunism will be outweighed by the loss of future gains.
However, some authors argue that economic incentives can create a second order dilemma, i.e. the problem of the compliance with a sanction system (Nosenzo & Sefton, 2013; Van Lange, Joireman et al., 2013). While a surveillance or sanction system may be good for the collective, they are costly and individuals may not be willing to contribute with resources in order to maintain them (Fehr & Gatcher, 2002). In comparison, motivational solutions are more cost-effective mechanisms to improve cooperation (Van Lange, Joireman et al., 2013; Zeng & Chen, 2003). They rely on more intangible ways to change individual's perception of the social environment. Social value orientation (Balliet, Parks, & Joireman, 2009; Bogaert, Boone, & Declerck, 2008), face-to-face communication (Balliet, 2010; Sally, 1995), group identity (Jackson, 2011; Kollock, 1998; Meleady, Hopthrow, & Crisp, 2013; Orbell, Van de Kragt, & Dawes, 1988), long-term goals among partners (Axelrod, 1984; Weber & Murnighan, 2008) are some examples of motivational solutions. Among them, face-to-face communication, in which individuals have the opportunity to discuss the dilemma they are facing and make pledges or communicate intended choices, is considered the most robust and effective mechanism of the motivational solutions. For instance, Sally (1995), in a meta-analysis review, showed that this form of communication increases cooperation by 40%.
Although the positive effects of communication on rates of cooperation are well documented, what is less discussed relates to the underlying mechanisms that account for such cooperative behavior. Some authors (Cohen, Wildschut, & Insko, 2010; Messick & Brewer, 1993; Tazelaar, Van Lange, & Ouwerkerk, 2004; Weber, Kopelman, & Messick, 2004; Zeng & Chen, 2003) offer some possible explanations: (a) communication offers an opportunity for moral suasion among group members, stressing what is right and appropriate to do; (b) when discussing the common problem they face, individuals may create a sense of group identity that can foster group norms and reduce...
Para continuar a ler
PEÇA SUA AVALIAÇÃOCOPYRIGHT GALE, Cengage Learning. All rights reserved.
