Inter-Organizational Studies - Practitioner

TheRoles of Satisfaction, Trust and Commitment in Value-Creation in StrategicNetworks – Inter-Organizational Studies. 

The authors of this article, Yaqub, Malik, and Shah explore the benefits of social capital within inter-organizational networks.  More specifically the topics they address are the satisfaction, trust, and commitment of organizations and its impact on the business relationships within joint ventures, strategic alliances, and enduring supplier and buyer relationships among others.  There has been growing interest in these topics, since people are realizing more and more that positive relationships within business can have a large impact on their reputation, productivity, and ultimately profitability.

The authors draw from over 100 different sources to support their findings, which is the advantage of developing and retaining social capital within an organization.  The authors explain the relational view of strategic networks, which is concerned with the level of satisfaction, trust, and commitment in a business partnership.  The first issue they discuss is social and economic trust.  When doing business with another firm, supplier, buyer, etc. there must be a level of satisfaction that results from the business transaction.  It seems as the two are connected, because a high level of social satisfaction with your business partner will lead to increased morale, which increases productivity, resulting in positive business results.  This is a cycle process where you enjoy doing business with a partner that increases your profitability, and increases in profitability encourage future participation with this partner.  The next topic the authors explore is the level of trust between inter-organizational business partners.  Trust cannot be developed between two or more parties if there is no level of satisfaction, which is obvious since you wouldn’t be motivated to work with someone you haven’t been satisfied with in the past.  However, if you’ve traditionally been satisfied with the working relationship then the parties will begin to develop levels of trust with one another.  When you trust someone you are essentially vulnerable to that person, so trust is something that is easily broken, and not easily recovered.  This is perhaps the most important aspect the authors explore, because once trust is developed, the working relationship becomes somewhat predictable.  When this happens, communication and collaboration become less important, freeing up time for both parties to focus on other aspects of their business.  High levels of trust between partners will result in continued commitment to the business relationship, and if you’ve been satisfied and successful in the past, then commitment to that partner will continue to produce positive results for the parties involved.  If companies are satisfied when doing business with one another, they will continue to do business together.  This cycle results in a growing trust between the two parties, which in turn creates even more positive results, because familiarity with the other party reduces the time spent collaborating with one another.  It also has other benefits such as the elimination of bulky, time-consuming contracts that have to be created. 

This is a magnificent article, because as a business student and someone with a future in business, it lays out the implications and advantages of doing business in a trustworthy way.  Most people have studied ethics at some point, but it’s usually applied to how a person lives their life, but this article shows how it can also help a person to be successful in business.  It’s pretty obvious that people don’t want to do business with another party they have been dissatisfied with or do not trust; but it isn’t so obvious the competitive advantages companies can attain and grow through doing business with partners who exhibit strong moral and ethic practices.