Trust and commitment play a pivotal role in supporting business relationships. Both concepts are essential in developing a strong foundation for the creation and development of these relationships (Yilmaz, 2017). Trust refers to the belief that a business partner would “do the right thing” and not take advantage of the other’s generosity or naivety in business. The establishment of such guarantees in developing business relationships means that thoughts of mistrust or feelings that cause people to seek protection-seeking behaviours are negated (Yamani, Long and Itoh, 2020). In turn, the development of this trust leads to an enhanced level of commitment in business relationships.
Trust and commitment are useful concepts in managing business to customer (B2C) and business-to-business relationships (B2B). Researchers suggest that trust helps to smoothen such relationships because partners do not spend too much time seeking ways to protect each other (Yamani, Long and Itoh, 2020; Yilmaz, 2017). Instead, parties engage in meaningful negotiations that would see their interests taken care of (Yilmaz, 2017). Relationships that are formed in such environments are likely to thrive and develop into productive unions as businesses develop. Therefore, trust and commitment emerge as the foundational bases for developing such arrangements.
In a team setting, trust and commitment provide a sense of safety for team members to collaborate and engage with one another. This is why research studies indicates that organizations which have a high sense of trust among partners are likely to benefit from reduced employee turnover and a higher sense of morale (Tse and Tsang, 2018; Wynn and Jones, 2019). Stated differently, employees who work with one another in an environment where they can trust their colleagues breeds a healthy environment of engagement and collaboration. These outcomes are possible because a trustful environment allows employees to focus on improving their productivity as opposed to seeking protection from their partners to cover their vulnerabilities (Mallett and Wapshott, 2017). Therefore, trust and commitment helps to foster business relationships by diminishing the perceived risk of engaging in business relationships. In this regard, it fosters the commitment that partners have towards improving their relationship marketing efforts.
As highlighted above, trust and commitment are important tenets for the development of productive business relationships. This foundation led to the development of the trust and commitment theory, which presupposes that healthy business relationships are held together by trustful relationships and a heightened sense of commitment among the partners involved (Tse and Tsang, 2018; Wynn and Jones, 2019). These two virtues affect the performance of business relationships, especially in the manner they improve or undermine an organization’s productivity.
Relationship performance refers to the output or value of business relationships, subject to the goals and vision of an organization. In this context of review, performance is assessed regardless of whether they are B2C or B2B (Tse and Tsang, 2018; Wynn and Jones, 2019). The trust and commitment theory attempts to explain such relationships but it fails to effectively do so because of the subjective nature of people’s levels of trust and commitment (Tse and Tsang, 2018). The theory fails to capture the effects of these subjective perceptions because they are contextual (Caldwell, 2018). Furthermore, their subjective nature means that people may have different expectations on the value they get from supporting business relationships.
Subjective relationship outcomes are difficult to quantify for multiple reasons. However, the trust and commitment theory fails to explain relationship performance because it does not capture all the elements that exist in relationship building (Liu, Zhang and Keh, 2019). For example, exogenous factors influencing performance are useful in determining the outcome of business relationships but they are not captured in the trust and commitment theory (Vasilica-Maria and José, 2019). Instead, the model only focuses on intrinsic factors affecting the relationship between businesses and their partners (Tse and Tsang, 2018). Therefore, the lack of a holistic approach in the trust and commitment theory fails to account for all the factors that impact business relationship outcomes.
Managing business relationships in networks is important in maintaining the health of business ecosystems. This positive outcome is visible from both demand and supply-side perspectives (Tse and Tsang, 2018; Wynn and Jones, 2019). Due to the complexities involved in maintaining such relationships, it is vital to deploy available resources and capabilities to maintain a healthy balance of power among business partners (Pääkkönen, Laaksonen and Jauho, 2020). Existing capabilities are aimed at using a company’s skills and competencies to identify useful relationships that would increase profitability or productivity. Therefore, the key capabilities of an organization play a pivotal role in driving the value that organizations need to create a competitive advantage over their rivals, or maintain a healthy balance of power to sustain business relationships.
These capabilities are widespread and may vary across organizations or industries. However, typically, they include people processes, or an organization’s resources, skills and capabilities (Tse and Tsang, 2018; Wynn and Jones, 2019). People processes are some of the most used capabilities for managing business relationships because they are predicated on identifying suitable partners that would enhance a business’s relationships (Abid and Harrigan, 2020). Therefore, associated processes may influence a company’s human resource activities, such as hiring and training to nurture the best talents and relationships that would support a business’s processes (Mashenene and Kumburu, 2020). Non-human capabilities may involve technological processes, such as automation, that eliminate human weaknesses in relationship building. For example, the real-time nature of B2C engagements on social media builds trust, while eliminating human weaknesses of interactions, such as slow replies. These competencies, when combined with people-based resources, are critical in nurturing business relationships.
The Resource Based View (RBV) of firms and the resource dependency theory play a critical role in informing the network strategies adopted by businesses to sustain their relationships. The RBV helps managers to identify which business relationships are most beneficial to the organization and which ones are not (Rahman, Ullah and Thompson, 2018). This classification criterion for establishing valuable and non-valuable relationships is sought by managers because the RBV seeks to maximize efficiency by ranking business relationships that are critical to the organization’s performance and those that only offer a supportive role (Tse and Tsang, 2018; Wynn and Jones, 2019). Those that are critical to the sustenance of core processes are provided with enhanced capabilities and resources that would help managers to nurture them. Comparatively, those that are deemed less critically important are terminated.
The process of identifying and classifying important and less important business relationships is critical in the RBV of a firm because of an underlying assumption that resources are scarce (Perkins and Khoo-Lattimore, 2020). Therefore, when one business relationship is terminated, the expectation is that a firm will have extra resources to pursue those that are critical to its operations (Tse and Tsang, 2018; Wynn and Jones, 2019). This approach to relationship management is covered by the resource dependence theory, which argues that firms should engage in business activities that enable it to improve its resources. Some researchers claim that this business relationship is advantageous to those that are seeking to improve their competitiveness (Tse and Tsang, 2018; Wynn and Jones, 2019). However, it could create an unhealthy dependence on resources for business survival, which could be detrimental to a business’s survival (Daft, 2020). To avoid this outcome, most organizations improve their negotiation strategies to improve their bargaining positions when seeking these additional resources.
Network development strategies are reliant on the development of broad-based data because they affect multiple operations in a business. Broadly, the RBV and the resource dependence theory are useful in informing network strategies because they provide a basis for the development or termination of business relationships (Dincer and Yüksel, 2020). The acquisition and reallocation of resources emerges as the most reliable basis for evaluating business relationships and networks that foster resource accumulation are favoured over those that do not provide the same benefit (Tse and Tsang, 2018; Wynn and Jones, 2019). Therefore these theories are critical in informing network strategies.
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