INTER-ORGANIZATIONAL TRUST AND EFFECT ON VIRTUAL ORGANIZATIONS’ PERFORMANCE OF SELECTED NIGERIAN SERVICE FIRMS

INTER-ORGANIZATIONAL TRUST AND EFFECT ON VIRTUAL ORGANIZATIONS’ PERFORMANCE OF SELECTED NIGERIAN SERVICE FIRMS

ABSTRACT

This investigation is based on inter-organizational trust and effect on virtual organizational performance of selected Nigerian service firms. Inter-organizational trust is the extent to which members of a firm hold a collective trust orientation towards another organization. Virtual organization brings together theories about the nature of work in the information age, the organization of social behaviour, and the role technology plays in the evolution of social structure. Inter-organizational trust in virtual organizations is difficult to manage, members work individually and there is hardly any control. In today’s knowledge-based competitive environment, a firm’s ability to establish inter-generational relationships in terms of strategic alliances and performance inside and outside a firm has become a critical fount of competitiveness. In inter-organizational relationships, the most common success factor, and possibly the most critical one is trust. Trust is widely acknowledged as being important for the efficient operation of inter-organizational business activities, the formation of trust remains challenging, the experience with trust despite increased interest and the acknowledged role of trust to a company’s competitiveness is that there has not yet been theoretically and empirically coherent attempts to measure trust in inter-organizational contexts to the best of my knowledge. Virtual organization is also a collection of geographically distributed, functionally and/or culturally diverse entities that are linked by electronic forms of communication and rely on lateral, dynamic relationships for coordination. Consequently lack of inter-organizational trust and reliability in virtual organizations as a result of perceived risks from privacy concerns and vulnerability to fraud may impede organizations’ performance. In carrying out this investigation, seven research objectives and seven research questions were formulated along side with seven research hypotheses. Relevant data were reviewed, this provide an understanding of previous work in an area of investigation thereby providing basis for the researchable problem at stake. The chief instrument for data collection was questionnaire, which was designed for low, middle and top level management staff. Thirty five (35) questionnaire items were administered to the respondents. The data was analyzed using a chi-square statistical technique and Z Test. The result of the study showed that inter-organizational trust influences virtual organizations commitment and performance and firm benefitted more from inter-organizational trust when the degree of interdependence between two organizations was higher. The result of the study also showed that conflict to a large extent is adversely related to lack of shared understanding between partners in virtual organizations. When we examine inter-organizational trust in virtual organizations from the perspective of network organizations, then we certainly conclude that inter-organizational trust in virtual organizations is a new type of network. Finally, it was recommended that, the formation of organizational process should be based on trust and not on the basis of power which will result in increase commitment, job-satisfaction, performance and growth of employees and the organizations in general.

CHAPTER ONE: INTRODUCTION

1.1              Background of the Study

While trust is widely acknowledged as being important for the efficient operation of inter-organizational business arrangements, the formation of trust remains challenging. Trust has several connotations. It refers to a situation attributed by one party (trustor) willing to rely on the actions of another party (trustee); the situation is directed to the future and the trustor forcefully or voluntarily abandons control over the actions performed by the trustee. The trustor is uncertain about the outcome of the others actions; he can only develop and evaluate expectations. The uncertainty involves the risk of failure to the trustor if the trustee will not behave as desired. Trust can be attributed to relationships between people. It can be demonstrated that humans have a natural disposition to trust and to judge trustworthiness that can be traced to the activity of human brain and neurobiological structure and can be altered.

INTER-ORGANIZATIONAL TRUST AND EFFECT ON VIRTUAL ORGANIZATIONS’ PERFORMANCE OF SELECTED NIGERIAN SERVICE FIRMS