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ConTRACTing And RElATionsHiPs 175
The greater the degree of trust, the greater is the willingness to make oneself vulnerable
to the actions of the other, even though this vulnerability is not as keenly felt because
of the existence of trust. If there were no risk involved in a relationship there would be
no need for trust, and without some degree of trust there is little justification for tak-
ing risks with a partner. Although most organisations are aware of different degrees of
trust in their relationships with suppliers or customers, they do not always see trust as
an issue to be managed explicitly. Sometimes this is the result of a broad philosophi-
cal view of the issue (‘in the end suppliers will always look after their interests, it’s foolish
to believe otherwise’). At other times it may be that managers do not believe that such a
nebulous concept can be either analysed or indeed managed (‘trust is one of those things
which is either there or it isn’t, you can’t account for it like profit and loss’ ). However, almost
all research in the area of supplier–customer relationships highlights the role of trust
in determining the scope and limits to the relationship. Furthermore, it is at the heart
of any understanding of partnership relationships. It is useful to think of trust in three
stages. Progression through these states of trust is often associated with time and the
accumulation of positive, relationship-building experiences.
1 Calculative trust is the most basic level of trust that arises because one of the parties
calculates that trusting the partner is likely to lead to a better outcome than not
trusting them. Underlying this is often the belief that the benefits from maintaining
trust are greater than those from breaking it.
2 Cognitive trust is based on a sharing of each partner’s cognitions or understandings
of aspects concerned with the relationship. By knowing how each other sees the
world, each partner is able to predict how the other will react. In other words, the
other partner’s behaviour can be anticipated; it therefore comes as no surprise and,
therefore, will not threaten the relationship.
3 Bonding trust is deeper. It is based on partners holding common values, moral codes
and a sense of what obligations are due to each other. The partners identify with each
other at an emotional level beyond the mere mechanics of the day-to-day transac-
tions that occur. Trust is based on the belief that each party feels, as well as thinks,
the same.

Sharing success
An attitude of shared success means that both partners recognise that they have more to
gain through the success of the other partner than they have individually, or by exploit-
ing the other partner. Both customers and suppliers are less interested in manoeuvring
in order to get a bigger slice of the pie and are more interested in increasing the size of
the pie. It is this belief that helps to prevent individual partners from acting against
the interests of the other in order to gain immediate advantage – what economists call
opportunistic behaviour. However, it must be clear that the size of pie will indeed be
larger if both partners are to cooperate. It also is important to have an agreement as to
how the larger pie will be divided up.

Long-term expectations
Partnership relationships imply relatively long-term relationships between suppliers
and customers. The deeper levels of trust require time to develop. Furthermore, there is
no need to incur the transaction costs of frequent changes of partner, always assuming
that the partner behaves in the best interests of the other. All of which points to long-
term relationships – but not necessarily permanent ones. At the heart of the partnership

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