Not So Mutual After All: Sources of Dyadic Trust in Interorganizational Exchange

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Trust in interfirm exchange has traditionally been treated as mutually held and jointly determined by the two parties to an exchange relationship. Yet, the expectations of exchange partners can and routinely do differ with respect to the goals, preferences, and vulnerabilities in their shared relationship. To account for such differences in expectations we propose a broadened conceptualization of interorganizational trust as dyadic trust. Dyadic trust expands the conventional focus on mutual elements to further emphasize exclusive and asymmetric features of an exchange relationships. To substantiate the concept of dyadic trust we examine a key source of interorganizational trust, exchange hazards, and assess the extent to which its effects vary as a function of the: (1) locus of exchange hazards (own vs. other) in the dyad, (2) each party’s power position in the dyad, and (3) the degree of power imbalance in the dyad. To assess the validity of our claims we devised a matched dyad research design and collected identical information from both buyers and suppliers in a given exchange relationship. Based on our results, we make three unique observations consistent with the notion of dyadic trust. First, the same exchange hazards have differing effects (enhancing versus limiting) across the dyad. Second, the relative significance of partners’ exchange hazards varies based on power position. Third, the degree of power imbalance has differing effects across the dyad.


This paper was presented at the Organizations & Markets Workshop on September 30, 2015, held at the University of Chicago Booth School of Business.