A Multilevel Approach to Trust

in Joint Ventures
Steven C. Currall*
RtC:K UNtVHRSITY

Andrew C.
THUNDHRBIRD
This article examines issues of level
in the study of joint venture trust In
particular, we explain how international joint venture (IJV) trust can
be conceptualized and measured at
the person, group, and firm levels.
To do this, we (1) provide a definition of IJV trust applicable to persons, groups, and firms, (2) promote
alignment of levels of theory and

esearch ovor the past decades on international joint ventnres (IJVs) and
strategic alliances (e.g., Buckley and ("Casson, 1988; Inkpeu and Beamish, 1997;
Madhok, 1995; Yan and Gray, 1994) has
repeatedly argued Ihat mutual trust is
essential for succossful I|Vs. In thoir
.study of a failed IJV, Ariiio and de la
Torre (1998) concluded that, in tbe absfuico of a reservi! of trusi, IJVs that experience throats to stability often dissolve. As noted bv Child and Faulkner

measurement through the use of a

3X3 approach to guide researchers
in identifying the level at which
they are theorizing and the proper
level of measurement, and (3) propose operational measures of IJV
trust across levels and dimensions
in order to lay a solid foundation for
theory testing.

(1998). trust is particularly fragile in IJVs

because the normal risk and uncertainty
involved in domestic JVs are heightened
in the IJV context by cross-national differoncos between partner firms with respect to culture, law, politics, and trade
policy.
Despite tho attention given to trust in
the IJV literature, "trust remains an undor-thoorized, under-researched, and,
therefore, poorly understood phenomenon'" (Ghild, 2001, p. 274). In particular.

'StiiV(;ii C;. Ouri'ail is tin; William N. and Stephanin Sick Proftis.sor of Eiilroprtmourship and
Associate Prelis.sor of Miiiiagomtint, Psyc:h(.)l(igy, and Statistics in the Jones Graduate School
of Maiiagonient al Rici; Lliiiversity.
**Andrew (i. tnk])(;n is l'r()tn.s.s()r of Managmnticit at ThuiHlerbird. His rts.sfsarch fbcustis on
various asp(!cls ot international straUigic alliaiic(!s .such as inler-partner trust, organizational
learning, and alliancn slahilily.
For helptul cuimnent.s ami SLiggoslions wo tliank participants in tin; Academy of Management
Thoory Duvidupmont Woiksliop and Iht; MESO Organization Sluditjs Group as well a.s David
Bi)W(in, C:hi^y(Mino Currall. I.on Ann Matossian, Karon Schnit'tz, Dong Schnler, t)uane Windsor
imd two anonymous revit^wors.
i. (IF l\'TRn.\A-ri()\'Ai.

ESS STUDIES, 33, 3 ('J'HIRU QLIARTER 2002): 479-495

479

MULTILEVEL JOINT VENTURE TRUST

issues of similarities and differoiu;es in

collaborative trust at the person, group,
and firm levels have received limited
empirical attention from IJV scholars.
Multilevel trust has, howovor, been studied in other intororganizational relationship literatures. Doney and Gannon
(1997), for oxample, stndiod huyer-soUer
relationships empirically and found that
intorfirm trust differed from intorporsonal trust. Zaheer, McEvily, and Perrone (1998) examined interfirm and interpersonal trust, also in the buyer-supplier setting, and identified JVs as an
area where thoir research should he extended, Jeffries and Reed (2000) focused
on rolational contracting and explored
the interaction hetween intorfirm and interpersonal trust for the success of interorganizational relationships. In tho IV
area, Barney and Hanson (1994) suggostod that discropancios ariso botwoon
int(ir[)orsonal trust and intorfirm trust bocause trust botween partner firms' managers may bo strong oven though trust
botw(!on partnor firms is weak, Dyor aiul
t;hu's (2000) study of cross-border collahoration concluded that the issLie of
interpersonal and interfirm trust should
he oxaminfKl in greater dot ail. Doz (1996)
examined how alliances evolve and how
trust at one organizational level impacts
the development of trust at another level.
Thus, givon tho widespread agreement
that trust is t:ritical for iJV performance!,
tho issuo of IJV trusl and organizaticmal
lovels is hoth relevant and under-explored.
Each alliance form, whothor a JV. licensing agreement, or technology sharing relationship, difff^rs in managerial
conditions, management structure, and
competitive context. Accordingly, operational models of trnst vary. In this artic.\u wo seiik to expllcale issues of level in
(Conceptualizing and measuring IJV trnst
and also to pr(jvido methodological guid-

Research on organizations has identified "level of theory" and "level of measuremont" as fundamental concepts
(e.g., Klein, Dansoreau, and Hall, 1994;
Kousseau, 1985),' "Level of theory" refers to the unit (person, group, or firm)
the researcher seeks to explain and about
which attributions and generalizations
aro mado. For example, if one examines
how trust botwoon IJV parent firms may
affect the iJV's finan[:ial performance,
then the unit of theory is the firm. Altornativoly, if tho focus is on trust as a fac-

480

JOURNAL OF iNTERNA'rioNAL BI^SINESS

ance for IIV researchers. Although wo

believe that our multilevel approach to
trust is applicable to numerous types of
international partnership and allianco
arrangements, discussion of multiple alliance forms is beyond tho scopo of this
article.
ADVANTAGES OF A MULTILEVKI,
APPROACH

In showing how organizational context shapesand is shaped bytho actions and porceptions of individuals,
multilevel research enriches our understanding of organizational life (Klein,
Tosi, and C:annella, 1999, p, 243). A multilevel approach contributes in two main
ways to research on IJV trust. Eirst, givon
the complox interpersonal, intergronp,
and interfirm dynamics typically found
in [jVs, it is likely that more precise research findings will come to light whon a
nndtilovol approach is applied to [JV
trust quostions. Second, clarity of moasuroment at the person, group, and firm
lovels facilitates more rigorous theory
to,sting. As Bacharach (1989) argued, tho
falsifiability of theories is dependent on
rigorous hypothesis testing, which, in
turn, is dependent on solid measures of
constructs.
LEVEL OE T H E O R Y AND LKVEL OF

MEASUREtVIKNT

STI^DIES

STEVEN C. CURRALL, ANDREW C. INKPEN

tor in effective communication between

people, then the unit of theory is the
person. "Level of measurement" refers to
the source of information such as individual interviews, group surveys, and
firm-level archival records of f:orporate
linancial performance.
For conceptual and empirical clarity,
the levels of Iheory and measurement
must be "aligned" nr cousistent (Klein et
al., 1994). For instance, Iho offect of
intorfirm trust on tho linancial performance of an IJV calls for firm-level measures of both trust and fin^mcial performance. On the othor hand "niisspecification" (Rousseau, 1985) occurs wlion
theory and moasuromont are inconsistent (i.e., a construct is tlicorotically attrihuted to one level when it was measured at another level) as when i\ claim
about parent firm trust is bosed on interviews witb IJV managers.
Table 1 ]irovides a roprosontative (not
exhaustive) lisl of empirical studies of
trust in JVs and alliances. Few studies
hav(^ adoptod a multilevel approach, instoaU. mosl assessments of interlirm trust
rciiy on data from individnaS informants.
Whilo this is understarulable in light of
tho snbstantial niothodological challenge
of modeling trust hetwoon [partner firms
(Zahoor ot al., 1998), reliance on koy infi^rniants can give rise to problems of
soloi lion and porcoptual agrooinent (Kumar, Stern, and Anderson. 1993). Although somo attention has boon paid to
tho competftntiy of informants (e.g.,
Parkhe, 1993; Zaheer et al., 1998). empirical assessments aro rare. Fnrthermore,
informants' personalilies, roles, and experienco.s often re.sult in perceptual disagreement (Kujnar et al., 1993). For ijistanco, data from an execntive who
toi-mod an IJV may contradict data from
sonioone brought in later to nianago the
ijV's operations.
VOL.

33, No. 3, TIIIKD QKXRTKR. 2002

Misspecification of the firm as the

level of theory and the person as the
level of measurement is common in alliance research. For example, Parkhe
(1993) attempted to measure tho perception that the partner firm was engaging in
opportunistic; behavior. On the basis of a
person-level survey, the author claimed
that trust existed at the firm level. By
referring to trust by firms, the connotation is that firms are doing the trusting.
Yet, this study failed to substantiate that
trust existed at the firm level because
data wore collected only from key informants (i.e., individual persons). Such
obfuscated shifts in level occur, and tho
validity of hypothesis tests is diminished, when porson-i!!vel measures of
trusi are the basis of statements made
about trust at lhe firm level (i.e., "trust by
a firm" or "interfirni trust"). Other types
of misspecfication also occur. A recent
study of trust botwoon groups of international alliance negotiators (Rao and
Schmidt, 1998) failod to find a significant rolationship hetwoon trust and negotiating tactics. Having identified tho
person as the lovol of measurement, tho
investigators used a survey in which
some itoms roforrefl to the trustoo as a
person and othors referred to tho trustee
as a grou[). This involves a mix of the
person and group as referent within the
same survey instrument (i.e., a mix of
interpersonal trust and intergroup
group), which makes empirical findings
difficult to intorpret.
IJV TRUST: A MULTILEVEI,
APPROACH TO MEASUREMENT

Although organizational and intornational management scholars have yet to

agree on a common definition of trust,
provious definitions havo emphasized
two principal concepts; reliance (Giffin,
1967; Rotter, 1980) and risk (Mayer.
Davis, and Schoorman, 1995; Rousseau,
481

MLJLIILEVEL JOINI- VENTURE TRUST

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JOURNAL OE INTERNATIONAL BUSINESS ST

STEVEN C . CURRALL, ANDREW C . INKPEN

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33, N(i. 3, Tinun

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483

MULTILEVEL JOINT VENTURE TRUST

Sitkin, Burt, and Camerer, 1998). We define 1)V trust as the decision to rely on
another IJV party (i.e., person, group, or
firm) under a condition of risk. Beliance
is action through which one party permits its late to be determined by another
(Currali und judge, 1995). Reliance is
based on positivo expectations of or confidHnce" in IIH; trustworthiness of fiuolher party (Kiiusseau ot al., 1998). Risk
is the potential that tho trusting party
will experionco nogative outcomes, i,e.,
"injury or loss" (March aud Shapira,
1987; Sitkin and Pablo, 1992), if tho
other party proves iintrnstworthy. Risk
creates an opportunily for trnst (Ruus,sean el al., 1998). Thus, trust arises from
social judgeuients (e.g., assessment of
tbn othei' party's bonovolonco, motivation to be trustworthy, etc) together with
assossmcnt of tho costs (i.e., risk) if tho
other party turns out to bo untrustworthy.
Tho measurement of trust must capturo a party's decision to rely on another.
As other writers bavo noted (Currali and
ludgo, 1995; Koo and Knox, t97(); Mayer
ot al., 1995; Nooleboom, Berger, and
Noorderhaveu, 1997), the literature has
focusod on trust as an action (e.g,, an
action that puts one party's fate in tho
hands of anothor) or trust as an expectation (o,g., a porceived probability concerning anothor party's future t:rustworthiiiess). To show that (JV trusi operates
and can be measured at niulliple levels,
wo view trust as a decision to act in ways
that place ono's fate in another's hands.
Thus, luider a condition of risk, a [jarty's
trust is signified by a decision to ongage
in action (i,e,, re!ianc:o) that allows its
fate to be dotermined by tho other party
(C:urrall and fudge, 1995).-'

tions that follow. Organizational researchers often study decision making

by individuals (e.g., Bazerman, 2001),
groups (e.g., Bar-Tal, 1990), or organizations (e.g., Huber, 1990). Therefore, our
definition of IJV trust may be said to
"travel" (Osigweh, 1989) across lovels
because viewing trust as a decision to
tako action rather than an expectation
also allows tho researcher to extend tho
level of measurement to the group or
firm. A focus on trust as an expectation
becomes problematical for a multilovel
approach because firms aro incapable of
subjective mental slates. Moroovor, an
ompbasis on the psychology of expectations creates the impression that managors can foster trnst merely by appearing
trustworthy (Whitener, Brodt, Korsgaard, and Wornor, 1998. p. 525). This
could lead managers and rosearchors to
stress managing impressions of managerial trustworthiness. Such an omphasis
on impressions without a genuine display of trustworthy action can result in a
mistaken belief that managers merely
need only to display tho appoaranco of
trustworthinoss to croato trusting rolationships.
Bigley and Foarce (1998) bavo proposed that concepts of trusi depend on
the rost^iircb problem (if interest. The research })r()l)lem this article seeks to addross is the alignment of theory and moasuremont across three levels; wo also
propose a connnon formulation of trust
to facilitate the study of levol in IJVs. We
offer this framework as a means to examine how trnst at one level impac;ts the
development of trust at anothor level and
bow trust in I)Vs evolves ovor time.

Trustors and Trustees at

Multiple Levels

Our concept oi' trust as a decision applies to persons, groups, and firms. As
we explain kiter, all throo are capable of
trnst decisions and tbe measurable ac-

Figure 1 is a guide to levels of thoory

and measurement in IJV trust. For twoparty IJVs,'' our approach distinguishes

484

JOURNAL OE INTERNATIONAL B(ISINHSS STL'DIES

STEVEN C. CURRALL, ANDREW C . INKPEN

FIGURE 1
CONCEPTUALIZING IJV TRUST AT THREE LEVELS

Person
Model P-P

(faiterpersonal)

Trustee IJV Partner

Group
Model P-G

Firm

(Person - Group)

Model P-*F

(Person - Rrm)

Model G-G

0nlergroup}

Model G-F

(Group - Firm)

Model F-*G

(Firm - Group)

Person

Mtxfcl 0-+P

Tnistor
IJV
Partner

(Group - Person)

Group

Model F~>P (Finn - Person)

Model F-^F

(Interfirm)

Firm

UVM = international joint venture manager. Anows indicate trust by the trustor toward the It^tee.

the "trustor" (the trusting party) from the

"trustee" {the trusted party). SpeciHuaticjD of tho trustor answers the question
"Wl;o trusts?" Specification of the
trustee answers the question "Who is
trusted?" Distinguishing trustors from
trustees avoids "the tendency to change
referents and even levels of analysis,
which obfuscatos the nature of the trust
relalionship" {Mayer et al.. 1995, p. 711).
hi Model P ^ P , !)oth the trustor and
trustee are individual persons. Three
types of persons are involved in an IJV:
husiness i)evelopm(!nt executives in the
parent firms; operations managers in the
IJV itself: and the IJV's board of directors,
most of whom are top executives from
the pareni firms {in smaller firms, there
may be overlap among the diffi^rent positions). All these individuals play important boLindnry roles such as commu33, No. 3, THIRD QUARTER, 2002

nicating and monitoring the IJV implementation and shaping tho collaborative
structure. Therefore, one could construct
an interaction model [Ring and Van de
Ven, 1994) that examines the impact of
interpersonal trust on IJV outcomes. A
trust network of multiple individual
trustors and trustees is a possible extension of Model P^-P. Variations of ihe
interperstmal model are Model P ^ G , in
which the trustor is a single person and
the trustee is a group of IJV managers in
the partner Brm, and Model P-F, which
reflects an IJV manager's trust in the partner firm as an entity.
One can also mode! IJV trust between
groups. On the diagonal of Figure 1,
Model G^-G defines one group of IJV
managers as the trustor and another
group of IJV managers from a partner
firm as the trustee. Model F ^ F repre485

MULTILEVEL JOINT VENTURE TRUST

scnts the pure form of interfirm trust, the

most common conceptualization in the
IJV literature.
In addition to strucluring research
questions c:on(:erning appropriate levels
of theory and nieasureineul, our apjiroach can \m used to ((viiluate earlier
work. Revisiliug Table 1, wo see tbat in
most sludi(!s, the level of theory was
Model I''^!', wliilo tho lovol of nioasuroinont was I'^-l''. By using Modol F>I' at
both iovols, (jnly Culati (1995) aligned
thoory and moasurtancnt.

Measuring IJV:
Procedures and Examples

cally record incidents of trusting decisions as when an 1)V manager decides to

uso informal oral agreements not backed
by a contract or JV by-laws (Informal
Agreements). Alternative measurement
techniques include a conlont analysis of
IJV hoard meeting minutes or ovon actual
(]bservalion of the mootings thomsolves;
as IVir a.s we Hi'fi awnro, tho lattor approach has bf^^ii tiik(!u only in caso-basod
research (e.g.. Salk, 1992). Whatovor system is used tf) record decisions to trust,
tho rosoarchor should provide intor-rator
roliability rosults to demonslrate its internal consistency.

In an IfV, trust botweon individual

managers aftiliatod with the rospectivo
partner firms (Mixlel P ^ P of h'iguro 1)
will play a key rolo in the collaborative
process. There au) several ways to ineasuro how much ouo IJV manager t:rnsts
anothor. One approiich is to systoinati-

Another option is to interview or survey an IJV manager about Iheir [last decisions to trust. One could lap, for example, lhe Open ("omnuuiication and Information Exchange dimension by asking
tbe manager lo indicate the frec|uency
with which a trustee has been given inlormHtiou tbat could jeopardize tho iJV
or a parent firm.
The hivol of trust botweon two IJV
managers mtiy bo examined through data
collected from each of thom (soo Johnsoii, (ailleri, Sakano. and Takenouchi,
1996). For instance, to assess Task C^oordiuation, the two managors both would
complete survey items tbat assess tho
dogree to which tbey have roliod on each
other to mako stratogic and operati(.)rml
decisions or for support in ox(!(:uting a
job function.
Somo recent work has gone boyond
provious studies' exclusive reliance on a
single key informant. For oxnmjile, following Modol P ^ F , Johnson ot al.
(1996) moasurod trust betwoon matched
dyads of managers from both sides of Iho
alliance partnership. !n addilion to using
the Modol P*F level of measurement,
Inkpon imd Currail (1997) added an additional trust nioasure based on Model
P ^ P (i.o,. key informant's trust in a
count or jiart managor Irom tbo partnor

486

JOUHNAI. OF INTERNATIONAL BUSINESS

Using mulli-sainplo and multi-source

data, Currall ;uid Judge (1995) and Inkpen find Currall (1997) provided eni[)irical support lor tbe existence of lour dimensions of trust, as well as their convergent and discriminant vylidity. Trust
may tako tho fornis of: (1) Open Ct)inniunif:ation and Information Kxchnnge, (2)
'I'ask Coordination. (3) Informal Agrettinents, anil (4) Survoilkiiico aud Moniloring (which signifies low trust). Mach
dimonsiou of trust is a manifestation of
relianco: i.o., decision to take action that
allows tbo trustor's fate to bo dotorminod
by tbo trustee. Tbo level of trust may bo
relative: for example, in Open Cxiinmunication and Information Exdumgo n
trustor migbt divulge more or loss scn.sitivo information.'' Bcdovv wo oxplain
how to moasuro IIV trust for a person,
group, or firm. Examples aro snnunarizod in Table 2.

The Trusting Person

SmniHs

STEVEN C . CURRALL, ANDREW C . INKPEN

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Vf)L, 33, No. 3. THIRD Qi;ARTi:R, 2002

487

MULTILEVEL JOINT VENTURE TRUST

firm) to extend the range of trustees studied.

Person-level trust and trustworthiness
measures. Although our emphasis is on
decisions to engage in trusting action,
previous research also has nioasurod porceptions of "trustworthiness" such as the
extent to whic:h [he trustee is soon as fair
or benevoleni (o.g., Butler, 1991; Currali,
1992; Mayer ot al., 1995; Zahoor ot al.,
1998). If a trustee is perceived as imtrustworthy, the; trustor will be reluctant to
trust. Butler used a similar conceptualization in referring to trustworthiness
characteristics as "conditions'" of trust
tbat aro required \.o "activate and sustain
trust in a spe[:ifit: person" (1991, p.
644). Some rosearchors (e.g., CAUUmings and Bromiley, 1996) bave asked
individual survey respondents to judge
the trustworlhiness of a group (P--*C)
or a firm (P^F). For IJV trust, some
rosearchors have asked managers to
rate tho trustworthinoss of tbe partner
firm (o.g., Johnson et al., t99(i) or (he
extent of trus! in thoir relationship
|e.g,, Aulakh, Katabo, and Sahay, 199(i;
Inkpen, 1995).
Persou-level methodological issues,
Supfjose t:hat one wishes to gauge a manager's willingness to share information
with a colloHgne that could jJotcMTtially
jeopardize the I|V. An affiruiativo responso to a survey question uiigbt indicate that th(! managor trusts ibe colleagno; alternatively, tho managor may
distrust tho colleague yet sharo tho information to comply with pressure from a
bigbor levol. Altbough the issue of volitional versus mandated behavior is not
nniquo to studios of trust, thii multilevol
nature of trust miums tbat researchers
intorosted in person-level trust must
carefully develop measures that capture
an individual's own decision to engago
in trusting aclion. Indood, Currali and
judge (1995) have provided an explana4B8

tion of the discriminant validity of measures of trusting action versus measures

that tap social pressures arising from
other persons.
In all alliances, the rolationship hetween managors will ovolve, as will tho
risks. Thorefore, a second issue involved
in porson-level Irust is that in IjVs, trust
changos ovor timo. Tho illustrative measures prosonted in Table 2 du not by
themselves provide a moans of assossing
the ovolution of trust. That would require a longitudinal approach that uses
our proposed methodology along witb
ropoatod ineasuremenLs and complex
statistical modeling techniques.

The Trusting Group

A group is said to trust when, as tho
result of a collectively mado docision
sucb as consensus or majority vote, the
groufi engages in actions that involve roiianco on anothor party (i.o., group members are cognizant that tho group has decidod to act trustfully). According to BarTal (1990), sucb a decision requires tbat:
(ii) the trustiug action reflect (he group as
a wbole, rathor tban its individual momhers, (h) group nKunhers agree with tho
docision, (c) groups that trust must bo
distinguishable from thoso that do not,
and (d) the origin of tho trust construct
reflect the j)rocessos of group interaction
and decision-making.
Ooup-lov(;l trust may bo diroctly observed and rocordod. For example, to assess the amonnt of trust a group of IJV
managors has in the parlner firm (Modol
G-^F) with rospoct to Open Communic:ation and Information Exchange, tbe researcher might observe groups of international business dovelopment executives or operations managers as they
woigh the pros and cons of sharing market, strategic, or operations information
witb the other firm.
JOURNAL OE INTERNATIONAL BU.HINESS STUDIES

STEVEN C. CURRALL, ANDREW C. INKPEN

When observing hierarchically organized groups such as management

teams, it is difficult to verify that the
trusting action rofiects tho group as a
whole (for a study in which employees
are studied as a homogenous unit, see
Mit:liel and Hambrick |1992]). Consider
a case we studied (Inkpen, 1998). In this
Swedish-French ljV, thore was strong interpersonal trust between two IJV senior
managers from tho partner firms. However, a group of Swedish managers assigned to determine transfer prices and
export strategies for tho IJV did not trust
the French partnor firm and were openly
unrocoptivo to overtures for a stronger
cooporativo rolationship. We do not
know whether this sunlinunit originated
among tho group of Swedish managers
themselves or whether it was tho result
of a decision made by a Swedish senior
oxec:utivo.

ICC(2) address different properties of aggregate (within-group) scores (James,

1982). ICC(l) indicates the agreement of
individual respondents within a group
of individuals (e.g.. IJV managers) by
comparing the between-group sum of
squares to the total sum of squares from
a one-way analysis of variance where the
group is specified as the independent
categorical variable. As Ostroff and
Schmitt (1993) indicated, previous research shows that lCC(l) values range
from 0 to ,5 with a median of ,12,
ICC(2) is a measure of the aggregatelevel reliability of mean scores within a
given group: it is the correlation between mean trust scores of two random
samples of I]V managers' scores drawn
from the same group, IC;C(2) values
should be ,6 or higher (Ostroff and
Schmitt, 1993).

Group-level methodological issues.

C.ibson, Rtmdel, and Earley (2000) idv.ntifiod various methods for measuring
group attributes using a questionnaire
vuethodology. One metbod is to assess
individual porceptions as a roprosontation of tho group beliof and then aggrogate tho Individual rosponsos into a
group-lovol avorago or median, creating
an ind(3x of groujj-lovol "colloctivo" actions (Kramer, Browitr, and Hanna,
199(i). Davis, Schoorman, Mayor, and
Tim (2000) aggrogatod porson-level trust
data to the group levol in u study of
group-level trust and organizational performance. To justify aggregating porsonlovol data to tho grou[). Ihe researcher
mnst provido ompiricai evidence [:oncorning tho homogeneity of trust within
groups (James, 1982; Klein et al.. 1994).
Either the correlation within group (r,^^)
or intraclass correlation (ICC) can be utilized to examine whether tho degree of
within-group homogeneity warrants aggregation. In terms of ICCs, ICC(l) and

A socond method for measuring a

group attribute, suggested by Guzzo,
Yost. Campbell, and Shea (1993) uses a
group discussion procedure in which
members provide a single response as a
group to a specific set of questions. This
approach eliminates the calculation of
statistical indicators used to reflect aggregation of individual-level data, Gibson ot al. (2000) arguod that this method
is superior to the aggregation approach
because the conslruct represents the
group as a whole, reflects tho processes
of interaction within the group, and may
better capture the group's collective history. Person-level trust measures in Tablo 2 could easily be adapted for use in a
group discussion format. We must point
out, however, two limitations ofthe discussion method: (1) a statement of the
group's (iocision to trust may actually
represent minority opinion and (2) a
group's statement of trust may reflect beliefs about which there is disagrooment
within the group (Bar-Tal, 1990),

V(j|.. 33, No. 3, THIRD QIJAKTER, 2002

489

MlHTILEVKL fO]NT VENTURE T R I J S T

The Trusting Firm

Most research on IJVs has been carried
ont at Iho firm level, from ij theoretical
jierspective (for a general li,sting of Firm
level IrusI studies see Blglev nnd Fearce.
1998). To measitre one I|V pareni firm's
trusi in the other, as in Model F ^ F , the
resfuircher must examine the firm's decision lo engage in trusting af:lions toward
the other firm. Such decisions are made
hy indivitluals ((;.g., when a cttrporate
board makes a decision on behalf of the
firm) yet the actions take place at the firm
level, as we show in Table 2, and reflect
transactions Ixttween the partner firms.
We acknowledge that managers initiated
actions anti remake decisions: nevertheless there remains within tjie firm a socially constructed, shared history, as evidenf:ed by institutionalized routines
(Nelson and Winter, 1982) and interactions hetween the partners at a firm level.
In measuring firm-level trusl, archival
data sources such as corporale statements, an 1|V shareholder agreement, or
an identification of specific: organizational routines may be useful. Although
firm-level trusting actions rarely can be
explained as the result of a single person's decision, trusting action will be
shaped over time by multiple managers'
inputs. If a researcher is studying an IJV
that has existed for several years, actions
may have become organizational routines, with no specific manager respousible. For example, a partner may be allowed to observe sensitive operations
following a series of interactions between the partners, based on multiple
managers and multiple decisions.
The extent to which partner Urms
openly share knowledge is a firm-level
manifestation of Open Communication
and Information Exchange. To measure
trust along this dimension, the researcher might examine corporate state490

ments, IJV agreements involving access

to partner technology, or the actual exchange of research and development personnel. Another example of Open Clommuniciition and Information Fxchange is
the firms' willingne.ss to regularly disseminate IJV performance data ((Ihild
and Faulkner, 1998). To measure trust in
terms of Task C^oordination, a researt:her
could study documents articulating how
resfxtnsibility for IJV tasks are allocated
among the partners. By adopting approaches similar to those used in studies
of IJV control (e.g., Killing, 1983). the
researcher (.:aii identify the extent of partner decision making responsibility for
key IJV areas in order to determine how
much one firm relies on the other. To
measure the Informal Agreement dimension, the researcher might examine the
scope of the IJV at the time of formation
and at a later point. Changes in IJV scope
may or may not require specific revisions
to the fJV agreement. Adopting a change
in scope without revising the IJV agreement constitutes an act of trust.
Measurement using Models F-^F and
F*G involves substituting an individual I|V manager or a group of IJV managers as the trustee, res[)ectively. For exiunple, a researcher may be interested in
a parent firm's routines for trusting a
chief executive from a partner firm
(Model F*P). Decisions to maintain or
replace an IJV GFO will often depend on
the degree to which one or both partner
firms trust the CEO. One could also examine a ]3arent firm's routines for trusting a group of IJV operations managers
(Model F^G).
Firm-level methodological issues. As
Klein et aJ, (1994) pointed out, the level
of some f:onstructs such as organizational climate, leadership, affect, and
technology is open to debate. We would
add trust to this list. As we have discussed, trust can be conceptualized and
loi'RNAI. OF IN'IERNAIIONAL

BL'SINESS

S'rUDIES

STEVEN C. CURRALL, ANDREW C. INKPEN

measured at more than one level. Eirmlevol trust is tho level of theory (i.e., the
level at which hypotheses are stated) in
most IJV studies (e.g., see Das and Teng,
2000; 1998). The level of theory in somo
of tho studios, however, tnight be more
appropriate at tho group or individual
lov(Us. Fur example, theories predicting
Iho relationship botween trust and opportunistic behavior might be moro appropriate for the group level. Theories
concerning the evolution of trust and IJV
performance could be built up from the
study of individual-lovel trust and its
uuti:om.es, then group-level Irust and ils
outcomes, and riually firm-level trust
and porformanco outcomes.

The Cultural Context of Trust

The cultural and national contoxt of
trust is an important issue for researchors studying IJVs. One ofthe few studies
to measure trust on both sides of an intornational alliance dyiid was Johnson et
al. (1996) yet those authors did not deal
diroctly with tlie cross-cultural moasuroment issues. Stating that, "tho Japanoso
partner usod partn(;r credibility and benevolence similar to Westorn perspectives on trust" (1996, p. 991), they used
the samo measure for hotli Japanese and
Amorican managers. An ompirical as yot
unanswered tjuestion is whether our
measures of trust are applicable across
cultures. Following Donoy, Cannon, and
Mullen (1998). wo beliove our conceptualization of trust (i.e., based on risk and
vulnerability) can be tho foundation for
studying IJV trust JKTOSS multiple culturos. Thus, we expoci tho diirionsions
should bo valid indlcatt)rs of decisions to
trust, Tho roles of risk and vulnerability,
howevor. as woll as the impact of trust
on (jthcr organizational variables and the
developmontal processes leading to trust
in ijVs, will likelv varv.
VOL.

33, Nix 3, THIRD QUARTER. 2002

The Movement of Trust

Across Levels
A complicating factor in the measurement of IJV trust is that trust can oxist at
different organizational levels. Trust at
ono lovel doos not nocessarily mean that
trust exists at another level. As an IJV
evolves, porson-levol trust may facilitate
trust at tho firm level and vice versa.
Trust is amplified as it travels across organizational levels. From individuals to
groups to firms moro and more managers
decide to engage in trusting actions. As
trust moves upward, it also becomes
more pervasive nt multiple organizational levols.
Various factors influence tho movement of trust across levels. Although a
detailed discussion of these factors is beyond the scopo of the article, we offer a
few examples. When individual IJV
managers trust ono another, the continuity of their relationship should enhance
intorfirm trust because these managers
influence other managors, groups, and
organizational routines. When interfirm
trust exisis in a now IJV, the level of
institutional resource commitment should
play a key role in moving trust from
firms to groups to persons (Doz, 1996).
Such institutional commitment demonstrates tho IJV's legitimacy and strategic
importance in tho eyos of managers assigned to its operations (Inkpen and Currall, 1998). The movement of IJV trust
may also be blocked. For example, in a
situation of high competitive overlap,
tho partners, may place strict boundaries
around the IJV to prevent diffusion of
knowlodgo outside it.
Wo havo argued that trust exists at different levels and that it may move across
thom. It follows that tho measurement of
trust at different levels results in a much
more textured and complex analysis of
the role of trust in IJVs. For example, it
491

MULTILEVEL JOINT VENTURE TRUST

could be demonstrated that strong triist

at the interpersonal level coexists witb a
low level of interfirm trust. Nevertheless,
bigb levels of interpersonal trust among
IJV managers may eventually produce
interfirm trust that blossoms later. Alternatively, bigh lovels of interfirm trust
may diffuse to affect tho decisions of IJV
managors. For instance, the environment
of high interfirm trust may create conditions enabling l]V managers to engage in
snccessively more frequent trusting actions even if they began with rolativoly
low trust in tho early stages of their rolationship. With measures of trust at botb
levels, the dynamism of trust ovor timo
will bo revealed.
CONCLUSION

Many challenging theoretical questions in the IJV area involve considerations of trust at multiple levels. The
complex nature of IJV trust may be best
captured througb simultaneous assessment al multiple levels; tbat is, by triangulating measures of trust. Triangulation
involves use of multiple operational
measures of a construct to better understand its properties. We urgo researchers
to use this approac;h in ordor to examine
tbe convergent and discriminant validity
of trust measures. Sucb analyses, tbough
raro in previous work on 1|V trust, will
illuminate tho nature of tho trust coustruct itself by identifying similarities
and distinctions across levels thoroby
enhancing tho mothodological rigor of
empirical work on IJV trust. By idontifying where trust is strong and whore it
may be weak, nniltiple nieasuroments
across lovels will clarify the role of trust
in various i)V outcomes, such as forbearanco, opportunism, conflict, and financial i)orformanc:o,

cal data. Data analysis issues are outside

our focus on theory and measurement.
2. In discussing the willingness to be
vulnorable, researchers in various disciplines have referred to trust in different
ways, such as perceived probabilities,
positive expectations, and confidence
(Rousseau et al., 1998).
3. It also is possible that a decision not
to tako action can signify trust (e.g., the
trustor docidos not to maintain surveillance over the trustee).
4. IJVs with more than two partners
introduce a separate set of dynamics. For
example, if Partner 1 trusts Partner 2 but
not Partner 3, conceptual and measurement issues associated with trustor and
trustee become substantially mtiro complex.
5. Our four trust dimensions are not
intondod to be oxhaustivo; wo urgo other
researchers to develop additional dimensions (for a relatod sot of dimensions see
Wbitener et al., 1998). Wo use thoso four
dimonsions because they are empirically
supported and allow us to illustrate h(jw
a common conceptual core can bo oxtended to a common measurement core.
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