Trust development in leader-follower relationships Paper presented at the Scientific International Conference on Economics and Management 23.-24.4.2009, Kaunas University of Technology, Kaunas, Lithuania Taina Savolainen Professor of Management and Leadership University of Joensuu Faculty of Business and Law /Management and Leadership FINLAND taina.savolainen@joensuu.fi Abstract This paper examines trust development within organizations in interpersonal relationships, and specifically, in leader-follower relationships. The paper aims to increase understanding of the role and formation of interpersonal trust between intra- organizational actors in the context of leadership. The paper promotes the idea of trust in leadership, and leader-follower relationships, as a foundation for collaboration and communication between the two key intra-organizational actors. Trust is introduced into the discussion as a force for enabling more effective communication and collaboration. Theoretically, the perspective of trust development may well add in approaches, theories, and applications of organizational member and leader behaviors. Moreover, the issues discussed in the paper produce findings, ideas and implications for more effective leadership from which organizations could benefit in practice. The topic of trust formation is still scarcely studied internationally and barely in Finland. The paper sheds light on trust building and implications are made for HRM experts and leaders. The originality of the paper is based on both the theoretical perspective of trust formation in leader-follower relationships, and empirical findings from the explorative Finnish case study (Häkkinen, 2006, Häkkinen and Savolainen, 2008). The paper makes a suggestion for further research by proposing a process ‘model’ for studying interpersonal trust between key actors within organizations (Figure 4.). Keywords: interpersonal trust, trust development, leadership, relationships, follower, process. 1. Introduction Trust is currently a constantly and widely debated issue in different sectors of societies. In the new millennium, it is also one of the most frequently examined concepts and timely topics in organizational literature (Burke et. al., 2007). Reasoning the significance of examining interpersonal trust development in organizations, it is widely recognized that new structures of organizations are based more and more on collaboration and functioning relationships. Such relationships, when interconnected, are thought to enable organizations to cope with levels of uncertainty in times of changes (Atkinson, 2004). Trust is seen as a central element of enabling collaborative actions in the dynamics of organizational and managerial relationships (Mayer et.al., 1995; Lewicki et.al., 2006). Collaboration and interaction in changing, globalized, multicultural and knowledge–intensive economy become more and more important, for example, for innovativeness and knowledge sharing for enhancing competitiveness (Blomqvist, 2006; Savolainen, 2008a). Trust based-relationships play an important role in sharing knowledge, and tacit knowledge in specific, which requires open communication and working atmosphere (Koskinen, 2001, Savolainen, 2008b). Despite the considerable amount of research work on social networks in organizations, the overall processes of trust in intra-organizational relationships are still unknown, and there is a lack of empirical research in this area (cf. Atkinson, 2004). A need is evident to empirically explore interpersonal trust construct and trust building within globalized organizational environments.