INITIAL TRUST IN CROSS-CULTURAL COLLABORATIONS: FORMAL AND INFORMAL ASSURANCES IN CANADA AND JAPAN OANA BRANZEI & ILAN VERTINSKY Faculty of Commerce University of British Columbia Vancouver B.C. V6T 1Z2 RONALD CAMP University of Regina Trust is a critical factor in alliance formation and management (Aulakh, Kotabe, & Sahay, 1996; Barclay & Smith, 1997; Barney & Hansen, 1994; Bouty, 2000; Fukuyama, 1995; Gulati, 1995). At the beginning of the collaboration, partners have insufficient background information about one another to form trusting beliefs and intentions (Johnson-George & Swap, 1982). Thus, initial trust is fragile. While first impressions and preliminary interactions can provide essential opportunities for developing initial trust (McKnight, Cummings, & Chevarny, 1998), in cross- cultural collaborations differences in expectations and interaction styles, language barriers, and geographical distance raise significant obstacles to trust building. Indeed, we know little about whether, why and how partners from different national cultures begin to trust each other (Cannon, Doney, & Mullen, 1999; Noorderhaven, 1999). Understanding the influence of trustors’ national culture on trust formation is important for both research and practice. First, “the processes trustors use to decide whether and whom to trust may be heavily dependent upon a society’s culture” (Doney, Cannon & Mullen, 1998: 601). Second, cultural norms shape the general disposition to trust others (Yamagishi, Cook, & Watabe, 1998) and partners’ evaluations of trustworthiness (Camp, Vertinsky, & Branzei, 2002; Johnson, Cullen, Sakano, & Takenouchi, 1996). Last but not least, the fragility of initial trust may become a severe liability when cultural differences lead to cultural stereotyping – i.e. trustors attribute negative characteristics to potential trustees solely based on their nationality (Baldwin, 1992). This study examines the development of inter-organizational trust at the beginning of a cross- cultural alliance for trustors from two different countries, Canada and Japan. We assess initial trust from the point of view of a firm’s assigned representatives (Zaheer, McEvily, & Perrone, 1998: 141), who typically act as the key decision-makers in the partner selection process (Ring & Van de Ven, 1992). Two qualitatively distinct trusting outcomes are addressed in this paper: credibility (i.e. trusting belief or confidence in one’s ability to predict partner’s future behavior, Anderson & Weitz, 1989) and initial trust (i.e. trusting intention or confidence in partner’s goodwill, Mayer et al., 1995, which results in willingness to rely on that partner, Currall & Judge, 1995). The distinction between credibility and initial trust is particularly relevant when comparing Canadian with Japanese trustors. In Canada, there is a proven, strong association between trusting beliefs, intentions, and behavior – i.e. a higher level of credibility fosters trusting intentions (Luhmann, 1979; McAllister, 1995; Moorman, Zaltman, & Deshpande, 1992) which result in “behavioral enactment” (undertaking a risky course of action that makes one vulnerable to the other party, Doney et al., 1998; Lewis & Weigert, 1985; Mayer et al., 1995). In Japan, credibility (shinyo), which depends on complex sets of obligational ties (giri no kankei, Dore, 1983), is characteristic of business relations, whereas stronger forms of trust (e.g. dependency-based, personalized bonds -- shinrai; bonds of faith, fidelity, and loyalty -- shingi) are restricted to close, long-term interpersonal relations and are seldom observed in business Academy of Management Best Conference Paper 2003 IM: G1 Table of Contents Best Paper Index Find (Cntl-F)