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INTERPERSONAL TRUST FORMATION DURING THE SUPPLIER SELECTION PROCESS: THE ROLE OF THE COMMUNICATION CHANNEL

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Abstract

This study investigates business-to-business interpersonal trust formation (trust that develops between boundary spanning individuals from different organizations) during the price determination stage of the supplier selection process. We first investigate whether trust can form at this stage. Then we examine two factors that may affect trust formation: the communication channel employed by the buyer and the amount of complexity involved in the purchase. Hypotheses are tested with a behavioral experiment (N=117) comparing three communication media (face-to-face, email, and Internet reverse auctions) and two levels of procurement complexity. Results show that trust formation does occur at the price determination stage; however, the degree to which trust grows depends on the communication channel employed and on the level of procurement complexity. Our study enhances managerial understanding of the possibility of developing (or eroding) trust early in the buyer-seller relationship, and it sheds light on the appropriateness of various supplier selection tools under various conditions. In addition, this research contributes to the supply chain management field by complementing the existing trust literature which typically focuses on interorganizational trust that is formed or eroded later in the supply relationship.

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