Collaborative Arrangements and the State of Trust between SMEs and Large Companies in Mandated Business Interactions

Abstract

The focus of this study is to explore trust between small and medium enterprises (SMEs) and large companies in interorganizational relationships (IORs) that are mandated by government policy. Due to the important contribution made by SMEs to national economies and to the fact that their growth is pivotal for entrepreneurial activities, many governments have made significant efforts to enhance their performance. However, SMEs are constrained by their lack of resources and experience. Some countries have required large companies to collaborate with SMEs to overcome these constraints. Whilst much attention has been devoted to trust in relationships of choice between SMEs and large companies, scant attention has been paid to the state of trust in mandated business interactions. This study explores the state of trust between large companies and SMEs companies in mandated business interactions, identifying those factors that influence trust between them. Qualitative semi-structured interviews with 25 key managers from large companies and SMEs were conducted in Oman which has a policy of mandated IORs. The interview data were analyzed thematically. The key findings resulted in a new contextual concept of trust, a refinement of classical trust indicators by which the presence of trust in IORs can be more appropriately detected and the development of a model embracing factors which were found to influence trust. Several new factors not previously commented on in the literature were identified in this study. The findings provide theoretical and practical contributions with recommendations for policy, practice and further research.