Description
Research Reports on Contextual Antecedents of Organizational Trust:- The Multidimensional Poverty Index (MPI) was developed in 2010 by Oxford Poverty & Human Development Initiative and the United Nations Development Programme[1] and uses different factors to determine poverty beyond income-based lists. It replaced the previous Human Poverty Index.
Research Reports on Contextual Antecedents of
Organizational Trust: A Multidimensional Cross-
level Analysis
ABSTRACT :- In this article we seek to explore the contextual antecedents of organizational
trust. In light of the complex links between organizational contexts and organizational
behaviours, we focus on the effects of the three most critical contextual antecedents, i.e.,
leadership role, structural rule, and cultural norm at the organizational level, on
organizational trust directly, and their behavioural outcomes at the individual level
indirectly, using organizational trust as a cross-level mediator. The empirical results,
based on a hierarchical linear model with a sample of 444 employees from 82 firms in
China, lent support for our multidimensional cross-level model of context-trust-
behaviour link. We extend the research on organizational trust by treating it as a
cross-level phenomenon and by specifying its core contextual antecedents and
behavioural consequences.
KEYWORDS contextual antecedent, cross-level analysis, cultural norm, leadership role,
organizational trust, structural rule
INTRODUCTION
There has been a dramatic surge of academic interest in the role of trust
in organizational settings, especially the roles of interpersonal and inter-firm trust (see
Kramer, 1999; Li, 2007, 2008; Rousseau, Sitkin, Burt, & Camerer, 1998; Schoorman,
Mayer, & Davis, 2007). This intense effort, however, has not gener- ated sufficient
knowledge regarding the contextual antecedents of trust in organi- zational settings, in
part due to the lack of integrative frameworks to interpret the extant empirical data as
well as to guide research on organizational trust as a cross-level phenomenon (cf.
Burke, Sims, Lazzara, & Salas, 2007; Lewicki, Tomlinson, & Gillespie, 2006;
Rousseau et al., 1998). Although scholars seem to agree that personal and institutional
sources of organizational trust are critical (e.g., Burke et al., 2007; Rousseau et al.,
1998), most studies have focused on the per- sonal sources in the domain of dyads
(see Schoorman et al., 2007 for review; see
Colquitt, Scott, & LePine, 2007; Dirks & Ferrin, 2002
for meta-analyses). Knowl-
edge is lacking on how organizational settings may be a context of trust (Li, 2008).
To address the above gap, the current study explored the organization-level
contextual antecedents of organizational trust as well as their cross-level effects on
individual-level behavioural outcomes. Specifically, we propose and test a multi-
dimensional cross-level model, with organizational trust as the mediator between the
three contextual antecedents (i.e., leadership role, structural rule, and cultural norm)
and the two behavioural outcomes of organizational trust at the individual level (i.e.,
in-role performance and extra-role performance in terms of organiza- tional
citizenship behaviour or OCB).
Extending and integrating the research streams on organizational context, orga-
nizational trust, and individual level outcomes, we seek to make two primary
contributions. First, we integrate the research streams on the context-trust link
bystudying the effects of leadership role, structural rule, and cultural norm as a
bundle of three key contextual antecedents on organizational trust. Second, we extend
the research on organizational trust by specifying its cross-level mediating role
between contextual antecedents and individual-level behavioural outcomes. The
contributions represent our response to the calls for greater attention to the cross-
level effects of multiple contextual factors in the research on trust (Li, 2008),
leadership (Porter & McLaughlin, 2006; Yammarino, Dionne, Chun, & Dansereau,
2005), and behaviour (Johns, 2006; Rousseau & Fried, 2001; Tsui, 2006) in
organizational settings.
A HOLISTIC MODEL OF THE CONTEXT-TRUST-BEHAVIOUR
LINK
Defining Organizational Trust
Despite its importance, there is no generally accepted definition of trust (cf. Burke
et al., 2007; Lewicki et al., 2006; Mayer, Davis, & Schoorman, 1995). For instance, there
is a debate over whether the construct and measure of trust in terms of ability, integrity,
and benevolence is sufficient (e.g., Colquitt et al., 2007; Lapidot, Kark, &Shamir, 2007).
There is also a debate over whether trust is a psychological attitude (i.e., expectation and
willingness) or a behavioural choice (i.e., decision to trust) (see Li, 2007). In this study,
we focus on trust as a psychological attitude toward an organization as an antecedent
of behavioural outcomes for the purpose of explor- ing the effects of organizational
context. We define organizational trust as employees' collective perception regarding the
trustworthiness of their organization.
Developing a Holistic Model of the Context-Trust-Behaviour Link
To explore the contextual antecedents of organizational trust, we adapt a subset of
Li's (2008) typology of trust sources: the depersonalized (relationship-generic) bases
Contextual Antecedents of Organizational Trust 373
in the network domain as the institutional sources of organizational trust. The
subset contains three institutional sources of organizational trust: (1) institutional rule as
the relationship-generic rules by formal institutions and authorities (e.g., law and
market); (2) institutional norm as the relationship-generic norms by weak-informal
institutions (e.g., ethics and culture), and (3) institutional role as the relationship-
generic roles prescribed by either formal rules or weak-informal norms (e.g., the
professional roles of a bureaucrat or doctor as well as the social roles of a spouse or
neighbour). We refer to the above three sources as institutional because they are
depersonalized (rather than personalized or relationship-specific) in terms of the
source content, and they function at the level of the organizational network domain
(rather than at the level of personal dyad domain). This is consistent with the notion of
system trust in contrast to that of personal trust (Giddens, 1990).
Applying the three institutional sources of trust to organizational settings, we
identify three contextual antecedents of organizational trust: (i) organizational
structure as the embodiment of institutional rule (i.e., structural rule); (ii) organi-
zational culture as the embodiment of institutional norm (i.e., cultural norm); and (iii)
organizational leadership as the embodiment of institutional role (i.e., leader- ship
role). More specifically, structural rule is a depersonalized system of formal
procedures to in?uence employees' behaviours; cultural norm is a depersonalized system
of informal values to in?uence employees' behaviours; and leadership role is a primarily
depersonalized process of in?uencing employees' behaviours by the chief executive officer
(CEO) or top management team (TMT) (Yukl, 2006). These three contextual
antecedents are clearly different from the dyad-level antecedents of interpersonal
trust between the supervisors and subordinates with direct working relationships (e.g.,
Ambrose & Schminke, 2003). We focus on the perception, rather than the objective, of
contextual antecedents so as to be consistent with our focus on organizational trust as
employees' collective perception of organizational trustworthiness.
Each of the above three contextual antecedents has unique features and func- tions
that require explicit conceptual differentiation (Yukl, 2006) even though the
operational distinction between the three contextual antecedents in organizational
settings are far from clear. First, there is ambiguity about the conceptual bound- aries
among the three antecedents, especially in the case of cultural norm. For instance, the
domain of cultural norm often blurs or overlaps with the domains of structural rule
and leadership role, re?ected in the construct of corporate culture that contains
various elements of structure and leadership as basic cultural artefacts (e.g., Hatch,
1993; Schein, 1992; Tsui, Zhang, Wang, Xin, & Wu, 2006). This is especially true for
the links between structural modes and cultural forms, including organic and
mechanistic modes as well as hierarchy, market, and clan modes (e.g., Ouchi, 1980;
Pawar & Eastman, 1997; Shamir & Howell, 1999). Second, the conceptual overlap is
re?ected in the operational measures (e.g., Cameron & Quinn, 1999; Moorman,
Deshpande, & Zaltman, 1993; O'Reilly, Chatman, &
374
Caldwell, 1991). For instance, some scholars mix the measure of cultural norm
with that of structural rule as if they were the same, including the measures of
corporate culture in terms of clan and hierarchy (e.g., Cameron & Quinn, 1999), in
terms of empowerment and organizational climate (e.g., Jung, Wu, & Chow, 2008),
or in terms of business values, moral values, and system control (e.g., Tsui et al.,
2006). Others measure the substitutes for leadership with a mix of cultural cohesion
and structural formalization (e.g., Podsakoff, MacKenzie, & Bommer, 1996a).
Further, according to a comprehensive review (Porter & McLaughlin, 2006), there
were few studies that encompassed more than one organizational contextual variable.
Scholars have called for a greater emphasis on the organizational context of leadership,
especially the effects of multiple contextual elements as a set or bundle, consistent
with the call for the contextualization of organizational behav- iour in general
(Rousseau & Fried, 2001). Another comprehensive review (Yam- marino et al., 2005)
revealed a serious lack of proper approach to the issue of level-of-analysis, with a
majority of the empirical studies falling short of adequately addressing the critical issue,
especially in the area of cross-level analysis. Finally, a major gap in the research is the
lack of studies on the contextual elements as a bundle, including all the three core
contextual antecedents of leadership role, structural rule, and cultural norm (see Dirks
& Ferrin, 2002; Podsakoff et al., 1996a for meta-analyses). Given the serious
conceptual and operational ambiguity regarding the causal links of the three
contextual elements, and to bundle all core contextual antecedents of organizational
trust, we have chosen to treat the three contextual elements as having parallel in?uence
on employees. In sum, we examine the effects of structural rule, cultural norm, and
leadership role as three core contextual antecedents of organizational trust in a single
model, with organiza- tional trust as the cross-level mediator between contextual
antecedents and behav- ioural consequences (see Fig. 1).
Transformational Leadership as the Core of Leadership Role
There are two distinctive perspectives on the leadership-trust link (cf. Dirks &
Ferrin, 2002; Wu, Tsui, & Kinicki, 2010; Yammarino et al., 2005): (i) leadership role
as a depersonalized embodiment of collective vision and identity, and (ii) lead- ership role
as a personalized embodiment of dyadic supervisor-subordinate ties. The first can be
represented by the transformational leadership theory or TFL theory (see Bass,
1999), and the second can be represented by the leader-member exchange theory or
LMX (see Graen & Uhl-Bien, 1995). Both theories recognize the critical role of
leadership for trust. While TFL implicitly assumes trust as necessary for leadership,
LMX explicitly regards trust as central to the supervisor- subordinate relationship (e.g.,
Maslyn & Uhl-Bien, 2001). However, only TFL can affect trust at the organizational
level because LMX lies in the dyadic domain. To
Contextual Antecedents of Organizational Trust
Figure 1. A cross-level model of organizational trust
Leadership Role
Transformational
Leadership
H1
375
Firm
Level:
Structural Rule
Formalization
Centralization
H2
H4, 5, 6
Cultural Norm
Business Value
Ethical Value
H3
,
Organizational
Trust
Individual
Level:
In-role
Performance
Extra-role
Performance
OCB
explore the leadership-trust link at the organizational level, we focus on TFL instead
of LMX (see Burke et al., 2007).
The issue of the referent for the leadership-trust link (i.e., distinctive targets
between direct supervisor and TMT or between CEO and TMT) is also relevant (see
Dirks & Ferrin, 2002 for a meta-analysis). We consider the TMT as an appropriate
leadership referent in analysing context-trust linkage for two reasons. First, the use of
TMT as the key surrogate or representative of organization is common in the
literature. For instance, Fox (1974) reported that most employees considered TMT as
the surrogate of organizations, while Hambrick and Mason (1984) also highlighted the
role of TMT as the representative of an organization in their 'upper-echelons
perspective'. Second, while the contribution of CEO to the effective functioning of
TMT may be conceptually appealing, the empirical evi- dence of this effect is limited
(cf. Finkelstein, 1992). Further, empirical findings show that the relationships among
variables tend to be stronger if they share the same referent, i.e., 'target similarity effect'
(Lavelle et al., 2009), such as our focus on structural rule, cultural norm, and TMT role,
all as organizational contextual factors at the organizational level.
Transformational leadership refers to those leader behaviours that in?uence
employees' values and aspirations, activate their higher-order needs, and arouse them
to transcend their own self-interests for the sake of organizational interests (Bass,
1999). As the core of leadership role at the organizational level with the emphases on
shared vision, team cooperation, role model, intellectual stimulation, and high
expectation, the TFL role of TMT is expected to have a positive effect on employees'
trust in their organizations in terms of their perceptions of organiza- tional
trustworthiness (Jung & Avolio, 2000; Podsakoff, MacKenzie, Moorman, &Fetter,
1990). The explanations for the positive effect lie in the mechanisms of
376
identification and reciprocity in social exchange (Blau, 1964; Flynn, 2005; Shore,
Coyle-Shapiro, Chen, & Tetrick, 2009). First, because of the inspiring roles of TFL
through its positive dimensions (e.g., shared vision and role model), employees tend to
identify with such roles, and are thus more likely to trust the TMT, which
symbolizes the TFL of an organization, and to trust the organization through the
TMT (Conger & Kanungo, 1998). Second, the TFL role of TMT could be perceived
by employees as the trust in employees from the TMT and also from the organization
via the TMT as the agent of the organization (Avolio & Bass, 1995; Fox, 1974;
Hambrick & Mason, 1984). Hence, the employees tend to reciprocate the trust from
the TMT with their own trust in the TMT in particular and in the organization in
general (Blau, 1964; Flynn, 2005). In sum, the mechanisms of identification and
reciprocity in social exchange between the TMT and employees facilitate the perceived
trustworthiness of organizations by the employees.
Hypothesis 1. The transformational leadership of TMT in an organization will relate
positively to employees' collective perception of organizational trust.
Formalization and Centralization as the Core of Structural Rule
Structural rule can best be captured by the central dimensions of organic versus
mechanistic structure (Li, 1998; Pawar & Eastman, 1997; Porter & McLaughlin,
2006; Shamir & Howell, 1999). An organic structure is a system that emphasizes the
?exibility and adaptability of 'soft rules', while a mechanistic structure is one emphasiz- ing the
standardization and reliability of 'hard rules' (Burns & Stalker, 1966). The organic-
mechanistic structural rule is commonly measured by the dimensions of formalization
and centralization (Moorman et al., 1993; Shamir & Howell, 1999). Formalization
refers to the extent to which control procedures are explicitly specified, while centralization
refers to the extent to which decision-making is concentrated in the hands of the TMT
(Khandwalla, 1976). There is evidence that formalization and centralization differ in
terms of their respective effects on trust, with the former being negative for trust and the
latter having no effect (e.g., Moorman et al., 1993), andalso on other factors such as
procedural justice, with the latter being negative and the former having no effect (e.g.,
Schminke, Ambrose, & Cropanzano, 2000).
It is evident that structural rule may in?uence organizational trust; when it does,
the effect is negative ( Jung et al., 2008; Moorman et al., 1993; Podsakoff,
MacKenzie, & Bommer, 1996b; Whitener, Brodt, Korsgaard, & Werner, 1998).
Consistent with the theories about the mechanisms of both identification and
reciprocity in social exchange (Blau, 1964; Flynn, 2005; Shore et al., 2009), we argue that
formalization and centralization tend to constrain the autonomy of employees, and thus
are less likely to be identified by the employees as desirable (Creed & Miles, 1996;
Whitener et al., 1998). Hence, the two primary structural dimensions are expected to
have a negative effect on employees' trust in their organization, similar
Contextual Antecedents of Organizational Trust 377
to the negative effect of control on trust (Creed & Miles, 1996). In addition,
formalization and centralization could be perceived by employees as a symbol of low trust
in the employees by their organizations, thus resulting in reciprocal low trust in the
organization by employees (Moorman et al., 1993; Whitener et al., 1998). In sum, the
lack of identification and reciprocity in social exchange between an organization and
its employees in terms of structural constraint is expected to hurt the perceived
trustworthiness of organizations by the employees.
Hypothesis 2a. Formalization in an organization will relate negatively to employees' collective
perception of organizational trust.
Hypothesis 2b. Centralization in an organization will relate negatively to employees' collective
perception of organizational trust.
Business and Ethical Values as the Core of Cultural Norm
Cultural norm can have a similar effect as leadership role and structural rule
(Pawar & Eastman, 1997; Porter & McLaughlin, 2006; Shamir & Howell, 1999).
Despite its complexity, organizational culture is commonly defined as a symbolic
system consisting of inner values and outer artefacts collectively experienced by
most employees in an organization (Hatch, 1993; Schein, 1992). To differentiate
cultural norm from structural rule, we have chosen to focus on the inner core of
deeply rooted values ( Jung & Avolio, 2000; Porter & McLaughlin, 2006) rather than
the outer governance modes of organizational form (e.g., the modes of clan, hierarchy,
and market) (Moorman et al., 1993; Pawar & Eastman, 1997; Shamir &Howell, 1999).
At the core of organizational culture, the inner values serve as the guiding principles
in terms of preferred ends and means for the employees in an organization to
embrace (O'Reilly et al., 1991). For instance, according to an empirical study on the
direct effect of culture on trust, none of the cultural artefacts represented by governance
modes in?uenced trust (Moorman et al., 1993). This is no surprise because only inner
values can motivate, rather than coerce, employees' organizational behaviours (Bardi &
Schwartz, 2003). In this sense, this value- oriented approach to cultural norm is
consistent with the nature of culture as
'softer' than the 'harder' structural rule (Johns, 2006; Shamir & Howell, 1999).
A recent review (Porter & McLaughlin, 2006) identified two core cultural ele-
ments, i.e., the cultural type in terms of innovation and adaptability as well as the
cultural value in terms of ethics. These two cultural elements represent the core of
cultural values that may in?uence the employee behavioural patterns in an orga-
nization. We refer to the preferred ends and means for business operations as
business values, including innovation, stability, outcome efficiency, attention to
detail, aggressiveness, teamwork, and high respect for people, the cultural values
proposed by O'Reilly et al. (1991). These values are directly related to business
378
performance in a wide range of industrial contexts in terms of technology and
growth rate (Chatman & Jehn, 1994). We refer to the preferred ends and means for
moral judgment as ethical values, including fairness, integrity, trust, and social
responsibility. The four ethical values are adapted from research on business ethics
(Reidenbach & Robin, 1990).
The two sets of inner values can affect organizational trust in distinctive aspects.
While business values may in?uence employees' perception of their firm's ability or
competence, which is a key source of trust or dimension of trustworthiness, ethical
values can directly affect integrity and benevolence, the other two sources of trust
(Mayer et al., 1995). In contrast to the hard formal rules of formalization and
centralization, which are regarded as negative to trust, the soft informal norms of
business and ethical values are expected to be positive for trust. This is because the
inner components of cultural values tend to arouse much stronger identification from
employees on their organizations than the outer components of cultural artefacts
(Schein, 1992). Further, employees in organizations with weak shared values will be
less likely to perceive strong organizational support (Cole, Schaninger, & Harris, 2002),
thus much less likely to reciprocate (Blau, 1964). As we argued earlier, such
reciprocity and identification are positive for trust (Blau, 1964; Flynn, 2005; Shore et
al., 2009). It is also evident that corporate values do directly and positively affect
employees' trust in their organizations (e.g., Moorman et al., 1993). In sum, cultural norm
in general and the core business values, as well as the core
ethical values in particular, will directly and positively affect organizational trust.
Hypothesis 3a. The core business values in an organization will relate positively to employees'
collective perception of organizational trust.
Hypothesis 3b. The core ethical values in an organization will relate positively to employees'
collective perception of organizational trust.
The Cross-level Effect of Organizational Trust on
Behavioural Outcomes
It is common to include extra-role performance and in-role performance as two
key behavioural outcomes of trust, while taking workplace satisfaction and orga-
nizational commitment as two psychological outcomes (Dirks & Ferrin, 2001, 2002).
The main effect of trust on behavioural outcomes, however, tends to be weaker and
less consistent than that on psychological outcomes, because the former is more
sensitive to the trust referent than the latter (Dirks & Ferrin, 2001, 2002). However, the
main effect of trust on OCB and in-role performance tends to be stronger than all other
behavioural outcomes (Dirks & Ferrin, 2001, 2002). While the links between
leadership, trust, extra-role performance, and in-role performance with supervisor as
trust referent are established, such links with any
Contextual Antecedents of Organizational Trust 379
trust referent at the organizational level are equivocal (Mayer & Gavin, 2005; see
Dirks & Ferrin, 2001). Because we define organizational trust as a psychological
attitude instead of a behavioural choice, it is obvious that trust will be strongly related
to psychological outcomes (e.g., affective commitment and job satisfaction). Further, a
focus on behavioural outcomes has the potential to shed light on the mixed evidence
of the trust-behaviour link. Consistent with the prevailing views and major findings
(e.g., Dirks & Ferrin, 2002; Jung & Avolio, 2000; Li, 2007, 2008; Moorman et al.,
1993; Podsakoff et al., 1990), we expect that organizational trust at the organizational
level will positively affect the two behavioural outcomes at the individual level, thus a
cross-level link.
Further, we posit that organizational trust will mediate the link between the three core
contextual antecedents and two core behavioural outcomes. Consistent with the
literature (Dirks & Ferrin, 2001, 2002), trust tends to mediate between the
antecedents of trust (e.g., procedural justice, perceived organizational support, and
TFL) and the outcomes of trust (e.g., extra-role performance, in-role performance,
affective commitment, and job satisfaction). There are two reasons why trust plays a
meditating role. First, trust has the ability to transform the trustor's positive
expectation of the trustee's goodwill commitment and cooperative intention into the
trustor's own goodwill commitment and cooperative intention (Mayer et al., 1995),
which is the process of transforming from other's trustworthiness to one's own
trustfulness (Li, 2008). In other words, as a psychological attitude, trust has the potential
to be a motivator for the intentions of commitment and cooperation that trigger
constructive behaviours (Dirks & Ferrin, 2001, 2002; Mayer & Gavin, 2005). Second,
as we evoke the notions of identification and reciprocity as the two mechanisms for the
effects of organizational antecedents on employees' organiza- tional trust, we also
regard them as the primary mechanisms for the cross-level effect of employees'
organizational trust on their behavioural outcomes in terms of in-role performance and
extra-role performance. These two mechanisms render organizational trust the key
mediator between organizational-level contextual antecedents and individual-level
behavioural outcomes.
Hypothesis 4. Organizational trust will mediate the relationship between leadership role in terms
of TMT's transformational leadership and employees' behavioural outcomes of in-role (H4a) and
extra-role performance (H4b).
Hypothesis 5. Organizational trust will mediate the relationship between structural rule in terms
of formalization and centralization and employees' behavioural outcomes of in-role (H5a) and extra-
role performance (H5b).
Hypothesis 6. Organizational trust will mediate the relationship between the cultural norms of core
business and ethical values and employees' behavioural outcomes of in-role (H6a) and extra-role
performance (H6b).
380
METHODOLOGY
Pilot Study
Although our measures were adapted from the established scales, we still con-
ducted a pilot study in China to ensure the construct validities of our measures of
formalization, centralization, business value, and ethical value. A high-tech firm in the
city of Xi'an in China was selected as the site of our scale validation study with the full
support from the firm's CEO. A total of 178 employees participated in the study, and
the final sample was 169 with a response rate of 95 percent. About 70 percent of the
respondents were men; the average age of the respondents was 37.20 years (SD =
6.46), and their average company tenure was 15.34 years (SD = 7.21).
Formalization. We adopted the five-item scale of mechanistic versus organic struc- ture
by Douglas and Judge (2001). The Likert-type five-item subscale of formal-
ization was polarized, ranging from 1 (informal/organic) to 7 (formal/mechanistic).
Centralization. A subscale of centralization in terms of a hierarchical decision-
making system was adopted from Deshpande and Zaltman (1982). The Likert-type four-
item subscale of centralization ranged from 1 (strongly disagree) to 7 (strongly agree).
Business value. We adapted the Organizational Cultural Profile (OCP) scale with seven
business values (O'Reilly et al., 1991), including innovation, stability, outcome
efficiency, attention to detail, aggressiveness, teamwork, and respect for people.
Employees were asked how their companies emphasized these value ori- entations. A
sample item was 'your company emphasizes on the value of "respect for people" '. The
Likert-type seven-item subscale of business value ranged from 1 (strongly disagree) to 7
(strongly agree).
Ethical value. We adapted the eight-item short-form of multidimensional ethics
scale or MES (Reidenbach & Robin, 1990) with the dimensions of moral equity,
relativism, and contractualism. We decided to drop the less relevant dimension of
relativism and reduced the items for the dimension of moral equity from four to two.
As a result, we had a new four-item scale of ethical value with two items for each of
the two dimensions (i.e., fairness and honesty for moral equity as well as keeping
promise and social responsibility for contractualism). The Likert-type four-item
subscale of ethical value ranged from 1 (strongly disagree) to 7 (strongly agree).
We subjected the above four scales to an exploratory factor analysis (EFA). The
EFA results (Eigen value >1) showed a four-factor structure, with four out of five
items for formalization, all four items for centralization, four out of seven items
for business values, and also all four items for ethical values loaded onto four
Contextual Antecedents of Organizational Trust 381
unidimensional factors. The validity of our composite version of OCP was also
examined. Based on the results of our scale validation study, we deleted the values of
'aggressiveness' and 'respect for people' because of the problem of cross-loading. We also
deleted the item 'stability' because of its weak loading and its logical inconsistency
with the item of 'innovation'. The results were seven items of a business value scale,
and it is highly consistent with the findings in Taiwan (McKinnon, Harrison, Chow,
& Wu, 2003) as well as reasonably consistent with the findings in Australia (Sarros,
Gray, Densten, & Cooper, 2005). In sum, 16 items were adopted for the four
variables in our main study (see Table 1 for item descriptions, factor loadings, and
alpha coefficients).
Main Study
Participants and procedures. The sample in our survey in the main study comprised
Executive Master of Business Administration (EMBA) students enrolled in an
elective course of an EMBA programme in a major university in China and their
direct subordinates (with six subordinates for each EMBA as the supervisor). All the
EMBA students were senior- or middle-level managers across many businesses,
including manufacturing, high-tech, service, finance, education, and government
agencies. Using the senior- or middle-level managers as the source for the data of
organizational-level variables is proper because they tend to have the opportunities to
observe TMT more closely, and they tend to be more knowledgeable about how the
structural rules and cultural norms actually work in their organizations. Further, they
are the supervisors who provide the evaluations of the performance of their
subordinates. Out of 196 EMBA students, 128 agreed to take part in the survey and
filled out a form to identify six of their subordinates with contact information.
We prepared three different forms of questionnaires labelled as Form-A, Form-B,
and Form-C. Form-A collected the data concerning the contextual ante- cedents of
organizational trust, completed by the EMBA students. Form-B asked the EMBA
students to evaluate the extra-role and in-role performance of each of their six
subordinates. The third questionnaire, Form C, was sent with a cover letter clearly
detailing the survey purpose, the voluntary nature of participation and assurance of
confidentiality, and finally the permission and support given by their supervisors. Form-
C was mailed to each of the six identified subordinates regarding their trust in their
organizations. All the subordinates were provided with stamped, pre-addressed
envelopes to return the finished questionnaires to the researchers directly. The
procedure of two-source (i.e., supervisor and subordinate) data col- lection was
designed to avoid the problem of common method variance (Podsakoff, MacKenzie, Lee,
& Podsakoff, 2003).
Out of the 128 supervisor questionnaires and 768 subordinate questionnaires
distributed, 89 supervisor questionnaires and 660 subordinate questionnaires were
382
Table 1. Exploratory factor analysis results of pilot study
Items F1 F2 F3 F4
Formalization
1. Open channels of communication with important financial 0.032 0.591 ÷0.170 0.070
and operating information versus Highly structured channels
of communication and highly restricted access to important
financial and operating information
2. Strong emphasis on adapting freely to changing circumstances 0.023 0.316 ÷0.534 0.427
without much concern for past practices versus Strong
emphasis on holding fast to true and tried management
principles despite any changes* (wrong loading)
3. Strong emphasis on getting things done even if this means ÷0.142 0.847 0.086 0.015
disregarding formal procedure versus Strong emphasis on
always getting personnel to follow the formally laid down
procedures
4. Loose, informal control with heavy dependence on informal ÷0.033 0.803 0.150 ÷0.150
relationships and norm of cooperation for work done versus
Tight, formal control of most operations by means of
sophisticated control and information system
5. Strong tendency to let requirements of situation and ÷0.022 0.805 ÷0.026 ÷0.012
individual's personality define proper on-job behaviour
versus Strong emphasis on getting line and staff personnel to
adhere closely to formal job descriptions
Centralization
1. Employees have little say in the decision-making process in ÷0.311 0.032 0.876 ÷0.232
organization
2. Participative or consultative decision-making is very rare in ÷0.308 0.016 0.882 ÷0.291
organization
3. There is little empowerment in organization ÷0.399 0.004 0.852 ÷0.382
4. There is very limited delegation in organization ÷0.372 0.045 0.777 ÷0.287
Business value
1. Innovation is highly valued in this organization 0.333 ÷0.070 ÷0.278 0.721
2. Stability is highly valued in this organization* (weak 0.425 ÷0.130 ÷0.022 0.582
loading)
3. Respect for people is highly valued in this organization* 0.722 ÷0.050 ÷0.416 0.575
(cross loading)
4. Outcome efficiency is highly valued in this organization 0.453 0.051 ÷0.261 0.757
5. Attention to detail is highly valued in this organization 0.214 ÷0.030 ÷0.273 0.697
6. Teamwork is highly valued in this organization 0.361 0.064 ÷0.261 0.783
7. Aggressiveness is highly valued in this organization* (cross 0.651 0.004 ÷0.390 0.644
loading)
Ethical value
1. Fairness is highly valued in this organization 0.863 0.020 ÷0.318 0.422
2. Honesty is highly valued in this organization 0.901 ÷0.009 ÷0.312 0.408
3. Keeping promises is highly valued in this organization 0.887 ÷0.030 ÷0.309 0.402
4. Social responsibility is highly valued in this organization 0.758 ÷0.035 ÷0.312 0.304
Eigenvalue 6.799 2.493 2.036 1.479
Percent variance explained (%) 33.997 12.467 10.181 7.393
Cumulative variance explained (%) 33.997 46.464 56.646 64.039
Alpha coefficients of remaining items 0.89 0.77 0.89 0.82
Note: Items marked by '*' were dropped in the main study.
Contextual Antecedents of Organizational Trust 383
returned. After excluding incomplete and non-paired questionnaires, the final
usable paired sample had 444 individual-level data from the subordinates as well as 82
organizational-level data from the supervisors (overall response rates of 58 percent
and 64 percent, respectively) with an average of 5.4 subordinates for each supervisor.
The average age of the subordinates was 34.85 (SD = 7.31); their average firm tenure
was 9.65 (SD = 7.16), and 69.8 percent of them were men. As for the supervisors, the
average age was 40.25 (SD = 5.23); the average firm tenure was 12.91 (SD = 7.62), and
84.1 percent were men. The supervisors averaged 12.91 years of tenure with the same
organization, which could ensure that they were knowledgeable and did possess
accurate information regarding managerial practices in their respective organizations.
Measures. We measured six organizational-level variables: formalization, central-
ization, business value, ethical value, TMT's transformational leadership, and
organizational trust as well as two individual-level variables: extra-role perfor-
mance and in-role performance. A 7-point Likert-type scale was adopted for all eight
variables.
Formalization, centralization, business value, and ethical value. We measured the four
contextual variables with the revised scales according to the EFA results in our pilot
study (o = 0.85, 0.87, 0.83, and 0.88, respectively, in our main study).
TMT's transformational leadership role. We adopted the Chinese version of a 23-item
TFL scale validated by prior studies (Wang, Law, Hackett, Wang, & Chen, 2005), with
six dimensions, including articulating a vision (five items; o = 0.94); intellec- tual
stimulation (four items; o = 0.95); high performance expectation (three items; o =
0.90); fostering collaboration (four items; o = 0.94); providing an appropriate model
(three items; o = 0.94), and providing individual support (four items; o = 0.87).
Avolio and Bass (1995) argued that leadership, if regarded as a social in?uence
process, went beyond a single leader when observed at multiple levels, so leadership
could be vested in a person or a group. Sivasubramaniam, Murry, Avolio, and Jung
(2002) also defined team leadership as the collective in?uence of all members in a team,
and argued that the team could in?uence employees just as the individual leader could
affect his or her followers. Hence, following their conceptualization, we shifted the
referent of TFL from individual to team; i.e., TFL was carried out by the TMT as a
whole.
Organizational trust. We adopted the scale of trustworthiness developed by Mayer
and Davis (1999). This scale was utilized to measure personal trustworthiness,
including employee's perception of leaders' trustworthiness (e.g., Mayer & Gavin, 2005).
We replaced the word 'leader' with that of 'organization' to measure subordinates'
perception of their organizations' trustworthiness in terms of orga- nizational ability (six
items; o = 0.96), integrity (six items; o = 0.90), and benevo- lence (five items; o =
0.89). In a recent review of trust research, Schoorman et al.
384
(2007) reconfirmed the applicability of this scale to a multilevel analysis. They
maintained that the perceptions of ability, benevolence, and integrity could be
applied to the individual, dyad, group, and organizational levels. These studies
provide the theoretical and empirical support for our adaptation of this scale for our
measure of trust at the organizational level. Sample items of organizational trust are
'our firm is known to be successful at the things it tries to do' for ability, 'we like our firm's
values' for integrity, and 'our firm is very concerned about our welfare' for benevolence.
As we obtained the data of organizational trust from individuals, to assess the
validity of aggregating individual-level data to the higher level, it would be neces- sary
to demonstrate both between-unit variability and within-unit agreement. We
conducted a one-way analysis of variance. The anova result showed a significant
between-group variance in organizational trust [F(81, 362) = 4.01, p < 0.01,
q
2
= 0.47]. The intra-class correlations (ICCs) were ICC(1) = 0.36, and
ICC(2) = 0.75 and mean R
wg
= 0.88 ( James, Demaree, & Wolf, 1993). The max
R
wg
= 0.98 and the min = 0.40. Only three out of 82 groups' R
wg
were under 0.70 (0.40,
0.56, 0.60). Most of the teams' R
wg
were above 0.90, hence a median of 0.92. Taken
together, the above results demonstrated an acceptable level of within- group
agreement in support of our choice of the mean value of individually reported data
as a measure of organizational trust.
Behavioural outcomes. We adopted the Chinese version of a 23-item OCB scale that has
been validated by prior studies for extra-role performance at the individual level (e.g.,
Wang et al., 2005). This scale has five dimensions: conscientiousness, altruism, civic
virtue, sportsmanship, and courtesy (o = 0.88, 0.92, 0.85, 0.93, and 0.91, respectively).
We also adopted four items from Jansson and Yperen (2004) to measure in-role
performance (o = 0.93). Sample items are 'this worker meets all the formal performance
requirements of the job' and 'this worker fulfils all responsi- bilities required by his/her
job'.
Control variables. Several demographic variables (age, gender, tenure, and position) of
employees were included as individual-level control variables, and firm's demo- graphic
variables (firm age and size) were also included as organizational-level control
variables. Coding for the categorical control variables is presented in Table 2.
Analyses. For the same-level effects of contextual antecedents on organizational trust
(both at the organizational level), we used the Ordinary Least Squares (OLS)
regression method. For the cross-level mediating effect of organizational trust
between organizational-level contextual antecedents and individual-level behav-
ioural outcomes, hierarchical linear modelling (HLM) was used in conjunction with
the basic procedure of mediation testing outlined by Baron and Kenny (1986). We chose
HLM because it was the most appropriate approach for the analysis of
Contextual Antecedents of Organizational Trust 385
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386
cross-level data all at the same time to overcome the shortcoming of aggregation or
disaggregation biases in the use of the OLS regression method (Seibert, Silver,
&Randolph, 2004). To test the mediation, as Baron and Kenny (1986) suggested, in the
first step, we examined the cross-level effects of organization-level contextual
antecedents (X) on individual-level outcomes (Y); in the second step, the same-level
effects of antecedents (X) on trust (M) were tested; in the third step, we put the
antecedents (X) and trust (M) both in the HLM to examine their cross-level effects on
behavioural outcomes (Y). We further performed the Sobel tests (1982) to ascertain
the mediation effect.
RESULTS
Descriptive Statistics
Table 2 presents the means, standard deviations, and correlations in our main
study. The five contextual antecedents were all significantly correlated with orga-
nizational trust (ranging from ÷0.29 to 0.64, p's < 0.05), providing initial support
for Hypotheses 1-5. More specifically, the correlations of formalization and cen-
tralization with trust were negative, while the correlations of the other three factors with
trust were positive. In addition, all the organizational-level variables were
significantly correlated with the outcome variables except for one (i.e., the insig-
nificant link between business value and in-role performance). Further, organiza- tional
trust was also significantly correlated with extra-role performance and
in-role performance (0.35 and 0.29, respectively, p's < 0.05). Finally, in Table 2,
we can clearly see that none of the control variables were significantly correlated to
trust or outcome variables. Becker (2005) recommended that if control variables had
little effect on outcome variables, it was better not to put them in the regression analysis
as they had little utility except for taking away the degrees of freedom. As a result, we
followed his recommendation and excluded the control variables from our HLM
analyses.
Hypotheses Testing
Before examining the parameter estimates, we first needed to run null models (i.e.,
without entering any Level-1 and Level-2 predictors) to examine if the between-
group variance in the outcome variables were significant. The results of the null
model for extra-role performance were: t
00
= 0.19, _
2
(81) = 220.52, p < 0.01, and
ICC(1) = 0.24. The results showed that extra-role performance had 24 percent
between-group variance. Similar results were found for in-role performance
[t
00
= 0.30, _
2
(81) = 250.68, p < 0.01, and ICC(1) = 0.28]. All the null-model
results justified the application of cross-level HLM testing (Seibert et al., 2004).
Contextual Antecedents of Organizational Trust 387
Table 3. OLS regression and HLM analyses of results
a
Variables DV = organizational DV = extra-role DV = in-role
trust performance performance
M1 M2 M3 M4 M5
Transformational 0.35* (0.10) 0.17
†
(0.10) 0.07 (0.08) 0.13 (0.10) 0.04 (0.10)
leadership
Formalization ÷0.20* (0.04) ÷0.07
†
(0.04) ÷0.03 (0.04) ÷0.07 (0.06) ÷0.03 (0.06)
Centralization ÷0.16 (0.06) ÷0.01 (0.05) 0.02 (0.05) ÷0.04 (0.07) ÷0.00 (0.06)
Business value ÷0.14 (0.11) ÷0.08 (0.12) ÷0.04 (0.12) ÷0.13 (0.14) ÷0.18 (0.13)
Ethical value 0.35* (0.09) 0.05 (0.09) ÷0.04 (0.09) 0.13 (0.09) 0.04 (0.10)
Organizational trust 0.41* (0.10) 0.38* (0.13)
R
2
0.52 0.21 0.47 0.10 0.27
Notes:
†
p < 0.1; * p < 0.05.
a
The antecedents and organizational trust are organizational-level variables, and extra-role performance and
in-role performance are individual-level variables. M1 was analysed at the organizational level using OLS regression
(n = 82 firms). M2-5 were analysed using HLM (Level 1, n = 444 employees; Level 2, n = 82 firms). Coefficients in M2-5
are estimations of fixed effects with robust standard errors.
R
2
for extra-role performance and in-role performance is the pseudo R
2
of between-group-variance. Numbers in
parentheses are standard errors for each of the regression coefficients.
DV, dependent variable; HLM, hierarchical linear modelling; OLS, ordinary least squares.
Hypotheses 1-3 predicted that the contextual antecedents had significant but
distinctive relationships with organizational trust, but our findings only support some
of these hypotheses. The OLS results on trust (M1) in Table 3 showed that the
coefficients of TFL, formalization, and ethical value were significant
(|
TFL
= 0.35; |
formalization
= ÷0.20, and |
ethical
value
= 0.35, all p's < 0.05), while those of
centralization and business value were not significantly tied to trust (|
centraliza-
tion = ÷0.16, and |
business
value
= ÷0.14, both p's > 0.10). The contextual antecedents
together accounted for 52 percent variance of organizational trust. Further, we
checked the Variance In?ation Factor (VIF) values of the contextual antecedents, and
none of the VIF values were larger than 10, showing that the common method variance
among the antecedents was not serious (VIF: TFL = 3.46, formaliza- tion = 1.08,
centralization = 1.89, business value = 2.74, ethical value = 2.92) (Neter, Kutner,
Nachtsheim, & Wasserman, 1996). Hence, Hypotheses 1, 2a, and 3b were supported,
while Hypotheses 2b and 3a were not supported.
Further, Hypotheses 4-6 predicted the cross-level mediating roles of organiza- tional
trust between the contextual variables and behavioural outcomes. According to Baron
and Kenny (1986), those contextual variables should be first significantly related to
outcome variables. As shown in Table 3, only TMT's TFL and formal- ization had
marginally significant relationships with extra-role performance
(¸
TEL
= 0.17, and ¸
formalization
= ÷0.07, both p's < 0.10) in the HLM models of extra-
role performance (M2) and in-role performance (M4). Although the insignificant
388
effects of some contextual variables on behavioural outcomes did not satisfy
the first-step requirement, Kenny, Kashy, & Bolger (1998: 260) posited that the
relationships for the first step of the mediation test (i.e., X÷Y) could be weak or
even non-significant in cases where the independent variables had a more distal (or
indirect) in?uence on the dependent variables, as was the case in our study on the distal
effects of organizational variables on individual's extra-role performance and in-role
performance. Hence, they argued that the first-step mediation test recom- mended by
Baron and Kenny (1986) was not required to demonstrate the distal mediation, while
Steps 2 and 3 were essential. Consequently, we chose to continue with the second and
third steps of the mediation test by following the suggestion of Kenny et al. (1998). If the
second and third steps were satisfied, we could still accept trust as the mediator between
contextual variables and outcome variables (Kenny et al., 1998; Seibert et al., 2004).
In the second step, the contextual variables should be significantly related to trust.
In testing Hypotheses 1-3, we found TFL (H1), formalization (H2a), and ethical
value (H3b) significantly related to trust (supported) at the organizational level, while
centralization (H2b) and business value (H3a) were not (not supported). In the third step,
we regressed the outcome variables on both the contextual variables and trust
simultaneously using HLM. As Table 3 shows, when the level-2 contextual variables
and trust were entered, trust was significantly related to
extra-role performance (M3: ¸ = 0.41, p < 0.05) and in-role performance (M5:
¸ = 0.38, p < 0.05); trust accounted for 26 percent and 17 percent additional
between-group variances of extra-role performance and in-role performance
beyond the contextual variables. While the significant relationships of TMT's TFL and
formalization with extra-role performance became insignificant (¸
TFL
from
0.17 to 0.07, p > 0.10, and ¸
formalization
from ÷0.07 to ÷0.03, p > 0.10 for extra-role
performance), the other links, such as ethical value and extra-role performance,
TMT's TFL, formalization, and ethical value and in-role performance, remained
insignificant. The significant effects of TMT's TFL, formalization, and ethical value
on trust (the 2
nd
step was satisfied) as well as the significant effect of trust on extra-role
performance and in-role performance (the 3
rd
step was satisfied) sug- gested that trust
served as a full mediator between the contextual variables of TMT's TFL,
formalization, ethical value, and the outcome variables of extra-role performance and
in-role performance (Kenny et al., 1998). Further, Sobel's (1982) tests were also
conducted to testify the mediating roles of organizational trust. For the effects of
TMT's TFL, formalization, and ethical value on extra-role perfor- mance, the
estimates that confirmed the mediating role of trust were significant
(Z
TFL
÷
extra-role
= 2.21, Z
formalization
÷
extra-role
= ÷2.21, and Z
ethical
value÷
extra-role
= 2.36, all
p's < 0.05); for the effects of TMT's TFL, formalization, and ethical value on
in-role performance, the estimates were also significant (Z
TFL
÷
in-role
= 2.10,
Z
formalization
÷
in-role
= ÷2.10, and Z
ethical
value÷
in-role
= 2.23, all p's < 0.05). Taking all the
results together, Hypothesis 4 was fully supported, while Hypotheses 5 and 6 were
Contextual Antecedents of Organizational Trust 389
partially supported that trust only mediated the relationships of formalization
and ethical value with in-role performance and extra-role performance, not the
relationships of centralization and business value with in-role performance and extra-
role performance, in organizational settings.
DISCUSSION
To summarize our overall findings, Hypotheses 1 (the effect of transformational
leadership on trust), 2a (the effect of formalization on trust), 3b (the effect of ethical
values on trust), and 4 (the mediating role of trust between transformational
leadership and outcomes) were fully supported. We only found support for the
mediating role of trust between formalization and outcomes and between ethical
values and outcomes, not for centralization and business values, and thus Hypoth- eses
5 and 6 were partially supported. Hypotheses 2b (the effect of centralization on trust) and
3a (the effect of business values on trust) were not supported.
The possible reasons for the lack of support may lie in the unique natures of
centralization and business value. As shown in some studies, centralization and
formalization are two distinctive structural dimensions in terms of function and role
(e.g., Moorman et al., 1993; Schminke et al., 2000), and centralization could differ in
the effect on organizational trust from that of formalization. It is also possible that the
unique effect of the Chinese context is at work, where centraliza- tion is taken for
granted due to the Chinese tradition of high power distance, thus having little effect
on the perception of organizational trust. This is worthy of further research. As for
the different functions and roles of business value and ethical value, it is possible that
business value may be too neutral to have either a positive or negative effect on
organizational trust, in contrast to the strong positive effect of ethical values. It is also
likely that business values may be taken for granted, but ethical values would be more
salient in defining organizational trustworthiness. Another possible reason may be the
unique effect of the Chinese context at work, where ethical values, not business values,
tend to dictate the perception of organi-
zational trust. This issue is also worthy of further investigation.
[1]
The first contribution of this study lies in the proposed and confirmed effects of three
contextual antecedents on organizational trust (i.e., TMT's transformational leadership,
formalization, and ethical values). The second contribution is the proposed and
confirmed cross-level role of organizational trust as a full mediator between its
contextual antecedents at the organizational level and its behavioural outcomes at the
individual level. Previous findings often emphasize the antecedents and effect of trust at
the individual level (e.g., Podsakoff et al., 1990), but we took trust to the
organizational level by treating organizational trust as a cross-level mediator so as to
connect the organizational level with the individual level. This shows an expandable
role of trust in organizational settings. As we argued before, identification and
reciprocity can be two mechanisms for the main effects of
390
contextual antecedents on organizational trust and also the cross-level effects of
organizational trust on behavioural outcomes. Future research is needed to confirm
not only the mediating role of organizational trust but also the two mechanisms of
identification and reciprocity in this process. Also, future research could bring trust to
the team level and find more important effects related to trust. Finally, this study is the
first empirical work to explore both business and ethical values as two core
dimensions of cultural norm in a single study, thus making a contribution to the
organizational culture literature.
Limitations
The primary limitation of this study is its cross-sectional design because only
longitudinal designs can truly address causal process. Another limitation is the
convenient sampling in this study using EMBA students from one university. This
study also lacks control over the contingencies that may affect our results, including the
macro-level factors of national culture (e.g., collectivism or individualism) and industry
type. However, our diverse sample of 82 organizations across various industries may
alleviate the problem related to industry type. Further, we did not differentiate
between the three dimensions of trustworthiness, i.e., ability, integrity, and
benevolence. Finally, our measure of business values is too coarse and sim- plistic
with all seven values lumped together. This may be the reason for the insignificant
finding regarding the effect of business values on organizational trust.
Theoretical Implications
The study has several key theoretical implications. First, to remedy the major
problem of 'no universally agreed-upon set of context' (Porter & McLaughlin, 2006:
562), this study suggests that we need to specify multiple contextual ante- cedents to
different organizational constructs, like trust and organizational support. Future
research can extend beyond the three contextual antecedents identified in this study
and explore their potential effect beyond organizational trust. Second, many
contextual antecedents, such as structural rule and cultural norm, should be treated as
multidimensional factors in organizational settings because they often have several
internal components that tend to play distinctive roles in organizational settings. This
issue deserves our special attention in future research. Third, it is imperative to study
leadership role as a multidimensional construct, including the level (e.g., the level of
TMT with a distal effect or the level of direct supervisor with a proximate effect), the
unit (e.g., TMT or CEO), and the mechanism (e.g., transformational or transactional
and differentiated or distrib- uted roles). Because organizational trust is a cross-level
mediator between leader- ship role and individual outcome, future research on the
link between trust and leadership should integrate the multiple dimensions of
leadership role to study its
Contextual Antecedents of Organizational Trust 391
cross-level effect on organizational trust. For instance, we need to study if and how
the transformational leadership of TMT may affect the supervisor-subordinate trust,
and if and how the transformational leadership of supervisor can affect subordinates'
trust in TMT.
In addition, future research should emphasize a longitudinal design to establish the
causal order of contextual elements. It would also be useful to explore the potential
interaction among contextual factors. It could be that certain configura- tions of the
three contextual factors may be most conducive to trust while other combinations
may nullify the effect of each other. Further, the moderating role of contextual
elements as a bundle or configuration should be examined. In addition, a multi-country
and multi-firm design is required to explore the interaction between the contextual
elements at both organizational and macro levels. Research could examine the
process of trust building across multiple levels (i.e., dyadic, network, organizational,
and inter-firm) with multiple trust referents (e.g., organization, TMT, CEO, and
supervisor or peer). Further, we need to differen- tiate between the three core
dimensions of trustworthiness, i.e., ability, integrity, and benevolence regarding their
potentially diverse antecedents and outcomes. The evidence seems to suggest the
need to do that because cultural context often in?uences the specific roles of various
antecedents and outcomes of trust (e.g., Lapidot et al., 2007). Finally, the distinction
between trust-as-attitude as a psycho- logical construct and trust-as-choice as a
behavioural construct deserves more attention as well. The latter is directly related to
the notion of trust as a unique mode of coordination or governance in contrast to the
traditional modes of price and authority (see Li, 1998, 2010). This new research stream
may shed light on the black box of institutionalization process in terms of specific
mechanisms and steps for the development of institutions (Jung& Avolio, 2000;
Zucker, 1991).
This study was conducted in Chinese firms. Future research should examine the
context-specificity of this set of results. Researchers have identified culture to be an
important factor that may modify the in?uence of social context on creativity at the
individual, team, and organizational levels (Erez & Nouri, 2010; Zhou & Su, 2010). Does
culture modify the in?uences of organizational context (such as those exam- ined in the
current study) on employee trust in the organization? What is the role of trust and
culture for employee and team creativity? Research on these questions will have both
theoretical and practical value.
Practical Implications
The major practical implication is that organizations should pay attention to
diverse contextual elements which may have different effects on various organiza-
tional outcomes. For example, managers may want to pay more attention to
formalization, but less to centralization, and more to ethical values, but less to
business values, so far as organizational trust is concerned, especially in China. As
392
China develops and the younger generation is exposed to Western firm practices,
they may expect less control and more freedom on the job. A high level of
formalization (written rules and procedures) may reduce their trust. In particular, to
build trust, managers must develop ethical values in the firm. Further, manage- ment
should pay attention to team leadership (e.g., top leadership team) beyond individual
leadership (e.g., CEO). Finally, management should realize that employees' trust in
the organization directly in?uences employee performance and willingness to do more
than their assigned tasks. Building organizational trust through designing ?exible
organization with transformational leadership by the TMT can contribute to the
firm's bottom line by encouraging employee task performance and taking extra steps
to help others.
CONCLUSION
As a multidimensional cross-level study to explore the effects of organization-level
contextual antecedents on organizational trust and the cross-level effect of organi-
zational trust on employee behavioural outcomes of in-role performance and
citizenship behaviour, this study has the potential to usher a new research stream on a
holistic context-trust-behaviour link. Our central conclusion is that the context-trust-
behaviour link seems more complex than expected, and none of the extant theories is
sufficient to fully explain such a link. This study is a preliminary attempt toward a
possible integration of the extant theories into a multidimen- sional cross-level model
of the context-trust-behaviour link. Hopefully, it makes a meaningful contribution to
furthering our understanding of how an organization can build trust among its
employees as well as additional refinements in the theories of trust, especially the
contextualization of organizational trust.
NOTES
We wish to express our gratitude to Prof Jiing-Lih Larry Farh and the two reviewers for their strong
support and valuable suggestions. Also, we want to thank Anne Tsui and Tina Minchella for their
editorial help.
This study is funded by grants from the National Natural Science Foundation (#71032002) and the
Ministry of Education of China (#10YJC630003).
Correspondence regarding this article should be sent to Yuntao Bai, Department of Management, Xiamen
University, Xiamen, Fujian 361005, China.
[1] We thank one of the reviewers for these suggestions.
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Peter Ping Li ([email protected]) received his Ph.D. from George Washington
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editorial boards of Journal of Management Studies, Management and Organization
Review, and Asia Pacific Journal of Management.
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University and is an assistant professor at the School of Management,
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Youmin Xi ([email protected]) received his Ph.D. from Xi'an Jiaotong
University and is a Professor of Management at the School of Management,
Xi'an Jiaotong University. He is also the Executive President of Xi'an
Jiaotong-Liverpool University and Vice President of Liverpool University. His
research interests include HeXie Theory, Chinese leadership, and
decision-making.
doc_156128828.docx
Research Reports on Contextual Antecedents of Organizational Trust:- The Multidimensional Poverty Index (MPI) was developed in 2010 by Oxford Poverty & Human Development Initiative and the United Nations Development Programme[1] and uses different factors to determine poverty beyond income-based lists. It replaced the previous Human Poverty Index.
Research Reports on Contextual Antecedents of
Organizational Trust: A Multidimensional Cross-
level Analysis
ABSTRACT :- In this article we seek to explore the contextual antecedents of organizational
trust. In light of the complex links between organizational contexts and organizational
behaviours, we focus on the effects of the three most critical contextual antecedents, i.e.,
leadership role, structural rule, and cultural norm at the organizational level, on
organizational trust directly, and their behavioural outcomes at the individual level
indirectly, using organizational trust as a cross-level mediator. The empirical results,
based on a hierarchical linear model with a sample of 444 employees from 82 firms in
China, lent support for our multidimensional cross-level model of context-trust-
behaviour link. We extend the research on organizational trust by treating it as a
cross-level phenomenon and by specifying its core contextual antecedents and
behavioural consequences.
KEYWORDS contextual antecedent, cross-level analysis, cultural norm, leadership role,
organizational trust, structural rule
INTRODUCTION
There has been a dramatic surge of academic interest in the role of trust
in organizational settings, especially the roles of interpersonal and inter-firm trust (see
Kramer, 1999; Li, 2007, 2008; Rousseau, Sitkin, Burt, & Camerer, 1998; Schoorman,
Mayer, & Davis, 2007). This intense effort, however, has not gener- ated sufficient
knowledge regarding the contextual antecedents of trust in organi- zational settings, in
part due to the lack of integrative frameworks to interpret the extant empirical data as
well as to guide research on organizational trust as a cross-level phenomenon (cf.
Burke, Sims, Lazzara, & Salas, 2007; Lewicki, Tomlinson, & Gillespie, 2006;
Rousseau et al., 1998). Although scholars seem to agree that personal and institutional
sources of organizational trust are critical (e.g., Burke et al., 2007; Rousseau et al.,
1998), most studies have focused on the per- sonal sources in the domain of dyads
(see Schoorman et al., 2007 for review; see
Colquitt, Scott, & LePine, 2007; Dirks & Ferrin, 2002
for meta-analyses). Knowl-
edge is lacking on how organizational settings may be a context of trust (Li, 2008).
To address the above gap, the current study explored the organization-level
contextual antecedents of organizational trust as well as their cross-level effects on
individual-level behavioural outcomes. Specifically, we propose and test a multi-
dimensional cross-level model, with organizational trust as the mediator between the
three contextual antecedents (i.e., leadership role, structural rule, and cultural norm)
and the two behavioural outcomes of organizational trust at the individual level (i.e.,
in-role performance and extra-role performance in terms of organiza- tional
citizenship behaviour or OCB).
Extending and integrating the research streams on organizational context, orga-
nizational trust, and individual level outcomes, we seek to make two primary
contributions. First, we integrate the research streams on the context-trust link
bystudying the effects of leadership role, structural rule, and cultural norm as a
bundle of three key contextual antecedents on organizational trust. Second, we extend
the research on organizational trust by specifying its cross-level mediating role
between contextual antecedents and individual-level behavioural outcomes. The
contributions represent our response to the calls for greater attention to the cross-
level effects of multiple contextual factors in the research on trust (Li, 2008),
leadership (Porter & McLaughlin, 2006; Yammarino, Dionne, Chun, & Dansereau,
2005), and behaviour (Johns, 2006; Rousseau & Fried, 2001; Tsui, 2006) in
organizational settings.
A HOLISTIC MODEL OF THE CONTEXT-TRUST-BEHAVIOUR
LINK
Defining Organizational Trust
Despite its importance, there is no generally accepted definition of trust (cf. Burke
et al., 2007; Lewicki et al., 2006; Mayer, Davis, & Schoorman, 1995). For instance, there
is a debate over whether the construct and measure of trust in terms of ability, integrity,
and benevolence is sufficient (e.g., Colquitt et al., 2007; Lapidot, Kark, &Shamir, 2007).
There is also a debate over whether trust is a psychological attitude (i.e., expectation and
willingness) or a behavioural choice (i.e., decision to trust) (see Li, 2007). In this study,
we focus on trust as a psychological attitude toward an organization as an antecedent
of behavioural outcomes for the purpose of explor- ing the effects of organizational
context. We define organizational trust as employees' collective perception regarding the
trustworthiness of their organization.
Developing a Holistic Model of the Context-Trust-Behaviour Link
To explore the contextual antecedents of organizational trust, we adapt a subset of
Li's (2008) typology of trust sources: the depersonalized (relationship-generic) bases
Contextual Antecedents of Organizational Trust 373
in the network domain as the institutional sources of organizational trust. The
subset contains three institutional sources of organizational trust: (1) institutional rule as
the relationship-generic rules by formal institutions and authorities (e.g., law and
market); (2) institutional norm as the relationship-generic norms by weak-informal
institutions (e.g., ethics and culture), and (3) institutional role as the relationship-
generic roles prescribed by either formal rules or weak-informal norms (e.g., the
professional roles of a bureaucrat or doctor as well as the social roles of a spouse or
neighbour). We refer to the above three sources as institutional because they are
depersonalized (rather than personalized or relationship-specific) in terms of the
source content, and they function at the level of the organizational network domain
(rather than at the level of personal dyad domain). This is consistent with the notion of
system trust in contrast to that of personal trust (Giddens, 1990).
Applying the three institutional sources of trust to organizational settings, we
identify three contextual antecedents of organizational trust: (i) organizational
structure as the embodiment of institutional rule (i.e., structural rule); (ii) organi-
zational culture as the embodiment of institutional norm (i.e., cultural norm); and (iii)
organizational leadership as the embodiment of institutional role (i.e., leader- ship
role). More specifically, structural rule is a depersonalized system of formal
procedures to in?uence employees' behaviours; cultural norm is a depersonalized system
of informal values to in?uence employees' behaviours; and leadership role is a primarily
depersonalized process of in?uencing employees' behaviours by the chief executive officer
(CEO) or top management team (TMT) (Yukl, 2006). These three contextual
antecedents are clearly different from the dyad-level antecedents of interpersonal
trust between the supervisors and subordinates with direct working relationships (e.g.,
Ambrose & Schminke, 2003). We focus on the perception, rather than the objective, of
contextual antecedents so as to be consistent with our focus on organizational trust as
employees' collective perception of organizational trustworthiness.
Each of the above three contextual antecedents has unique features and func- tions
that require explicit conceptual differentiation (Yukl, 2006) even though the
operational distinction between the three contextual antecedents in organizational
settings are far from clear. First, there is ambiguity about the conceptual bound- aries
among the three antecedents, especially in the case of cultural norm. For instance, the
domain of cultural norm often blurs or overlaps with the domains of structural rule
and leadership role, re?ected in the construct of corporate culture that contains
various elements of structure and leadership as basic cultural artefacts (e.g., Hatch,
1993; Schein, 1992; Tsui, Zhang, Wang, Xin, & Wu, 2006). This is especially true for
the links between structural modes and cultural forms, including organic and
mechanistic modes as well as hierarchy, market, and clan modes (e.g., Ouchi, 1980;
Pawar & Eastman, 1997; Shamir & Howell, 1999). Second, the conceptual overlap is
re?ected in the operational measures (e.g., Cameron & Quinn, 1999; Moorman,
Deshpande, & Zaltman, 1993; O'Reilly, Chatman, &
374
Caldwell, 1991). For instance, some scholars mix the measure of cultural norm
with that of structural rule as if they were the same, including the measures of
corporate culture in terms of clan and hierarchy (e.g., Cameron & Quinn, 1999), in
terms of empowerment and organizational climate (e.g., Jung, Wu, & Chow, 2008),
or in terms of business values, moral values, and system control (e.g., Tsui et al.,
2006). Others measure the substitutes for leadership with a mix of cultural cohesion
and structural formalization (e.g., Podsakoff, MacKenzie, & Bommer, 1996a).
Further, according to a comprehensive review (Porter & McLaughlin, 2006), there
were few studies that encompassed more than one organizational contextual variable.
Scholars have called for a greater emphasis on the organizational context of leadership,
especially the effects of multiple contextual elements as a set or bundle, consistent
with the call for the contextualization of organizational behav- iour in general
(Rousseau & Fried, 2001). Another comprehensive review (Yam- marino et al., 2005)
revealed a serious lack of proper approach to the issue of level-of-analysis, with a
majority of the empirical studies falling short of adequately addressing the critical issue,
especially in the area of cross-level analysis. Finally, a major gap in the research is the
lack of studies on the contextual elements as a bundle, including all the three core
contextual antecedents of leadership role, structural rule, and cultural norm (see Dirks
& Ferrin, 2002; Podsakoff et al., 1996a for meta-analyses). Given the serious
conceptual and operational ambiguity regarding the causal links of the three
contextual elements, and to bundle all core contextual antecedents of organizational
trust, we have chosen to treat the three contextual elements as having parallel in?uence
on employees. In sum, we examine the effects of structural rule, cultural norm, and
leadership role as three core contextual antecedents of organizational trust in a single
model, with organiza- tional trust as the cross-level mediator between contextual
antecedents and behav- ioural consequences (see Fig. 1).
Transformational Leadership as the Core of Leadership Role
There are two distinctive perspectives on the leadership-trust link (cf. Dirks &
Ferrin, 2002; Wu, Tsui, & Kinicki, 2010; Yammarino et al., 2005): (i) leadership role
as a depersonalized embodiment of collective vision and identity, and (ii) lead- ership role
as a personalized embodiment of dyadic supervisor-subordinate ties. The first can be
represented by the transformational leadership theory or TFL theory (see Bass,
1999), and the second can be represented by the leader-member exchange theory or
LMX (see Graen & Uhl-Bien, 1995). Both theories recognize the critical role of
leadership for trust. While TFL implicitly assumes trust as necessary for leadership,
LMX explicitly regards trust as central to the supervisor- subordinate relationship (e.g.,
Maslyn & Uhl-Bien, 2001). However, only TFL can affect trust at the organizational
level because LMX lies in the dyadic domain. To
Contextual Antecedents of Organizational Trust
Figure 1. A cross-level model of organizational trust
Leadership Role
Transformational
Leadership
H1
375
Firm
Level:
Structural Rule
Formalization
Centralization
H2
H4, 5, 6
Cultural Norm
Business Value
Ethical Value
H3
,
Organizational
Trust
Individual
Level:
In-role
Performance
Extra-role
Performance
OCB
explore the leadership-trust link at the organizational level, we focus on TFL instead
of LMX (see Burke et al., 2007).
The issue of the referent for the leadership-trust link (i.e., distinctive targets
between direct supervisor and TMT or between CEO and TMT) is also relevant (see
Dirks & Ferrin, 2002 for a meta-analysis). We consider the TMT as an appropriate
leadership referent in analysing context-trust linkage for two reasons. First, the use of
TMT as the key surrogate or representative of organization is common in the
literature. For instance, Fox (1974) reported that most employees considered TMT as
the surrogate of organizations, while Hambrick and Mason (1984) also highlighted the
role of TMT as the representative of an organization in their 'upper-echelons
perspective'. Second, while the contribution of CEO to the effective functioning of
TMT may be conceptually appealing, the empirical evi- dence of this effect is limited
(cf. Finkelstein, 1992). Further, empirical findings show that the relationships among
variables tend to be stronger if they share the same referent, i.e., 'target similarity effect'
(Lavelle et al., 2009), such as our focus on structural rule, cultural norm, and TMT role,
all as organizational contextual factors at the organizational level.
Transformational leadership refers to those leader behaviours that in?uence
employees' values and aspirations, activate their higher-order needs, and arouse them
to transcend their own self-interests for the sake of organizational interests (Bass,
1999). As the core of leadership role at the organizational level with the emphases on
shared vision, team cooperation, role model, intellectual stimulation, and high
expectation, the TFL role of TMT is expected to have a positive effect on employees'
trust in their organizations in terms of their perceptions of organiza- tional
trustworthiness (Jung & Avolio, 2000; Podsakoff, MacKenzie, Moorman, &Fetter,
1990). The explanations for the positive effect lie in the mechanisms of
376
identification and reciprocity in social exchange (Blau, 1964; Flynn, 2005; Shore,
Coyle-Shapiro, Chen, & Tetrick, 2009). First, because of the inspiring roles of TFL
through its positive dimensions (e.g., shared vision and role model), employees tend to
identify with such roles, and are thus more likely to trust the TMT, which
symbolizes the TFL of an organization, and to trust the organization through the
TMT (Conger & Kanungo, 1998). Second, the TFL role of TMT could be perceived
by employees as the trust in employees from the TMT and also from the organization
via the TMT as the agent of the organization (Avolio & Bass, 1995; Fox, 1974;
Hambrick & Mason, 1984). Hence, the employees tend to reciprocate the trust from
the TMT with their own trust in the TMT in particular and in the organization in
general (Blau, 1964; Flynn, 2005). In sum, the mechanisms of identification and
reciprocity in social exchange between the TMT and employees facilitate the perceived
trustworthiness of organizations by the employees.
Hypothesis 1. The transformational leadership of TMT in an organization will relate
positively to employees' collective perception of organizational trust.
Formalization and Centralization as the Core of Structural Rule
Structural rule can best be captured by the central dimensions of organic versus
mechanistic structure (Li, 1998; Pawar & Eastman, 1997; Porter & McLaughlin,
2006; Shamir & Howell, 1999). An organic structure is a system that emphasizes the
?exibility and adaptability of 'soft rules', while a mechanistic structure is one emphasiz- ing the
standardization and reliability of 'hard rules' (Burns & Stalker, 1966). The organic-
mechanistic structural rule is commonly measured by the dimensions of formalization
and centralization (Moorman et al., 1993; Shamir & Howell, 1999). Formalization
refers to the extent to which control procedures are explicitly specified, while centralization
refers to the extent to which decision-making is concentrated in the hands of the TMT
(Khandwalla, 1976). There is evidence that formalization and centralization differ in
terms of their respective effects on trust, with the former being negative for trust and the
latter having no effect (e.g., Moorman et al., 1993), andalso on other factors such as
procedural justice, with the latter being negative and the former having no effect (e.g.,
Schminke, Ambrose, & Cropanzano, 2000).
It is evident that structural rule may in?uence organizational trust; when it does,
the effect is negative ( Jung et al., 2008; Moorman et al., 1993; Podsakoff,
MacKenzie, & Bommer, 1996b; Whitener, Brodt, Korsgaard, & Werner, 1998).
Consistent with the theories about the mechanisms of both identification and
reciprocity in social exchange (Blau, 1964; Flynn, 2005; Shore et al., 2009), we argue that
formalization and centralization tend to constrain the autonomy of employees, and thus
are less likely to be identified by the employees as desirable (Creed & Miles, 1996;
Whitener et al., 1998). Hence, the two primary structural dimensions are expected to
have a negative effect on employees' trust in their organization, similar
Contextual Antecedents of Organizational Trust 377
to the negative effect of control on trust (Creed & Miles, 1996). In addition,
formalization and centralization could be perceived by employees as a symbol of low trust
in the employees by their organizations, thus resulting in reciprocal low trust in the
organization by employees (Moorman et al., 1993; Whitener et al., 1998). In sum, the
lack of identification and reciprocity in social exchange between an organization and
its employees in terms of structural constraint is expected to hurt the perceived
trustworthiness of organizations by the employees.
Hypothesis 2a. Formalization in an organization will relate negatively to employees' collective
perception of organizational trust.
Hypothesis 2b. Centralization in an organization will relate negatively to employees' collective
perception of organizational trust.
Business and Ethical Values as the Core of Cultural Norm
Cultural norm can have a similar effect as leadership role and structural rule
(Pawar & Eastman, 1997; Porter & McLaughlin, 2006; Shamir & Howell, 1999).
Despite its complexity, organizational culture is commonly defined as a symbolic
system consisting of inner values and outer artefacts collectively experienced by
most employees in an organization (Hatch, 1993; Schein, 1992). To differentiate
cultural norm from structural rule, we have chosen to focus on the inner core of
deeply rooted values ( Jung & Avolio, 2000; Porter & McLaughlin, 2006) rather than
the outer governance modes of organizational form (e.g., the modes of clan, hierarchy,
and market) (Moorman et al., 1993; Pawar & Eastman, 1997; Shamir &Howell, 1999).
At the core of organizational culture, the inner values serve as the guiding principles
in terms of preferred ends and means for the employees in an organization to
embrace (O'Reilly et al., 1991). For instance, according to an empirical study on the
direct effect of culture on trust, none of the cultural artefacts represented by governance
modes in?uenced trust (Moorman et al., 1993). This is no surprise because only inner
values can motivate, rather than coerce, employees' organizational behaviours (Bardi &
Schwartz, 2003). In this sense, this value- oriented approach to cultural norm is
consistent with the nature of culture as
'softer' than the 'harder' structural rule (Johns, 2006; Shamir & Howell, 1999).
A recent review (Porter & McLaughlin, 2006) identified two core cultural ele-
ments, i.e., the cultural type in terms of innovation and adaptability as well as the
cultural value in terms of ethics. These two cultural elements represent the core of
cultural values that may in?uence the employee behavioural patterns in an orga-
nization. We refer to the preferred ends and means for business operations as
business values, including innovation, stability, outcome efficiency, attention to
detail, aggressiveness, teamwork, and high respect for people, the cultural values
proposed by O'Reilly et al. (1991). These values are directly related to business
378
performance in a wide range of industrial contexts in terms of technology and
growth rate (Chatman & Jehn, 1994). We refer to the preferred ends and means for
moral judgment as ethical values, including fairness, integrity, trust, and social
responsibility. The four ethical values are adapted from research on business ethics
(Reidenbach & Robin, 1990).
The two sets of inner values can affect organizational trust in distinctive aspects.
While business values may in?uence employees' perception of their firm's ability or
competence, which is a key source of trust or dimension of trustworthiness, ethical
values can directly affect integrity and benevolence, the other two sources of trust
(Mayer et al., 1995). In contrast to the hard formal rules of formalization and
centralization, which are regarded as negative to trust, the soft informal norms of
business and ethical values are expected to be positive for trust. This is because the
inner components of cultural values tend to arouse much stronger identification from
employees on their organizations than the outer components of cultural artefacts
(Schein, 1992). Further, employees in organizations with weak shared values will be
less likely to perceive strong organizational support (Cole, Schaninger, & Harris, 2002),
thus much less likely to reciprocate (Blau, 1964). As we argued earlier, such
reciprocity and identification are positive for trust (Blau, 1964; Flynn, 2005; Shore et
al., 2009). It is also evident that corporate values do directly and positively affect
employees' trust in their organizations (e.g., Moorman et al., 1993). In sum, cultural norm
in general and the core business values, as well as the core
ethical values in particular, will directly and positively affect organizational trust.
Hypothesis 3a. The core business values in an organization will relate positively to employees'
collective perception of organizational trust.
Hypothesis 3b. The core ethical values in an organization will relate positively to employees'
collective perception of organizational trust.
The Cross-level Effect of Organizational Trust on
Behavioural Outcomes
It is common to include extra-role performance and in-role performance as two
key behavioural outcomes of trust, while taking workplace satisfaction and orga-
nizational commitment as two psychological outcomes (Dirks & Ferrin, 2001, 2002).
The main effect of trust on behavioural outcomes, however, tends to be weaker and
less consistent than that on psychological outcomes, because the former is more
sensitive to the trust referent than the latter (Dirks & Ferrin, 2001, 2002). However, the
main effect of trust on OCB and in-role performance tends to be stronger than all other
behavioural outcomes (Dirks & Ferrin, 2001, 2002). While the links between
leadership, trust, extra-role performance, and in-role performance with supervisor as
trust referent are established, such links with any
Contextual Antecedents of Organizational Trust 379
trust referent at the organizational level are equivocal (Mayer & Gavin, 2005; see
Dirks & Ferrin, 2001). Because we define organizational trust as a psychological
attitude instead of a behavioural choice, it is obvious that trust will be strongly related
to psychological outcomes (e.g., affective commitment and job satisfaction). Further, a
focus on behavioural outcomes has the potential to shed light on the mixed evidence
of the trust-behaviour link. Consistent with the prevailing views and major findings
(e.g., Dirks & Ferrin, 2002; Jung & Avolio, 2000; Li, 2007, 2008; Moorman et al.,
1993; Podsakoff et al., 1990), we expect that organizational trust at the organizational
level will positively affect the two behavioural outcomes at the individual level, thus a
cross-level link.
Further, we posit that organizational trust will mediate the link between the three core
contextual antecedents and two core behavioural outcomes. Consistent with the
literature (Dirks & Ferrin, 2001, 2002), trust tends to mediate between the
antecedents of trust (e.g., procedural justice, perceived organizational support, and
TFL) and the outcomes of trust (e.g., extra-role performance, in-role performance,
affective commitment, and job satisfaction). There are two reasons why trust plays a
meditating role. First, trust has the ability to transform the trustor's positive
expectation of the trustee's goodwill commitment and cooperative intention into the
trustor's own goodwill commitment and cooperative intention (Mayer et al., 1995),
which is the process of transforming from other's trustworthiness to one's own
trustfulness (Li, 2008). In other words, as a psychological attitude, trust has the potential
to be a motivator for the intentions of commitment and cooperation that trigger
constructive behaviours (Dirks & Ferrin, 2001, 2002; Mayer & Gavin, 2005). Second,
as we evoke the notions of identification and reciprocity as the two mechanisms for the
effects of organizational antecedents on employees' organiza- tional trust, we also
regard them as the primary mechanisms for the cross-level effect of employees'
organizational trust on their behavioural outcomes in terms of in-role performance and
extra-role performance. These two mechanisms render organizational trust the key
mediator between organizational-level contextual antecedents and individual-level
behavioural outcomes.
Hypothesis 4. Organizational trust will mediate the relationship between leadership role in terms
of TMT's transformational leadership and employees' behavioural outcomes of in-role (H4a) and
extra-role performance (H4b).
Hypothesis 5. Organizational trust will mediate the relationship between structural rule in terms
of formalization and centralization and employees' behavioural outcomes of in-role (H5a) and extra-
role performance (H5b).
Hypothesis 6. Organizational trust will mediate the relationship between the cultural norms of core
business and ethical values and employees' behavioural outcomes of in-role (H6a) and extra-role
performance (H6b).
380
METHODOLOGY
Pilot Study
Although our measures were adapted from the established scales, we still con-
ducted a pilot study in China to ensure the construct validities of our measures of
formalization, centralization, business value, and ethical value. A high-tech firm in the
city of Xi'an in China was selected as the site of our scale validation study with the full
support from the firm's CEO. A total of 178 employees participated in the study, and
the final sample was 169 with a response rate of 95 percent. About 70 percent of the
respondents were men; the average age of the respondents was 37.20 years (SD =
6.46), and their average company tenure was 15.34 years (SD = 7.21).
Formalization. We adopted the five-item scale of mechanistic versus organic struc- ture
by Douglas and Judge (2001). The Likert-type five-item subscale of formal-
ization was polarized, ranging from 1 (informal/organic) to 7 (formal/mechanistic).
Centralization. A subscale of centralization in terms of a hierarchical decision-
making system was adopted from Deshpande and Zaltman (1982). The Likert-type four-
item subscale of centralization ranged from 1 (strongly disagree) to 7 (strongly agree).
Business value. We adapted the Organizational Cultural Profile (OCP) scale with seven
business values (O'Reilly et al., 1991), including innovation, stability, outcome
efficiency, attention to detail, aggressiveness, teamwork, and respect for people.
Employees were asked how their companies emphasized these value ori- entations. A
sample item was 'your company emphasizes on the value of "respect for people" '. The
Likert-type seven-item subscale of business value ranged from 1 (strongly disagree) to 7
(strongly agree).
Ethical value. We adapted the eight-item short-form of multidimensional ethics
scale or MES (Reidenbach & Robin, 1990) with the dimensions of moral equity,
relativism, and contractualism. We decided to drop the less relevant dimension of
relativism and reduced the items for the dimension of moral equity from four to two.
As a result, we had a new four-item scale of ethical value with two items for each of
the two dimensions (i.e., fairness and honesty for moral equity as well as keeping
promise and social responsibility for contractualism). The Likert-type four-item
subscale of ethical value ranged from 1 (strongly disagree) to 7 (strongly agree).
We subjected the above four scales to an exploratory factor analysis (EFA). The
EFA results (Eigen value >1) showed a four-factor structure, with four out of five
items for formalization, all four items for centralization, four out of seven items
for business values, and also all four items for ethical values loaded onto four
Contextual Antecedents of Organizational Trust 381
unidimensional factors. The validity of our composite version of OCP was also
examined. Based on the results of our scale validation study, we deleted the values of
'aggressiveness' and 'respect for people' because of the problem of cross-loading. We also
deleted the item 'stability' because of its weak loading and its logical inconsistency
with the item of 'innovation'. The results were seven items of a business value scale,
and it is highly consistent with the findings in Taiwan (McKinnon, Harrison, Chow,
& Wu, 2003) as well as reasonably consistent with the findings in Australia (Sarros,
Gray, Densten, & Cooper, 2005). In sum, 16 items were adopted for the four
variables in our main study (see Table 1 for item descriptions, factor loadings, and
alpha coefficients).
Main Study
Participants and procedures. The sample in our survey in the main study comprised
Executive Master of Business Administration (EMBA) students enrolled in an
elective course of an EMBA programme in a major university in China and their
direct subordinates (with six subordinates for each EMBA as the supervisor). All the
EMBA students were senior- or middle-level managers across many businesses,
including manufacturing, high-tech, service, finance, education, and government
agencies. Using the senior- or middle-level managers as the source for the data of
organizational-level variables is proper because they tend to have the opportunities to
observe TMT more closely, and they tend to be more knowledgeable about how the
structural rules and cultural norms actually work in their organizations. Further, they
are the supervisors who provide the evaluations of the performance of their
subordinates. Out of 196 EMBA students, 128 agreed to take part in the survey and
filled out a form to identify six of their subordinates with contact information.
We prepared three different forms of questionnaires labelled as Form-A, Form-B,
and Form-C. Form-A collected the data concerning the contextual ante- cedents of
organizational trust, completed by the EMBA students. Form-B asked the EMBA
students to evaluate the extra-role and in-role performance of each of their six
subordinates. The third questionnaire, Form C, was sent with a cover letter clearly
detailing the survey purpose, the voluntary nature of participation and assurance of
confidentiality, and finally the permission and support given by their supervisors. Form-
C was mailed to each of the six identified subordinates regarding their trust in their
organizations. All the subordinates were provided with stamped, pre-addressed
envelopes to return the finished questionnaires to the researchers directly. The
procedure of two-source (i.e., supervisor and subordinate) data col- lection was
designed to avoid the problem of common method variance (Podsakoff, MacKenzie, Lee,
& Podsakoff, 2003).
Out of the 128 supervisor questionnaires and 768 subordinate questionnaires
distributed, 89 supervisor questionnaires and 660 subordinate questionnaires were
382
Table 1. Exploratory factor analysis results of pilot study
Items F1 F2 F3 F4
Formalization
1. Open channels of communication with important financial 0.032 0.591 ÷0.170 0.070
and operating information versus Highly structured channels
of communication and highly restricted access to important
financial and operating information
2. Strong emphasis on adapting freely to changing circumstances 0.023 0.316 ÷0.534 0.427
without much concern for past practices versus Strong
emphasis on holding fast to true and tried management
principles despite any changes* (wrong loading)
3. Strong emphasis on getting things done even if this means ÷0.142 0.847 0.086 0.015
disregarding formal procedure versus Strong emphasis on
always getting personnel to follow the formally laid down
procedures
4. Loose, informal control with heavy dependence on informal ÷0.033 0.803 0.150 ÷0.150
relationships and norm of cooperation for work done versus
Tight, formal control of most operations by means of
sophisticated control and information system
5. Strong tendency to let requirements of situation and ÷0.022 0.805 ÷0.026 ÷0.012
individual's personality define proper on-job behaviour
versus Strong emphasis on getting line and staff personnel to
adhere closely to formal job descriptions
Centralization
1. Employees have little say in the decision-making process in ÷0.311 0.032 0.876 ÷0.232
organization
2. Participative or consultative decision-making is very rare in ÷0.308 0.016 0.882 ÷0.291
organization
3. There is little empowerment in organization ÷0.399 0.004 0.852 ÷0.382
4. There is very limited delegation in organization ÷0.372 0.045 0.777 ÷0.287
Business value
1. Innovation is highly valued in this organization 0.333 ÷0.070 ÷0.278 0.721
2. Stability is highly valued in this organization* (weak 0.425 ÷0.130 ÷0.022 0.582
loading)
3. Respect for people is highly valued in this organization* 0.722 ÷0.050 ÷0.416 0.575
(cross loading)
4. Outcome efficiency is highly valued in this organization 0.453 0.051 ÷0.261 0.757
5. Attention to detail is highly valued in this organization 0.214 ÷0.030 ÷0.273 0.697
6. Teamwork is highly valued in this organization 0.361 0.064 ÷0.261 0.783
7. Aggressiveness is highly valued in this organization* (cross 0.651 0.004 ÷0.390 0.644
loading)
Ethical value
1. Fairness is highly valued in this organization 0.863 0.020 ÷0.318 0.422
2. Honesty is highly valued in this organization 0.901 ÷0.009 ÷0.312 0.408
3. Keeping promises is highly valued in this organization 0.887 ÷0.030 ÷0.309 0.402
4. Social responsibility is highly valued in this organization 0.758 ÷0.035 ÷0.312 0.304
Eigenvalue 6.799 2.493 2.036 1.479
Percent variance explained (%) 33.997 12.467 10.181 7.393
Cumulative variance explained (%) 33.997 46.464 56.646 64.039
Alpha coefficients of remaining items 0.89 0.77 0.89 0.82
Note: Items marked by '*' were dropped in the main study.
Contextual Antecedents of Organizational Trust 383
returned. After excluding incomplete and non-paired questionnaires, the final
usable paired sample had 444 individual-level data from the subordinates as well as 82
organizational-level data from the supervisors (overall response rates of 58 percent
and 64 percent, respectively) with an average of 5.4 subordinates for each supervisor.
The average age of the subordinates was 34.85 (SD = 7.31); their average firm tenure
was 9.65 (SD = 7.16), and 69.8 percent of them were men. As for the supervisors, the
average age was 40.25 (SD = 5.23); the average firm tenure was 12.91 (SD = 7.62), and
84.1 percent were men. The supervisors averaged 12.91 years of tenure with the same
organization, which could ensure that they were knowledgeable and did possess
accurate information regarding managerial practices in their respective organizations.
Measures. We measured six organizational-level variables: formalization, central-
ization, business value, ethical value, TMT's transformational leadership, and
organizational trust as well as two individual-level variables: extra-role perfor-
mance and in-role performance. A 7-point Likert-type scale was adopted for all eight
variables.
Formalization, centralization, business value, and ethical value. We measured the four
contextual variables with the revised scales according to the EFA results in our pilot
study (o = 0.85, 0.87, 0.83, and 0.88, respectively, in our main study).
TMT's transformational leadership role. We adopted the Chinese version of a 23-item
TFL scale validated by prior studies (Wang, Law, Hackett, Wang, & Chen, 2005), with
six dimensions, including articulating a vision (five items; o = 0.94); intellec- tual
stimulation (four items; o = 0.95); high performance expectation (three items; o =
0.90); fostering collaboration (four items; o = 0.94); providing an appropriate model
(three items; o = 0.94), and providing individual support (four items; o = 0.87).
Avolio and Bass (1995) argued that leadership, if regarded as a social in?uence
process, went beyond a single leader when observed at multiple levels, so leadership
could be vested in a person or a group. Sivasubramaniam, Murry, Avolio, and Jung
(2002) also defined team leadership as the collective in?uence of all members in a team,
and argued that the team could in?uence employees just as the individual leader could
affect his or her followers. Hence, following their conceptualization, we shifted the
referent of TFL from individual to team; i.e., TFL was carried out by the TMT as a
whole.
Organizational trust. We adopted the scale of trustworthiness developed by Mayer
and Davis (1999). This scale was utilized to measure personal trustworthiness,
including employee's perception of leaders' trustworthiness (e.g., Mayer & Gavin, 2005).
We replaced the word 'leader' with that of 'organization' to measure subordinates'
perception of their organizations' trustworthiness in terms of orga- nizational ability (six
items; o = 0.96), integrity (six items; o = 0.90), and benevo- lence (five items; o =
0.89). In a recent review of trust research, Schoorman et al.
384
(2007) reconfirmed the applicability of this scale to a multilevel analysis. They
maintained that the perceptions of ability, benevolence, and integrity could be
applied to the individual, dyad, group, and organizational levels. These studies
provide the theoretical and empirical support for our adaptation of this scale for our
measure of trust at the organizational level. Sample items of organizational trust are
'our firm is known to be successful at the things it tries to do' for ability, 'we like our firm's
values' for integrity, and 'our firm is very concerned about our welfare' for benevolence.
As we obtained the data of organizational trust from individuals, to assess the
validity of aggregating individual-level data to the higher level, it would be neces- sary
to demonstrate both between-unit variability and within-unit agreement. We
conducted a one-way analysis of variance. The anova result showed a significant
between-group variance in organizational trust [F(81, 362) = 4.01, p < 0.01,
q
2
= 0.47]. The intra-class correlations (ICCs) were ICC(1) = 0.36, and
ICC(2) = 0.75 and mean R
wg
= 0.88 ( James, Demaree, & Wolf, 1993). The max
R
wg
= 0.98 and the min = 0.40. Only three out of 82 groups' R
wg
were under 0.70 (0.40,
0.56, 0.60). Most of the teams' R
wg
were above 0.90, hence a median of 0.92. Taken
together, the above results demonstrated an acceptable level of within- group
agreement in support of our choice of the mean value of individually reported data
as a measure of organizational trust.
Behavioural outcomes. We adopted the Chinese version of a 23-item OCB scale that has
been validated by prior studies for extra-role performance at the individual level (e.g.,
Wang et al., 2005). This scale has five dimensions: conscientiousness, altruism, civic
virtue, sportsmanship, and courtesy (o = 0.88, 0.92, 0.85, 0.93, and 0.91, respectively).
We also adopted four items from Jansson and Yperen (2004) to measure in-role
performance (o = 0.93). Sample items are 'this worker meets all the formal performance
requirements of the job' and 'this worker fulfils all responsi- bilities required by his/her
job'.
Control variables. Several demographic variables (age, gender, tenure, and position) of
employees were included as individual-level control variables, and firm's demo- graphic
variables (firm age and size) were also included as organizational-level control
variables. Coding for the categorical control variables is presented in Table 2.
Analyses. For the same-level effects of contextual antecedents on organizational trust
(both at the organizational level), we used the Ordinary Least Squares (OLS)
regression method. For the cross-level mediating effect of organizational trust
between organizational-level contextual antecedents and individual-level behav-
ioural outcomes, hierarchical linear modelling (HLM) was used in conjunction with
the basic procedure of mediation testing outlined by Baron and Kenny (1986). We chose
HLM because it was the most appropriate approach for the analysis of
Contextual Antecedents of Organizational Trust 385
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386
cross-level data all at the same time to overcome the shortcoming of aggregation or
disaggregation biases in the use of the OLS regression method (Seibert, Silver,
&Randolph, 2004). To test the mediation, as Baron and Kenny (1986) suggested, in the
first step, we examined the cross-level effects of organization-level contextual
antecedents (X) on individual-level outcomes (Y); in the second step, the same-level
effects of antecedents (X) on trust (M) were tested; in the third step, we put the
antecedents (X) and trust (M) both in the HLM to examine their cross-level effects on
behavioural outcomes (Y). We further performed the Sobel tests (1982) to ascertain
the mediation effect.
RESULTS
Descriptive Statistics
Table 2 presents the means, standard deviations, and correlations in our main
study. The five contextual antecedents were all significantly correlated with orga-
nizational trust (ranging from ÷0.29 to 0.64, p's < 0.05), providing initial support
for Hypotheses 1-5. More specifically, the correlations of formalization and cen-
tralization with trust were negative, while the correlations of the other three factors with
trust were positive. In addition, all the organizational-level variables were
significantly correlated with the outcome variables except for one (i.e., the insig-
nificant link between business value and in-role performance). Further, organiza- tional
trust was also significantly correlated with extra-role performance and
in-role performance (0.35 and 0.29, respectively, p's < 0.05). Finally, in Table 2,
we can clearly see that none of the control variables were significantly correlated to
trust or outcome variables. Becker (2005) recommended that if control variables had
little effect on outcome variables, it was better not to put them in the regression analysis
as they had little utility except for taking away the degrees of freedom. As a result, we
followed his recommendation and excluded the control variables from our HLM
analyses.
Hypotheses Testing
Before examining the parameter estimates, we first needed to run null models (i.e.,
without entering any Level-1 and Level-2 predictors) to examine if the between-
group variance in the outcome variables were significant. The results of the null
model for extra-role performance were: t
00
= 0.19, _
2
(81) = 220.52, p < 0.01, and
ICC(1) = 0.24. The results showed that extra-role performance had 24 percent
between-group variance. Similar results were found for in-role performance
[t
00
= 0.30, _
2
(81) = 250.68, p < 0.01, and ICC(1) = 0.28]. All the null-model
results justified the application of cross-level HLM testing (Seibert et al., 2004).
Contextual Antecedents of Organizational Trust 387
Table 3. OLS regression and HLM analyses of results
a
Variables DV = organizational DV = extra-role DV = in-role
trust performance performance
M1 M2 M3 M4 M5
Transformational 0.35* (0.10) 0.17
†
(0.10) 0.07 (0.08) 0.13 (0.10) 0.04 (0.10)
leadership
Formalization ÷0.20* (0.04) ÷0.07
†
(0.04) ÷0.03 (0.04) ÷0.07 (0.06) ÷0.03 (0.06)
Centralization ÷0.16 (0.06) ÷0.01 (0.05) 0.02 (0.05) ÷0.04 (0.07) ÷0.00 (0.06)
Business value ÷0.14 (0.11) ÷0.08 (0.12) ÷0.04 (0.12) ÷0.13 (0.14) ÷0.18 (0.13)
Ethical value 0.35* (0.09) 0.05 (0.09) ÷0.04 (0.09) 0.13 (0.09) 0.04 (0.10)
Organizational trust 0.41* (0.10) 0.38* (0.13)
R
2
0.52 0.21 0.47 0.10 0.27
Notes:
†
p < 0.1; * p < 0.05.
a
The antecedents and organizational trust are organizational-level variables, and extra-role performance and
in-role performance are individual-level variables. M1 was analysed at the organizational level using OLS regression
(n = 82 firms). M2-5 were analysed using HLM (Level 1, n = 444 employees; Level 2, n = 82 firms). Coefficients in M2-5
are estimations of fixed effects with robust standard errors.
R
2
for extra-role performance and in-role performance is the pseudo R
2
of between-group-variance. Numbers in
parentheses are standard errors for each of the regression coefficients.
DV, dependent variable; HLM, hierarchical linear modelling; OLS, ordinary least squares.
Hypotheses 1-3 predicted that the contextual antecedents had significant but
distinctive relationships with organizational trust, but our findings only support some
of these hypotheses. The OLS results on trust (M1) in Table 3 showed that the
coefficients of TFL, formalization, and ethical value were significant
(|
TFL
= 0.35; |
formalization
= ÷0.20, and |
ethical
value
= 0.35, all p's < 0.05), while those of
centralization and business value were not significantly tied to trust (|
centraliza-
tion = ÷0.16, and |
business
value
= ÷0.14, both p's > 0.10). The contextual antecedents
together accounted for 52 percent variance of organizational trust. Further, we
checked the Variance In?ation Factor (VIF) values of the contextual antecedents, and
none of the VIF values were larger than 10, showing that the common method variance
among the antecedents was not serious (VIF: TFL = 3.46, formaliza- tion = 1.08,
centralization = 1.89, business value = 2.74, ethical value = 2.92) (Neter, Kutner,
Nachtsheim, & Wasserman, 1996). Hence, Hypotheses 1, 2a, and 3b were supported,
while Hypotheses 2b and 3a were not supported.
Further, Hypotheses 4-6 predicted the cross-level mediating roles of organiza- tional
trust between the contextual variables and behavioural outcomes. According to Baron
and Kenny (1986), those contextual variables should be first significantly related to
outcome variables. As shown in Table 3, only TMT's TFL and formal- ization had
marginally significant relationships with extra-role performance
(¸
TEL
= 0.17, and ¸
formalization
= ÷0.07, both p's < 0.10) in the HLM models of extra-
role performance (M2) and in-role performance (M4). Although the insignificant
388
effects of some contextual variables on behavioural outcomes did not satisfy
the first-step requirement, Kenny, Kashy, & Bolger (1998: 260) posited that the
relationships for the first step of the mediation test (i.e., X÷Y) could be weak or
even non-significant in cases where the independent variables had a more distal (or
indirect) in?uence on the dependent variables, as was the case in our study on the distal
effects of organizational variables on individual's extra-role performance and in-role
performance. Hence, they argued that the first-step mediation test recom- mended by
Baron and Kenny (1986) was not required to demonstrate the distal mediation, while
Steps 2 and 3 were essential. Consequently, we chose to continue with the second and
third steps of the mediation test by following the suggestion of Kenny et al. (1998). If the
second and third steps were satisfied, we could still accept trust as the mediator between
contextual variables and outcome variables (Kenny et al., 1998; Seibert et al., 2004).
In the second step, the contextual variables should be significantly related to trust.
In testing Hypotheses 1-3, we found TFL (H1), formalization (H2a), and ethical
value (H3b) significantly related to trust (supported) at the organizational level, while
centralization (H2b) and business value (H3a) were not (not supported). In the third step,
we regressed the outcome variables on both the contextual variables and trust
simultaneously using HLM. As Table 3 shows, when the level-2 contextual variables
and trust were entered, trust was significantly related to
extra-role performance (M3: ¸ = 0.41, p < 0.05) and in-role performance (M5:
¸ = 0.38, p < 0.05); trust accounted for 26 percent and 17 percent additional
between-group variances of extra-role performance and in-role performance
beyond the contextual variables. While the significant relationships of TMT's TFL and
formalization with extra-role performance became insignificant (¸
TFL
from
0.17 to 0.07, p > 0.10, and ¸
formalization
from ÷0.07 to ÷0.03, p > 0.10 for extra-role
performance), the other links, such as ethical value and extra-role performance,
TMT's TFL, formalization, and ethical value and in-role performance, remained
insignificant. The significant effects of TMT's TFL, formalization, and ethical value
on trust (the 2
nd
step was satisfied) as well as the significant effect of trust on extra-role
performance and in-role performance (the 3
rd
step was satisfied) sug- gested that trust
served as a full mediator between the contextual variables of TMT's TFL,
formalization, ethical value, and the outcome variables of extra-role performance and
in-role performance (Kenny et al., 1998). Further, Sobel's (1982) tests were also
conducted to testify the mediating roles of organizational trust. For the effects of
TMT's TFL, formalization, and ethical value on extra-role perfor- mance, the
estimates that confirmed the mediating role of trust were significant
(Z
TFL
÷
extra-role
= 2.21, Z
formalization
÷
extra-role
= ÷2.21, and Z
ethical
value÷
extra-role
= 2.36, all
p's < 0.05); for the effects of TMT's TFL, formalization, and ethical value on
in-role performance, the estimates were also significant (Z
TFL
÷
in-role
= 2.10,
Z
formalization
÷
in-role
= ÷2.10, and Z
ethical
value÷
in-role
= 2.23, all p's < 0.05). Taking all the
results together, Hypothesis 4 was fully supported, while Hypotheses 5 and 6 were
Contextual Antecedents of Organizational Trust 389
partially supported that trust only mediated the relationships of formalization
and ethical value with in-role performance and extra-role performance, not the
relationships of centralization and business value with in-role performance and extra-
role performance, in organizational settings.
DISCUSSION
To summarize our overall findings, Hypotheses 1 (the effect of transformational
leadership on trust), 2a (the effect of formalization on trust), 3b (the effect of ethical
values on trust), and 4 (the mediating role of trust between transformational
leadership and outcomes) were fully supported. We only found support for the
mediating role of trust between formalization and outcomes and between ethical
values and outcomes, not for centralization and business values, and thus Hypoth- eses
5 and 6 were partially supported. Hypotheses 2b (the effect of centralization on trust) and
3a (the effect of business values on trust) were not supported.
The possible reasons for the lack of support may lie in the unique natures of
centralization and business value. As shown in some studies, centralization and
formalization are two distinctive structural dimensions in terms of function and role
(e.g., Moorman et al., 1993; Schminke et al., 2000), and centralization could differ in
the effect on organizational trust from that of formalization. It is also possible that the
unique effect of the Chinese context is at work, where centraliza- tion is taken for
granted due to the Chinese tradition of high power distance, thus having little effect
on the perception of organizational trust. This is worthy of further research. As for
the different functions and roles of business value and ethical value, it is possible that
business value may be too neutral to have either a positive or negative effect on
organizational trust, in contrast to the strong positive effect of ethical values. It is also
likely that business values may be taken for granted, but ethical values would be more
salient in defining organizational trustworthiness. Another possible reason may be the
unique effect of the Chinese context at work, where ethical values, not business values,
tend to dictate the perception of organi-
zational trust. This issue is also worthy of further investigation.
[1]
The first contribution of this study lies in the proposed and confirmed effects of three
contextual antecedents on organizational trust (i.e., TMT's transformational leadership,
formalization, and ethical values). The second contribution is the proposed and
confirmed cross-level role of organizational trust as a full mediator between its
contextual antecedents at the organizational level and its behavioural outcomes at the
individual level. Previous findings often emphasize the antecedents and effect of trust at
the individual level (e.g., Podsakoff et al., 1990), but we took trust to the
organizational level by treating organizational trust as a cross-level mediator so as to
connect the organizational level with the individual level. This shows an expandable
role of trust in organizational settings. As we argued before, identification and
reciprocity can be two mechanisms for the main effects of
390
contextual antecedents on organizational trust and also the cross-level effects of
organizational trust on behavioural outcomes. Future research is needed to confirm
not only the mediating role of organizational trust but also the two mechanisms of
identification and reciprocity in this process. Also, future research could bring trust to
the team level and find more important effects related to trust. Finally, this study is the
first empirical work to explore both business and ethical values as two core
dimensions of cultural norm in a single study, thus making a contribution to the
organizational culture literature.
Limitations
The primary limitation of this study is its cross-sectional design because only
longitudinal designs can truly address causal process. Another limitation is the
convenient sampling in this study using EMBA students from one university. This
study also lacks control over the contingencies that may affect our results, including the
macro-level factors of national culture (e.g., collectivism or individualism) and industry
type. However, our diverse sample of 82 organizations across various industries may
alleviate the problem related to industry type. Further, we did not differentiate
between the three dimensions of trustworthiness, i.e., ability, integrity, and
benevolence. Finally, our measure of business values is too coarse and sim- plistic
with all seven values lumped together. This may be the reason for the insignificant
finding regarding the effect of business values on organizational trust.
Theoretical Implications
The study has several key theoretical implications. First, to remedy the major
problem of 'no universally agreed-upon set of context' (Porter & McLaughlin, 2006:
562), this study suggests that we need to specify multiple contextual ante- cedents to
different organizational constructs, like trust and organizational support. Future
research can extend beyond the three contextual antecedents identified in this study
and explore their potential effect beyond organizational trust. Second, many
contextual antecedents, such as structural rule and cultural norm, should be treated as
multidimensional factors in organizational settings because they often have several
internal components that tend to play distinctive roles in organizational settings. This
issue deserves our special attention in future research. Third, it is imperative to study
leadership role as a multidimensional construct, including the level (e.g., the level of
TMT with a distal effect or the level of direct supervisor with a proximate effect), the
unit (e.g., TMT or CEO), and the mechanism (e.g., transformational or transactional
and differentiated or distrib- uted roles). Because organizational trust is a cross-level
mediator between leader- ship role and individual outcome, future research on the
link between trust and leadership should integrate the multiple dimensions of
leadership role to study its
Contextual Antecedents of Organizational Trust 391
cross-level effect on organizational trust. For instance, we need to study if and how
the transformational leadership of TMT may affect the supervisor-subordinate trust,
and if and how the transformational leadership of supervisor can affect subordinates'
trust in TMT.
In addition, future research should emphasize a longitudinal design to establish the
causal order of contextual elements. It would also be useful to explore the potential
interaction among contextual factors. It could be that certain configura- tions of the
three contextual factors may be most conducive to trust while other combinations
may nullify the effect of each other. Further, the moderating role of contextual
elements as a bundle or configuration should be examined. In addition, a multi-country
and multi-firm design is required to explore the interaction between the contextual
elements at both organizational and macro levels. Research could examine the
process of trust building across multiple levels (i.e., dyadic, network, organizational,
and inter-firm) with multiple trust referents (e.g., organization, TMT, CEO, and
supervisor or peer). Further, we need to differen- tiate between the three core
dimensions of trustworthiness, i.e., ability, integrity, and benevolence regarding their
potentially diverse antecedents and outcomes. The evidence seems to suggest the
need to do that because cultural context often in?uences the specific roles of various
antecedents and outcomes of trust (e.g., Lapidot et al., 2007). Finally, the distinction
between trust-as-attitude as a psycho- logical construct and trust-as-choice as a
behavioural construct deserves more attention as well. The latter is directly related to
the notion of trust as a unique mode of coordination or governance in contrast to the
traditional modes of price and authority (see Li, 1998, 2010). This new research stream
may shed light on the black box of institutionalization process in terms of specific
mechanisms and steps for the development of institutions (Jung& Avolio, 2000;
Zucker, 1991).
This study was conducted in Chinese firms. Future research should examine the
context-specificity of this set of results. Researchers have identified culture to be an
important factor that may modify the in?uence of social context on creativity at the
individual, team, and organizational levels (Erez & Nouri, 2010; Zhou & Su, 2010). Does
culture modify the in?uences of organizational context (such as those exam- ined in the
current study) on employee trust in the organization? What is the role of trust and
culture for employee and team creativity? Research on these questions will have both
theoretical and practical value.
Practical Implications
The major practical implication is that organizations should pay attention to
diverse contextual elements which may have different effects on various organiza-
tional outcomes. For example, managers may want to pay more attention to
formalization, but less to centralization, and more to ethical values, but less to
business values, so far as organizational trust is concerned, especially in China. As
392
China develops and the younger generation is exposed to Western firm practices,
they may expect less control and more freedom on the job. A high level of
formalization (written rules and procedures) may reduce their trust. In particular, to
build trust, managers must develop ethical values in the firm. Further, manage- ment
should pay attention to team leadership (e.g., top leadership team) beyond individual
leadership (e.g., CEO). Finally, management should realize that employees' trust in
the organization directly in?uences employee performance and willingness to do more
than their assigned tasks. Building organizational trust through designing ?exible
organization with transformational leadership by the TMT can contribute to the
firm's bottom line by encouraging employee task performance and taking extra steps
to help others.
CONCLUSION
As a multidimensional cross-level study to explore the effects of organization-level
contextual antecedents on organizational trust and the cross-level effect of organi-
zational trust on employee behavioural outcomes of in-role performance and
citizenship behaviour, this study has the potential to usher a new research stream on a
holistic context-trust-behaviour link. Our central conclusion is that the context-trust-
behaviour link seems more complex than expected, and none of the extant theories is
sufficient to fully explain such a link. This study is a preliminary attempt toward a
possible integration of the extant theories into a multidimen- sional cross-level model
of the context-trust-behaviour link. Hopefully, it makes a meaningful contribution to
furthering our understanding of how an organization can build trust among its
employees as well as additional refinements in the theories of trust, especially the
contextualization of organizational trust.
NOTES
We wish to express our gratitude to Prof Jiing-Lih Larry Farh and the two reviewers for their strong
support and valuable suggestions. Also, we want to thank Anne Tsui and Tina Minchella for their
editorial help.
This study is funded by grants from the National Natural Science Foundation (#71032002) and the
Ministry of Education of China (#10YJC630003).
Correspondence regarding this article should be sent to Yuntao Bai, Department of Management, Xiamen
University, Xiamen, Fujian 361005, China.
[1] We thank one of the reviewers for these suggestions.
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Peter Ping Li ([email protected]) received his Ph.D. from George Washington
University and is Professor of Chinese Business Studies at Copenhagen
Business School, Denmark. Adopting the Chinese frame of Yin-Yang
Balance with the holistic, dynamic and duality dimensions, his research
focuses on integrating the Western theories with the indigenous perspectives
of the East. He is the editor-in-chief of Journal of Trust Research and on the
editorial boards of Journal of Management Studies, Management and Organization
Review, and Asia Pacific Journal of Management.
Yuntao Bai ([email protected]) received his Ph.D. from Xi'an Jiaotong
University and is an assistant professor at the School of Management,
Xiamen University. His research interests include leadership, trust, diversity, and
creativity in Chinese context.
Youmin Xi ([email protected]) received his Ph.D. from Xi'an Jiaotong
University and is a Professor of Management at the School of Management,
Xi'an Jiaotong University. He is also the Executive President of Xi'an
Jiaotong-Liverpool University and Vice President of Liverpool University. His
research interests include HeXie Theory, Chinese leadership, and
decision-making.
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