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Sources of Trust Building in Innovation Networks and the Contribution of Network Management
Martina Kauffeld-Monz
(Institute for Urban Research and Structural Policy, IfS Berlin) kauffeld-monz@freenet.de
Net’swork11 International Conference on Professional Network Management
Dipl. Oec. Martina Kauffeld-Monz Vortrag im CEIP, Uni Potsdam, Oktober 2006 24th November 2011 - Potsdam
Topics of the presentation
What is trust? (definition) Benefits of trust (in innovation processes) Introduction of the networks under study Findings on trust benefits Sources of trust:
– –
Introduction of the indicators Results of the analysis
Further findings on trust Conclusions for management of innovation networks
2
What does we mean when we talk about trust?
Definitions & characteristics of trust situations
Behavioral uncertainty
(Information asymmetries, Incomplete contracts/control)
Risky performance/action in advance (inputs possibly get lost/destroyed) Trustor’s expectation that the trustee (voluntarily) restrains from conducting opportunistic practices/actions Trustor’s acceptance of vulnerability (trustful action may prove to be
misplaced) Situations where coercion exists/the trustor has no alternatives there is no room for trust!
3
Economic Interactions: Trust matters!
Two main reasons for benefits of trust: (1) transaction cost reduction (by reducing control) (2) transaction value enhancement by increasing
the willingness to contribute to (knowledge) exchange and the readiness to invest in R&D-partnerships
Which are the drivers for trust building? in innovation networks?
4
The innovation networks under study*
23 German regional innovation networks
–
supported by regionalized innovation policy
(BMBF 1999-2005; InnoRegio)
–
596 network participants Financial support to
inter-organizational R&D-projects network management
–
5
*Research/Evaluation: DIW Berlin & Partner
596 Network participants by organization types
6% 10% 2% 9% 33%
Manufacturing Firms (203)
Service Firms (129)
Universities (105)
Non-university Research Orgs. (51)
18% 22%
An-Institutes (14)
Private Research Institutes (60)
firms = 55 %
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Others (34)
Illustration: One of the networks (51 organizations)
Research institutes
Firms
7
= most central organizations
= knowledge flow (one way) = knowledge flow (reciprocal)
Trust measurement: by 5 trust levels
Assessment of trust by the network participants
250 200 150 100 50 4 0 no trust low moderate high complete 18 114 181
44%
246
32%
8
Trust levels
Findings on benefits of trust (23 networks)
Trust level matters with respect to … Information and knowledge transfer to R&D-cooperation partners Innovativeness of products Benefits of network participation in general
9
Illustration: Trust matters with respect to …
… knowledge transfer to R&D-cooperation partners 3,58
4,00 3,50
3,50
2,94
3,15 2,94
3,58 3,40
3,00
2,50
2,00
1,50
1,00
,50
4
no trus t
18
low trus t
114
m oderate trus t
246
high trus t
181
com plete trus t
,00
Trust level
no
low
moderate
high
complete
10
Correlation coefficient (Kendall-Tau b): 0,155** (**significant at 1 percent level)
The sources of trust building in innovation networks (model)
A‘s trust in B results from … (1) Generalized trust (A‘s disposition) (2) Specific trust (interactions A & B) (3) Institutionalized trust (nw-characteristics
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Sources of trust building: indicators (1) Generalized trust indicators
A‘s disposition to trust depends on familiarity with …
context of interaction Social groups involved
A
A’s Network experience
(yes/no)
12
share of network partners A has known before
Sources of trust building: (2) Specific trust indicators indicators
A
B
Interactions between A & B (current + historical)
13
Amount of Information & Knowledge A received from network partners (for example B)
Sources of trust building:
(3) Institutionalized trust indicators
Qualitative network characteristics that constrain opportunistic behavior (social capital)
network partners’ identification with their network shared norms/values in the network network partners’ compatibility of interest
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From 8 sources of trust to 3 components: A factor analysis
Components 1
Network experience yes/no (context familiarity) Share of network partners known before (social group familiarity) Information received from network partners Knowledge received from network partners Dependence of the partner’s project from the trustor’s inputs 0,718 0,684 0,025 0,011 0,388 0,054 0,067 0,069
2
0,171 -0,128 0,861 0,795 0,424 0,256 0,181 0,055
3
-0,036 0,214 0,191 0,321 -0,014 0,713 0,792 0,867
Identification of network partners with their network Existence of norms/values in the network Interest compatibility of the network partners’
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Measurement of the variables: Likert-scale ranging from 1 to 5
Sources of Trust: Findings
Regression OLS: Level of trust towards network partner(s) standard. Coefficients Significance 0.007 0.000 0.000
Factor 1: Generalized trust Factor 2: Specific trust Factor 3: Institutionalized trust
Adjusted R2 = 0,419
0.094 0.240 0.603 (!)
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Findings: How can network management contribute to institutionalized trust?
By …
Involving the network partners in decision making Being open for criticism and suggestions Target-oriented network conduction Mediation in conflict situations
Relevance …
high high moderate moderate
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Further findings on trust (of interest for network management)
Contracts & trust: not substitutive but complementary
– – –
If there is no trust, there is no contract In case of low trust: contracts are relatively rare Even if trust is very high/complete: Very much R&D-partnerships conclude a contract (77%)
When „time to market“ approaches: Trust shifts slightly down Relation between trust and knowledge exchange (over time)
– – –
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Strong inter-dependency Balance of knowledge exchange has to remain positive If the amount/value of knowledge acquired from partners declines over time: trust decreases as well
Conclusions (1)
Trust matters with respect to R&D-Cooperation Regarding regional innovation networks: Institutionalized trust is a very important source of trust building Institutionalized trust is manageable by network management (in particular governance by participation and
transparency)
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Conclusions (2)
Also specific trust can be supported by network management (by arranging for rich opportunities that foster (direct)
exchange of information and knowledge)
Special guidance/instruments for “newcomers” (without any network experience) and when “time to market” approaches? How to develop a “network governance” that exploits the power of contracts and considers the prospects/benefits of trust (building)?
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Thank you for your attention!
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