Relational Coordination: A Framework for Building Trust in the Entrepreneurial Setting

AbstractThose who manage are in a key position to influence the behaviors and perceptions of employees toward organizational objectives. The contextual nature of managerial action is of utmost importance to organizational performance especially in the entrepreneurial setting. In such circumstances, an open and dynamic collection of knowledgeable employees could provide a plethora of human capital. This article provides a framework by which this vital resource may be developed and nurtured. The focus of discussion is on the entrepreneur as manager and his or her ability to engage subordinate employees through relational ties. Relational coordination is introduced as a framework by which this goal may be achieved. It is suggested that the entrepreneur's ability to establish relational coordination within the entrepreneurial unit will influence the development of employee attitudes and perceptions such as mutual trust and social acceptance. The model helps to explain how the facilitation of beneficial outcomes such as multi-directional communication, organizational cooperation and coordination efforts, employee empowerment and creativity is bound and engaged with relational coordination through a foundation of trust. The discussion concludes with possible practical implications and directions for future research.Entrepreneurial ventures often are established with relatively few resources. Of special interest to this discourse is the limited number of employees available to provide essential knowledge, skills, and abilities in order for the organization to become established, develop a positive reputation among stakeholders, and compete with more established competitors. Though in many cases these employees earn a lower wage and have less job protection, it has been reported that it is possible for them to be more satisfied with their jobs than employees in more established firms (van Praag and Versloot, 2008). In the case of establishing a favorable business reputation, budding firms depend greatly on employees to facilitate the development of a favorable reputation, which may provide the venture an advantage in competing against established rivals (Cardon and Stevens, 2004). For this reason, human resources may be considered the lifeblood of the entrepreneurial enterprise, and should be managed accordingly (Barney, 1991; Boxall, 1996, 1998; Delaney and Huselid, 1996; Dyer and Reeves, 1995). Several have proposed that as the entrepreneurial venture develops and matures, strategic value may be gained through a human resources strategy focused on the development of firm specific human capital (e. g., Altinay and Altinay, 2006; Altinay, Altinay, and Gannon, 2008; Lepak and Snell, 2002). For these reasons and others, recent discussions in the literature have emphasized the need to study the creation, development, and maintenance of human resource systems in these entrepreneurial enterprises (Cardon and Stevens, 2004; Heneman and Tansky, 2002; Ram and Edwards, 2003). The following discussion proposes a model by which entrepreneur-employee trust is created through interactions embodied by the theory of relational coordination. Because of the close knit and dependent nature of the entrepreneur-employee relationship, trust is essential to the successful execution of entrepreneurial activity. The management framework of relational coordination is discussed as an effectively compatible framework by which trust may be developed in such a localized and interdependent business environment. It is further pro- posed that the promotion of trust through this framework consisting of relationships and open communication (Gittell, 2002) may engender the positive development of valuable human resource behaviors in the form of risk taking innovation, control of agency costs, and a fully cooperative staff.The Character of TrustTrust is characterized as the willingness of an individual to expose oneself or be vulnerable to others (Butler, Cantrell, Et Flick, 1999). …