title: Wasta- Triadic Governance and Trust in Jordanian Business
Creators: name: Brandstaetter, Thomas Horst
Publisher: name: University of Liverpool Repository
Year: 2015

description: Purpose This research analyses the trust building and collective-action functions of Wasta in Jordanian business. Design/methodology/approach This research analyses the collective-action function of Wasta in Jordanian business. By demonstrating the role of informal institutions and personal trust in economic cooperation, Wasta will be approached as a mechanism contributing to personal trust and reducing transaction costs. Wasta as a concept is introduced, and the historical development, its various functions and ethical ambiguity are discussed. Based on the review of Wasta-literature, a three-dimensional model of Wasta is presented. By connecting Wasta to the insights of new institutional economics and transaction cost economics a new perspective on Wasta as a potentially beneficial institution is provided. The trust-building function of Wasta is explored in detail by empirical analysis. The empirical section of this research is based on 28 interviews mostly conducted in Jordan. The sample consisted of two groups of respondentsone with 17 and the other with 11 interviewees. It analyses the role of personal trust in Jordanian business relations and identifies patterns of trust-building based on Wasta in business situations in which personal trust is required. Considering the important role of triadic governance as emerging in the interviews and the ethically ambiguous perception of Wasta in the current literature, a model based on game theory is developed to distinguish between harmful and beneficial categories of Wasta. Findings The interviews revealed that personal trust between business partners is considered vital for the success of a business-relationship, anticipating a perceived ineffectiveness of formal institutions. The cornerstone of personal trust-building is structural embeddedness set up through middlepersons and the availability of traditional mediation mechanisms. Two phases of a trust creation process have been identified. In the first stage individual trustworthiness is explored through third parties prior to entering into cooperation and joint ventures. Trust emergence in the second stage is based on the availability of an intervening middleperson (Waseet), providing normative pressure and mediation in case of a dispute. Both stages are connected as middlepersons establishing new business relations face some moral obligation in the event of opportunistic behaviour or defection of the trustee, to whom references have been given. Intercession and mediation as dimensions of Wasta are interrelated and embedded in a cultural narrative of indigenous Arab traditions serving as antecedents of trust. Besides the structural function of network closure and an intervening third party, the processes of mediation and intercession as a culturally embedded habitus serve as social capital in situations in which personal trust is required. Based on the interviews a conceptualisation of Wasta and a typology of trust in Jordanian business relations are provided. Considering the ethically ambiguous connotations of Wasta in public and scientific discourse, it will be argued that it is not Wasta as such that leads to harmful results but structural conditions depriving actors of the options of voice and exit. These findings provide new knowledge and put this analysis at the forefront of academic research in this field.