Trust and Team Performance: Assessing the Moderating Role of Risk in Global Outsourcing Teams

[Abstract] In this study, the concepts of trust and risk are examined in relation to the performance of global outsourcing teams. First, competing arguments of the relationship between trust and performance are presented, followed by an examination of the impact of risk and uncertainty in the global task environment on the trust-performance relationship. Project risk, technical complexity, and project dynamism are argued to moderate the relationship between team trust and performance. To test these arguments, data were collected from a sample of global outsourcing teams spanning emerging economies and developed countries. Results support project risk as a critical moderator of the relationship between trust and performance, such that trust was positively related to performance when the project was highly risky. For low risk projects, trust was negatively related to team performance. These findings allude to a far more complex relationship between risk and trust than previous research has empirically considered. Results of this study provide insight into the advantages and limitations of trust in global teams, and underscore the need to move beyond a focus on the direct link between trust and performance in seeking to understand the conditions, such as risk and uncertainty under which trust promotes or inhibits performance, suggesting the complicated and contingent role of trust in global collaborations. Findings contribute to a practical understanding of under what conditions of environmental risk and uncertainty should managers build trust within teams to foster performance of global collaborations.[Keywords] trust, risk, global teamsThe relationship between trust, risk, and performance has long been considered in the organizational behavior and strategic management literature. While many researchers have theoretically expounded on the relationship between these constructs, few have empirically tested the nature of the relationship. Flere, the complex relationship between trust and risk is examined in relation to the performance of global outsourcing teams. An initial review of the research on trust reveals conflicting findings of the impact of trust on performance. While some have found a positive relationship between the two (Lee & Kim, 1999), others note that trust can be detrimental to the performance of teams and alliances (Krishnan, Martin, & Noorderhaven, 2006). Drawing on these results, competing arguments are presented, in line with Platt's (1964) call for more strong inference research based on competing hypotheses, which is rare in international management research.Results of this test are then used to examine the long-held view by researchers in organizational behavior that risk is necessary for the development of trust (Luhmann, 1979). The risk and uncertainty present in the task environment faced by global teams is discussed in detail, with a specific focus on project risk, technical complexity, and project dynamism. I propose and empirically test the moderating role of these components of risk and uncertainty in the global task environment on the trust - performance relationship. Results of this study provide insight into the advantages and limitations of trust in global teams, and underscore the need to move beyond a focus on the direct link between trust and performance in seeking to understand the conditions, such as risk and uncertainty under which trust promotes or inhibits performance, suggesting the complicated and contingent role of trust in global teams. Findings further contribute to a practical understanding of under what conditions of environmental risk and uncertainty should managers build trust within teams to foster performance of global collaborations.TrustThe importance of trust has been emphasized in multiple literatures across diverse disciplines. Trust has been considered as a foundation of interpersonal relationships and social order (Barber, 1983; Luhmann, 1979). …