The Role Played by Trust and Its Effect on the Competiveness of Logistics Service Providers in Hungary
Judit Oláh, Attila Bai, György Karmazin, Péter Balogh, József Popp
This research focuses on the role of trust and the impact of its level on the revenue, earnings before tax and the degree of flexibility of logistics service providers (LSPs). More specifically, the role of the executive manager is examined in relation to the impact of business relationships (trust levels) within and between organizations. In addition, the analysis covers the development of revenue, earnings before tax and degree of flexibility of logistics service providers in the context of
... e role of the head manager. The data were collected from 51 logistics service providers in Hungary. The results show that the level of trust established in the organization (with the employees, co-workers etc.) has a positive impact on the earnings before tax. Furthermore, this paper confirms that the trust executive managers establish around them is an important performance factor which even consumers perceive and that it has major significance in terms of degree of flexibility. This research further increases our understanding of the role and importance of trust as a strategic success factor for LSPs. The main factors accounting for the failure in securing partnership between parties during outsourcing process are poor communication, lack of top-management support, lack of trust, lack of a total quality management program of the provider company and inadequate upfront planning    . Trust plays a major role in improving the relationships between parties, as trust between LSPs and logistics service buyers is a key factor in the success of logistics outsourcing relationships     . Furthermore, trust is a powerful precedent of effective collaboration and a forecaster of positive performance outcomes and competitive advantage in supply chain inter-organizational relationships [15, 16] . Nowadays, trust is an important determinant of the development of modern organizations. Not only does it become an increasingly important element of the relationship between entities but, above all, it positively influences the building of the organization's intellectual capital. This capital is differently classified but always contains components that determine the potential of sustainable organizations, often in the human, social, relational, organizational and innovation dimensions. Trust is more often the key determinant of this capital  . Trust is an element that ties this capital with relationships in business. This has an integrated character  . The reason for the lack of trust is related to differing interests of supply chain partners  . Yet, trust was found to be a crucial factor that affects supply chain collaboration  . Three aspects of a supply chain network influence network-level trust in supply chains: the number of uninfluenced partners, the number of uninfluential partners and the degree of interdependence  . Research papers analyzing and evaluating the examination, competition and integration of LSP companies highlight the significance of trust in the success of LSP and collaborating companies. Owing to the role and weight of trust, the authors of this paper consider trust to be important in two aspects. The first is the appearance and factors of trust as a concept, as well as its impact on the establishment of enterprises as trust-based communities and their success. The second is the examination of the impact of trust-based leadership as a management tool and its factors on the success of collaborative relationships within and between enterprises. The role and importance of trust is strongly supported by statements made by leading economists in recent years, in which the main cause of social and economic crises is the loss of trust in modern societies. Thus, following the crisis in the financial and economic world of 2008, research into confidence-building has acquired a significant role in the academic field, since, taking account of the results of studies of trust can provide preventive tools for avoiding, mitigating and managing the negative effects of cyclically-changing economic processes. An essential prerequisite for the success of logistics service providers is to build trust and to provide the necessary information for operation which can be shared among participants. Building trust requires the comprehension and acceptance of the need for transparency, openness and proactive knowledge exchange  . This is a primary factor in that trust also increases innovation and supply chain performance  . Comer et al.  studied how to develop a multidimensional measure of trust specifically for the sales context and found support for their division into salesperson trust, product trust and company trust. Young-Ybarra and Wiersema  analyzed flexibility in strategic alliances, utilizing a model drawn from transaction cost economics and social exchange theory. They found that economic constraints, the quality of communication and the existence of shared values were positively related to trust and dependence was negatively related. The economic processes and the effectiveness of companies is determined on the basis of the organization of these companies as formed by individuals, in the same way that families made up of individuals determine the functioning of society and its norms. In the two approaches, the individual is the same, at once a social and an economic building block; the behavior, the culture and the level of trust of the economy and society are the individual values and attributes that permeate families, companies and societies and so national beliefs about trust can flow right down to the individuals that belong to the community and make up the nation and the same is true in the other direction, in that statements about trust in smaller communities can also be true of the narrower society surrounding them.