Measurements of variables

In this research, constructs were the hypothetical variables that were being measured and they were the four sources and three consequences of trust. The items (questions) were generated based on the literature mentioned in the earlier chapter and each item was a statement followed by a seven-point Likert scale. Each respondent was asked to rate each item on one to seven scales where one represented strongly disagree, four represented neutral and seven represented strongly agree.  

In addition to the aforementioned items, a number of demographic measures, such as firm size, years of establishment, respondents’ year of working experience as well as job position, were used to profile the firms and respondents that participated in our study.

In this research, the reliability and validity tests were especially important to determine if the items were a reliable measure of the constructs prior to the subsequent analyses. Hence, to ensure that the items(questions) asked related to the underlying construct(sources and consequences of trust) that we intended to measure and to determine the internal consistency or average correlation of items in the survey to gauge its reliability, Cronbach’s alpha (Cronbach, 1951)for each construct was obtained through SPSS software (Statistical Package for the Social Sciences). The reliability of those constructs in this research was satisfactory in view of the Cronbach alpha was all above 0.6 in general as shown in the table 1, higher than 0.50 for exploratory studies (Hair et al., 1995).

Therefore, it was an acceptable value for a research instrument indicating high reliability and the inter-item correlations were high in measuring the same underlying construct.

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Furthermore, factor command was used to check the dimensionality of the data and each construct was with eigen value of more than 1.0. According to Hair et al. (1992), the most commonly used method of determining whether items are loading on one construct was the latent root criterion (eigen values). Only the factors having eigen values greater than 1 were considered significant; those with eigenvalues less than 1 were considered insignificant and were disregarded.

In summary, the items for measuring the constructs (sources and consequences of trust) were reliable and valid. The data obtained can be used in subsequent data analysis.

According to the literature we mentioned in the earlier chapter, the sources of trust were constructed into economic-based trust, process-based trust, characteristic-based trust and institutional-based trust.

Economic-based trust was operationalized by the following sub measures:

 The inter-dependency level between both parties.

 The input level of various resources (technology, capital, equity involvement)

 The size/scale of the counterpart’s company/organization/corporation.

The cronbach alpha for this construct was 0.74 and eigen value was 1.98, indicating high reliability as shown by the Table 1.

Process-based trust was operationalized by the following sub measures:

 The reputation/fame of the counterparts within the same industry.

 The satisfaction levels of the previous transaction experiences.

The cronbach alpha for this construct was 0.60 and eigen value was 1.44, indicating high reliability as shown by the Table 1.

Characteristic-based trust was operationalized by the following sub measures:

 Former acquaintance/personal relationship prior to the establishment of the contractual relationship.

 The counterparts share a similar background (i.e. former classmate, former colleague/co-worker, social group/community organization etc.)

 Contractual relationship established through a third-party recommendation, which is well acquainted with both parties

 The qualification/experience/seniority/execution style of the personnel in counterpart’s company

The cronbach alpha for this construct was 0.76 and eigen value was 2.34, indicating high reliability as shown by the Table 1.

Institutional-based trust was operationalized by the following sub measures:

 The counterpart’s recognition level in the business world (i.e. ISO Certification, IPO etc.)

 The willingness of the industry’s player to abide by the law based upon the geographical area

 The counterpart’s country’s level of law enforcement

The cronbach alpha for this construct was 0.79 and eigen value was 2.11, indicating high reliability as shown by the Table 1.

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Table 1: Measurement of the sources of Trust

Variables Operational items

Economic-based  The inter-dependency level between both parties.

 The input level of various resources (technology, capital, equity involvement)

 The size/scale of the counterpart’s company (organization corporation)

0.74 1.98

Process- based  The reputation/fame of the counterparts within the same industry.

 The satisfaction levels of the previous transaction experiences.

0.60 1.44

Characteristic-based  Former acquaintance/personal relationship prior to the establishment of the contractual relationship.

 The counterpart shares a similar background (i.e. former classmate, former colleague/co-worker, social group/community organization etc.)

 Contractual relationship established through a third-party recommendation, which is well acquainted with both parties

 The qualification, experience, seniority, execution style of the personnel in counterpart’s company

0.76 2.34

Institutional-based  The counterparts’ recognition level in the business world (i.e ISO Certification, certification, IPO, etc.)

 The willingness of the industry’s player to abide by the law based upon the

geographical area

 The counterpart’s country’s level of law enforcement

0.79 2.11

On the other hand, within the literature, the consequences of trust were contractual adherence, flexibility beyond contract and relationship outside contract.

Contractual adherence was operationalized by the following sub measures:

 I will strictly follow the contract based upon the exact terms and conditions.

 I will definitely maintain company trade secrets and confidences.

The cronbach alpha for this construct was 0.83 and eigen value was 1.71, indicating high reliability as shown by the Table 2.

Flexibility beyond contract was operationalized by the following sub measures:

 If abrupt changes occurred, I will remain flexible and adjust to the changes by modifying the contract to fit the needs

 I will allow my counterpart to make certain judgment calls, if expediency is

necessary.

 If the contract needs to be amended, I will follow the conventional rules and

regulations.

The cronbach alpha for this construct was 0.71 and eigen value was 1.90, indicating high reliability as shown by the Table 2.

Relationship outside contract was operationalized by the following sub measures:

 Aside from the agreements made within the contract, any verbal agreements made will also be honored.

 I value long-term relationships over contracts that are solely based upon profit with a counterpart that is unfamiliar to me.

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 I will voluntarily provide important market information to my counterparts

The chronbach alpha for this construct was 0.67 and eigen value was 1.83, indicating high reliability as shown by the Table 2.

Table 2: Measurement of the consequences of trust

Variables Operational items

adherence  I will strictly follow the contract based upon the exact terms and conditions.

 I will definitely maintain company trade secrets and confidences.

0.83 1.71

Flexibility beyond contract

 If abrupt changes occurred, I will remain flexible and adjust to the changes by modifying the contract to fit the needs

 I will allow my counterpart to make certain judgment calls, if expediency is necessary.

 If the contract needs to be amended, I will follow the conventional rules and regulations.

0.71 1.90

Relationship outside contract

 Aside from the agreements made within the contract, any verbal agreements made will also be honored.

 I value long-term relationships over contracts that are solely based upon profit with a counterpart that is unfamiliar to me.

 I will voluntarily provide important market information to my counterparts

0.67 1.83