Horak, S. and Long, C. (2018). Dissolving the paradox: toward a Yin–Yang perspective on the

power and trust antagonism in collaborative business relationships. Supply Chain Management,

Vol. 23 No. 6, pp. 573-590. DOI: 10.1108/SCM-01-2018-0013

Link: https://doi.org/10.1108/SCM-01-2018-0013

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Dissolving the Paradox:

Toward a Yin-Yang Perspective on the Power and Trust Antagonism in

Collaborative Business Relationships

Sven Horak, Christopher P. Long

Abstract

Purpose: By challenging the typical antagonistic view of the informal institutions power and

trust, this study explores the interrelatedness of the two through the yin-yang lens.

Design/methodology/approach: The data for this research stem from extensive group and

one-to-one interviews with Toyota and its domestic and international suppliers.

Findings: Contrary to the conventional antagonistic view of power and trust, the study finds

a different relationship between power and trust in Japan, namely a rather natural, mutually

integrative and dependent one. The paper assumes that Taoist ideals, in particular the forces

of yin-yang, explain this apparent contradiction.

Practical implications: Guided by the yin-yang perspective on power and trust balancing,

the study proposes six management paradigms regarding how power and trust relationships

can be developed and managed to increase collaboration performance.

Originality/value: While this research contributes to the research stream considering power

and trust as complements rather than substitutes, it introduces the yin-yang view of business

collaboration into the field of supply chain management in the automotive industry.

Furthermore, it proposes practical measurements for the management of collaborative

business relationships in a supply chain by taking advantage of the yin-yang view of putative

contradictions.

Keywords: supply chain management, collaborative business relationships, automotive

industry, Japan, informal institutions, power, trust, paradox, yin-yang.

Version July 2018 An identical version has been accepted for Supply Chain Management: an International Journal Copyright © 2018 Horak, Long All rights reserved.

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Introduction

In terms of structural change, the most important shift in the automotive industry in

recent years has been that from the former rather hierarchically organized maker-supplier

pyramid-like supply chain to a supply network that often operates at the international level

(Pilbeam et al., 2012). An alternative term for supply networks, namely meta-organizations,

is suggested in a recent study by Gulati et al. (2012) for those firms surrounding companies

such as Toyota, Proctor & Gamble, and Apple. By definition, these firms are seldom owned

by the focal firm but pursue a system-level goal. The governance of these networks poses

new challenges in terms of collaboration and management (Barratt, 2004; Fawcett et al.,

2015). It can be argued that it will be not companies but international supply networks, or

meta-organizations, that will increasingly compete with each other in the future (Gulati et al.,

2012; Trkman et al., 2010). Hence, the quality of collaboration can become a source of

differentiation in competition to gain or maintain a competitive advantage through

cooperation (Ireland et al., 2002; Rothaermel, 2001). In the existing literature, the term

‘coopetition’ is usually used (Yami et al., 2010) to describe the tension relationship between

cooperation and competition (i.e., the collaboration between competitors). Simply explained,

when coopetition is actively managed, it leads to capability building within the supply

network that results in a competitive advantage through improved supply chain performance

(Fujimoto, 2010). As a supply network requires participating firms to collaborate in a tense

coopetitive relationship (Sydow and Moellering, 2009; Wilhelm, 2011), the optimal

institutional environment required for successful collaboration remains unclear. Whereas

contracting (a formal institution) is usually applied to enter a collaborative relationship, the

existing literature points out that informal institutions and relational contracts are especially

important factors for successful collaboration in business.

The primary challenge in achieving this outcome in buyer-supplier relationships is

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that power and trust often exert antagonistic forces on these relationships. While buyers or

suppliers commonly show their power through contracts to motivate particular actions with

their exchange partners, doing so can compromise a sense of trust within the relationship.

This happens because actors (firms, individuals, etc.) over whom power is being exerted may

feel that their autonomy and overall self-determination are being threatened, a perception

which often leads these partners to feel that their values and motives are incongruent, which

can compromise their mutual sense of trust and cooperation (Akintoye et al., 2000; Barratt,

2004; Hernandez et al., 2014; Kwon and Suh, 2004 on trust; Benton and Maloni, 2005; Cox,

1999; Maloni and Benton, 2000; Webster, 1995; Weibel et al., 2016 on power; and Ireland

and Webb, 2007; Yeung et al., 2009 on the connection between power and trust).

Power in this dynamic can be defined as the ability of the more powerful actor to

influence the behavior and actions of others with less power (Emerson, 1962). In the

automotive industry, reports on Toyota’s supplier strategy assume that there is high power

asymmetry (i.e., differences in power) between the car maker and its suppliers (Liker and

Choi, 2004), but, at the same time, it appears that there is a high level of trust between them

(Dyer and Chu, 2000). Although Japanese management philosophies have been extensively

studied (Botti, 1995; Freeman and Browne, 2004; Jia et al., 2016; Schaede, 2008), the way in

which Japanese car makers manage their business relationships in a supply network by

institutionalizing power and trust relationships in a non-antagonistic way is rarely

investigated and rationalized. Hence, the purpose of this research is to challenge the

conventional antagonistic view of power and trust and to gain a better understanding of the

underlying philosophy enabling the management of the power and trust paradox. In

particular, the study seeks to expand the extant knowledge about the nature of these two

informal institutions and to derive new insights into the management of collaborative

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business relationships. These are increasingly important today, as a solely cost-based focus

on efficiency is considered to be insufficient (Yeung et al., 2009).

Although distinct forms of relationship between collaboration and market orientation

(e.g., coopetition) are omnipresent in the automotive industry, most theories think of these

ways of organizing as trade-offs (‘either/or’), rather than thinking about how they can coexist

and be integrated or combined (‘both/and’) and exploring their nature in greater depth on the

supplier-buyer relationship level while taking the required capabilities into account to take

full advantage of the benefits that paradoxical management capabilities would bring. In more

detail, since this study pursues a relational approach to analyzing buyer-supplier relationships

by focusing on power and trust, it contributes to the extant knowledge by explicitly putting

both forces into context (Cardinal et al., 2010; Hernandez et al., 2014; Long and Sitkin, 2006;

Weibel et al., 2016); hence, it proposes an approach that explicitly draws attention to

potentially contradictory informal institutions that are pivotal in determining the buyer-

supplier relationship. While several studies have reported that Toyota acts dominantly

towards its suppliers (as an indicator of power) and exhibits preferences for long-term ties (as

an indicator of trust), this study leverages the epistemological system of yin-yang to explain

the interrelatedness of these two institutions (Fang, 2012; Li, 2016). While this concept is

new to the supply chain management literature, it seems to add a strong and important

analytical lens to other explanatory concepts such as ambidexterity (see, for example, Aoki

and Wilhelm, 2017).

This study challenges the antagonistic view of power and trust by evaluating a

situation where the power that exchange partners exert over each other actually enhances the

mutual trust that they experience within the exchange relationship. This relationship is

initially explored by outlining the theoretical background on informal institutions and

network collaboration, before reviewing the literature on power and trust by stressing the

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conventional antagonistic view as well as the interrelated perspective. Based on the extant

literature, the paper develops several theoretical assumptions that guide a series of qualitative

analyses of interviews between buyers and suppliers. The results of these analyses are then

used to provide a new way of thinking about power and trust in buyer-supplier relationships.

In the Discussion section, these findings are further evaluated; furthermore, some limitations

of this work are reported and implications for practice presented.

Informal institutions and collaborative business relationships

The role of informal institutions is discussed by North (1990; see also Knight, 1992;

Lauth, 2000; O’Donnell, 1994), pointing out that informal institutions make “the rules of the

game” in relation to individuals’ behavior. Other scholars describe informal institutions as

“durable systems of established and embedded social rules that structure social interactions,

rather than rules as such” (Hodgson, 2006, p. 13) or characterize them as “the actual rules

that are being followed, unwritten rules that often shape incentives in systematic ways”

(Estrin and Prevezer, 2011, p. 44). Hence, the nature of informal institutions can be described

as unwritten and socially shared (Helmke and Levitsky, 2004), with underlying evolutionary

processes; that is, they are not static but are persistent and developed through history. The

influence of informal institutions has been studied by socio- and institutional economists,

while recent business studies address and extend their relevance (Peng and Pinkham, 2009).

In this field, among others, this is established as the third approach to business strategy

alongside the conventional industry- and resource-based views; their influence, especially in

transitional economies, is discussed (Meyer et al., 2009; Peng, 2002, 2003; Peng et al., 2008,

2009).

Next to culturally determined values and norm systems that guide individual behavior,

power and trust primarily represent two informal institutions that are not specific to one

national culture, although their characteristics and impact level may differ across cultures.

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Power and trust are analyzed both independently and in terms of their connection. Most

authors view power- and trust-based relationships as antagonistic and hence hardly

compatible (Table 1). It is assumed that “horizontal relationships may involve trust and

cooperation, and vertical relationships power and compliance” (Granovetter, 2002, p. 36). In

a classic paper, Kumar (1996) asserts that “the vast majority of manufacturer-retailer

relationships are unbalanced” (Kumar, 1996, p. 98) in terms of power and trust, since the two

forces can hardly be merged, which is in line with the conventional antagonistic view.

Research typically treats power and trust as two natural opposites that hardly merge.

-----------------------------------

Insert Table 1 about here

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The embeddedness of firms in horizontal (e.g., alliances, joint ventures) and vertical

(e.g., buyer-supplier) collaborative business relationships can be regarded as embeddedness

in a strategic network (Hanf and Kühl, 2004; Lazzarini et al., 2001; Ng et al., 2003; Omta et

al., 2001). Those networks have a hierarchy led by a focal firm that coordinates the activities

of the network (Burr, 1990; Sydow and Moellerring, 2009). To coordinate a supply network

effectively, alignment of the actions and interests of the participating actors is important

(Belaya et al., 2008). A supply network in the automotive industry consists of actors who are

urged to cooperate to serve the automobile maker but who, at the same time, often compete

over the supply and market share. In the relationship between cooperation and competition,

power and trust coexist. They are typically regarded as “complementary and opposing

components of social behavior” (Ireland and Webb, 2007, p. 487). Whereas several studies

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investigate power and trust separately, the research on their nature, interplay, and mutuality in

supply network management is relatively underdeveloped (Belaya et al., 2008).

The antagonistic view of power and trust

Power

Given a certain dependency between actors, power describes the capacity of an actor

to manipulate or influence the actions and intentions of another actor (Emerson, 1962). This

includes control mechanisms brought into effect by managers and their organizations by

setting performance goals, monitoring and evaluating the achievement of these goals, and

rewarding or sanctioning in terms of how effectively the target of control has met the goals

(Ouchi, 1979; Weibel et al., 2016). In addition, behavior can be influenced by collectively

shared values, norms and beliefs that are enforced by peer pressure; hence, these comprise

normatively focused controls. Examples include shared norms of communicating,

information exchange, and the way in which agreements are enforced (Cao and Lumineau,

2015; Cardinal et al., 2010).

Traditionally, power asymmetry (i.e., power imbalance) is regarded as a rather

unfavorable force in a relationship. Power asymmetry is found to lead to a lower degree of

trust, hence acting against a sustainable cooperative relationship (Anderson and Weitz, 1989).

Moreover, it may lead to conflicts given high power imbalances between a buyer and a

supplier (Zhou et al., 2007). In addition, the option of power abuse is found to be a negative

force in the buyer-supplier relationship. The traditional view states that the greater the

imbalance of power between two actors, the more likely it is that power will be abused

(Caniëls and Gelderman, 2007; Kumar et al., 1998).

However, some scholars distinguish between different sources of power and assume

that asymmetry in distribution may not only harm a relationship but also serve as a positive

force. An early, yet often used, approach to classifying and exploring different power bases in

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empirical research (see, for example, Mayer et al., 2011) is proposed by French and Raven

(1959), who distinguish five power bases: coercive, reward, expert, legitimate, and referent

power (Table 2).

-----------------------------------

Insert Table 2 about here

-----------------------------------

The influence of the different power bases within the supply chain is investigated in a

later empirical study by Maloni and Benton (2000). The authors conclude that some of the

power sources have positive effects on the buyer-supplier relationship, leading to better

performance, but others—especially in relation to overuse of power—may be harmful: hence

the findings indicate that, in relation to supply network collaboration, both positive and

negative power asymmetry exist. Maloni and Benton’s findings indicate the important role of

power in network relations and call for active management of power relations, which so far

has been largely disregarded by scholars.

Liker and Choi (2004) point out the large power differential between Toyota and

Honda, respectively, and their suppliers, which can be regarded as rather typical of the buyer-

supplier relationship in Japan. More specifically, Toyota’s emphasis is on supplier discipline

in the form of a requirement to meet strict monthly performance targets or rigid performance

improvement measurements (Aoki and Wilhelm, 2017; Wilhelm and Sydow, 2018). This

study therefore assumes that the power asymmetry between Toyota and its suppliers is high

and less balanced than is usually the case between a buyer and a supplier in the Western

automotive industry (McMillan, 1990).

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Trust

Trust is a comprehensively researched theme in a number of academic disciplines (for

a detailed overview, see, for example, Bachmann, 2011; Bachmann and Zaheer, 2006; Long

and Sitkin, 2006; McEvily and Tortoriello, 2011; on organizational trust, see Fuglsang and

Jagd, 2015; Kroeger, 2012; Luo, 2005).[1]

At the dyadic level, Gambetta (2000, p. 218)

defines trust as “a particular level of the subjective probability with which an agent assesses

that another agent or group of agents will perform a particular action, both before he can

monitor such action (or independently of his capacity ever to be able to monitor it) and in a

context in which it affects his own action”. A popular and broader conceptualization of trust

stresses a willingness to be vulnerable to another party when control and monitoring

mechanisms are absent (Mayer et al., 1995) “based upon positive expectations of the

intentions or behavior of another” (Rousseau et al., 1998, p. 395).

While trust is often examined as a rather holistic concept, researchers also distinguish

between different forms of trust. The labels of these different forms of trust are diverse and

evolving. The distinction between competence-based trust and goodwill-based trust is

regarded as plausible, since forms of managerial control affect these forms of trust

differently. Competence-based trust emerges based on trustees’ professional expertise, skills,

and ability to perform tasks. Trust based on goodwill develops from a positive perception of

someone’s sense of ethical conduct, values, credibility, and empathy; it is also defined as

someone’s attempts to do good without being solely profit-focused (Das and Teng, 1998,

2001; Hernandez et al., 2014). In their popular article (over 17,800 citations as of April

2018), Mayer et al. (1995) refine goodwill trust further to encompass benevolence and

integrity. While benevolence and goodwill both describe a willingness to take others’

interests into account when making decisions and taking actions, integrity is defined as “the

trustor’s perception that the trustee adheres to a set of principles that the trustor finds

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acceptable” (Mayer et al., 1995, p. 719). Depending on how high or low a trustee is perceived

to rank across these three factors, the extent to which a trustor trusts a trustee will vary.

The positive effects of trust are also studied in relation to supply chains. The findings

show that a low degree of trust between a trustor and a trustee hinders communication and

information sharing, and that a lack of trust acts against supply chain integration (Forslund

and Jonsson, 2009). MacDuffie and Helper (2007) identify a lack of trust in the American

automotive industry. Dyer and Chu’s (2000) findings also imply a low level of trust between

buyers and suppliers in the USA, whereas in Japan it appears that there is a high level of trust

between them. While this reflects the notion of power and trust antagonism as discussed

above, it appears to be the typical and quite unique way in which Toyota is able to balance

putative contradictory informal institutions effectively, which, when seen as a managerial

capability, contributes to developing a competitive advantage in the industry. Understanding

this phenomenon in more detail is currently an evolving area of research (Aoki and Wilhelm,

2017; Wilhelm and Sydow, 2018).

Interrelated perspectives on power and trust

From the conventional standpoint which suggests that power and trust are hardly

compatible or even mutually exclusive, knowledge has evolved to take combinations of

power and trust into account. Bachmann (2001), for instance, sees different forms of

controlling relationships across organizations based on power and trust. At the interpersonal

level, where power and trust are generated, the two are interrelated but one dominates the

other. Power, on the other hand, which accrues at the structural level, is highly conducive to

the generation of trust between organizations (Bachmann, 2001, 2003). Ke and Wei (2008)

argue that trust plays a moderating role in power-asymmetric relations. Trust, which is based

on goodwill (integrity and benevolence) and competence, is argued to be positively related to

collaboration between firms and individuals (Abrams et al., 2003; Cao and Lumineau, 2015).

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Furthermore, Narayandas and Rangan (2004), by analyzing the performance of three

industrial buyer-seller relationships, show that power and trust asymmetries can lead to

different results. The three dyads are characterized by (1) high buyer power over the supplier;

(2) high supplier power over the buyer; and (3) power equality. Unexpectedly, their empirical

data show that both asymmetric relations outperform situations where actors maintain equal

power. In these situations, they observe that the development of high interpersonal trust helps

actors redress power asymmetries, leading to high levels of inter-organizational commitment.

Substitutes or complements?

The findings of this study support the consensus developing among scholars that

actively balancing power and trust can lead to more sustainable and high-performing

exchange partnerships (Cao and Lumineau, 2015; Ireland and Webb, 2007; Long, 2010,

2018; Long and Sitkin, 2006, 2018; Sutcliffe et al., 2000; Yeung et al., 2009). It also

generates insights into how the essential tension between these two forces should be balanced

by exchange partners and what managerial actions lead these two forces to produce

complementary or substitutional effects on key strategic outcomes (Long and Sitkin, 2018;

Long and Weibel, 2018).

Importantly, it is contended here that approaches which employ a yin-yang

perspective can be useful in analyzing and explaining existing theoretical contradictions in

power-trust relationships, especially as it pertains to East Asia. In discussing the contributions

of the yin-yang viewpoint to this literature, this study demonstrates how such a perspective

can help to disentangle theoretical contradictions in research that tends to conceptualize

power and trust as distinct, often mutually exclusive, exchange mechanisms while

downplaying their more synergistic elements (Cao and Lumineau, 2015; Cristina Costa and

Bijlsma-Frankema, 2007; Grabner and Moers, 2013; Long and Sitkin, 2006; Weibel et al.,

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2016). Researchers in this area have actively sought to examine the complementary and

substitutive effects that are generated by power and trust mechanisms.

This viewpoint is most prominently displayed in research that conceptualizes power

and trust as substitutes. Observations from such work suggest that power and trust are

incompatible and that combining them can negatively impact key outcomes. When this

happens, trust and control can become opposing forces hindering efforts to attain mutual

goals. If actors seek to use their power to enforce formal contracts, they often become

protective about their position in a relationship, and their efforts to develop mutual trust can

suffer (Poppo and Zenger, 2002). Alternatively, when high levels of trust exist, exchange

partners can become hesitant to develop formal controls through contracts for fear that they

might compromise the levels and social capital they have fostered.

The complementary view of power and trust focuses more on how power and trust

can be integrated and balanced, but still views these elements as distinct mechanisms for

managing uncertainty. Specifically, this research examines the effectiveness of several types

of contract in combination with trust to manage the types of uncertainty that are present

primarily in joint ventures or mergers and acquisitions (Cao and Lumineau, 2015). Contracts

are used to “define outputs to be delivered, specify monitoring procedures, and detail duties,

rights, and contingencies” (Cao and Lumineau, 2015, p. 15). In addition, informal or

relational contracts (i.e., shared norms) are used to develop a collective understanding

regarding how actions will be coordinated or rewards conferred. In this stream of research,

informal forms of control and trust combine to generate shared values and norms (Long and

Sitkin, 2018). In contexts where trust exists, formal contracts and informal governance jointly

motivate partners to achieve mutual goals and act against free riding and opportunism (Cao

and Lumineau, 2015; Ferrin et al., 2007).

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Yin-yang balancing

Despite the theoretical and empirical advances produced by research, there is

significant potential for scholars to develop a more detailed understanding of when balancing

power and trust becomes effective and how positive outcomes can be jointly achieved

through the application of these mechanisms. An important step in this direction has been

achieved by the introduction of the yin-yang view to the management literature (e.g., Fang,

2012; Li, 2016; Luo and Zheng, 2016). The following paragraphs detail why the yin-yang

view is especially useful for examining supply chain management related phenomena in an

East Asian context.

Although there is a growing literature recognizing the interrelatedness of potential

contradictions of theoretical principles, research in the supply chain management literature

tends to conceptualize these mechanisms in buyer-supplier relationships as distinct choices or

‘trade-offs’. As a result, they do not fully embrace the advantages that come with viewing

these mechanisms as inter-related components of a paradox (Aoki and Wilhelm, 2017; Schad

et al., 2016; Smith and Lewis, 2011). It is proposed here, however, that the yin-yang

philosophy or epistemological system (Fang, 2012; Li, 2016) provides an alternative and

arguably more effective mechanism for conceptualizing the relationships between power and

trust in buyer-supplier relationships. Yin-yang provides the means to study the potential

contradictions between mechanisms present in paradoxes as logical, normal, and naturally

interrelated.

At the core of the yin-yang philosophy is an integral theme in Taoism (Chen, 2002;

Fang, 2005/6, 2012; Fang and Faure, 2011; Li, 1998, 2008) that conceptualizes components

of paradoxes not necessarily as opposing forces but rather as interdependent mechanisms that

are held in a dynamic tension as necessary parts of a larger whole. According to the yin-yang

philosophy, two opposing elements comprise a duality that cannot exist without the other

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because they reciprocally balance and transform, reinforce and negate one another in unity

(Li, 2008). Yin-yang claims that contradictory elements are natural, mutually dependent, and

necessary because balancing forces synthesize and harmonize seeming contradictions

between competing elements (Fang, 2003, 2012; Li, 2016).

While scholars currently debate whether power and trust are informal institutions that

are antithetically (i.e., as substitutes) or synergistically (i.e., as complements) related to each

other (Cao and Lumineau, 2015; Cristina Costa and Bijlsma-Frankema, 2007; Long and

Sitkin, 2006; Weibel et al., 2016), supply chain management scholars are generally

undecided as to whether suppliers are motivated to maintain a high level of power while they

work actively to develop trusting relationships with their exchange partners. Moreover,

despite a few seminal examples (Li, 2016; Pauluzzo et al., 2018), scholars in this domain are

largely unclear as to how they should manage paradoxes related to power and trust in their

relationships in ways that allow them to generate significant performance increases (on a

similar note, see Aoki and Wilhelm, 2017).

This study notes that the concept of ambidexterity in buyer-supplier relationships

currently evolving in the literature might be considered an alternative approach to yin-yang.

Ambidexterity is utilized in recent work to discuss the contradiction of cooperation and

competition (i.e., coopetition) or exploration and exploitation in buyer-supplier relationships

(Aoki and Wilhelm, 2017; Li, 2014). By definition, organizations that exhibit ambidexterity

try to balance contradictory elements (Birkinshaw and Gupta, 2013; O’Reilly and Tushman,

2013), which is in some ways similar to yin-yang. However, this study prefers to utilize yin-

yang, since it is not merely a concept but rather an indigenous epistemological system (Li,

2016) that appears in the authors’ opinion to be more suitable to apply to the analysis of

power and trust in buyer-supplier relationships with a focal firm from East Asia. Specifically,

yin-yang aligns more naturally with the cultural environment (see also Fang, 2005/6, 2012;

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Fang and Faure, 2011; Faure and Fang, 2008; Li, 2005, 2012, 2016). In addition, through the

yin-yang lens, the nature of balancing power and trust can be regarded rather as a coalescence

of power and trust, better reflecting the character of natural interdependencies between these

mechanisms.

Method and data collection

To observe how the yin-yang philosophy is operationalized in practice (Yin, 2014), a

case study of Toyota’s relationship with its suppliers is examined. Toyota was chosen

because this firm has garnered a reputation for systematically integrating paradoxical

thinking into many of its practices, including relationships within firms that supply it with

automotive parts and technologies (Aoki and Wilhelm, 2017; Osono et al., 2008). To avoid

firm in-group bias and single-sided analyses, a heterogeneous yet representative pool of

suppliers to Toyota was selected, comprising Denso, Aisin Steel and Bosch. Denso and Aisin

Steel are suppliers belonging to the Toyota keiretsu; Bosch is an independent supplier of non-

Japanese origin (Figure 1).

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Insert Figure 1 about here

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The argument for choosing this mix of firms is that they differ from each other across several

dimensions (e.g., organizational structure), including their relationship to Toyota (formal and

informal), product portfolio, technological capabilities, and scope of business activities

(Table 3). In terms of similarities, they all have a business relationship with Toyota as a

supplier, and in most cases act as tier 1 suppliers—that is, they have a direct communication

channel to Toyota.

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-----------------------------------

Insert Table 3 about here

-----------------------------------

Primary data in the form of four extensive group and one-to-one and secondary data in

the form of publicly available published materials have informed this research. An open-

ended semi-structured questionnaire was used to conduct the series of interviews. Specific

interview questions addressed a consistent sequence of critical themes but were tailored for

the auto maker and its suppliers (see Appendix). They featured an identical structure in terms

of the critical themes questioned. Question content about power and trust dynamics was

inspired by the works of Das and Teng (1998, 2001), Hernandez et al. (2014), and Mayer et

al. (1995), and specific sets of questions were refined over the course of the interviews. The

extensive practical experience in the Japanese automotive industry of one of the authors

contributed significantly to our understanding of specific aspects of the automotive business

and the specific buyer-supplier relationships observed. In addition, this author’s familiarity

with the industry allowed him to quickly establish a comfortable rapport with interview

participants, which created a trusting environment where individuals could connect quickly

on an interpersonal level and openly express their views. Moreover, where possible, the focus

was placed on a pre-existing relationship between the interviewees and the interviewer: this is

especially important in Japan, as it contributes positively to an open and trustful atmosphere,

a factor that is considered to be important when conducting interviews (Ryen, 2001).

The interviews were conducted with key informants from the auto maker and on the

supplier side. At the site of the latter, key informants were interviewed at the manager,

general manager, and director levels in sales and project management functions; at the site of

the auto maker, interviews were held with the general manager and group manager of

17

purchasing and project purchasing functions, in charge of purchasing strategic components

(Table 4). The interviews took about one and a half to two hours each. They were recorded

for later evaluation. When the answers from the interviewees repeatedly showed similarities,

saturation occurred, so further interviews were not necessary (Bowen, 2008; Mason, 2010).

Individual bias was reduced by triangulation through repeated answers or affirmed through

the existing literature. Moreover, public sources or communication with a secondary

source—specifically, Japanese scholars of the local automotive industry—were used to

corroborate observations generated through the interview process. The interviewees all had

significant experience with Toyota, some more than a decade. Potential interviewees were

selected based on their experience with and frequency of direct contact with Toyota. The

questioning took place on-site, either one-to-one in cases where the interviewer could draw

on a pre-existing relationship with the interviewee, or as a group interview with up to three

scholars on the side of the interviewees in cases where a relationship existed between the

interviewer and one or more of the interviewees. Unclear answers were clarified through

follow-up emails or phone calls.

The interview data were evaluated using content analysis (Mayring, 2010; Miles and

Huberman, 1994). In line with an abductive reasoning approach (Aliseda, 2006; Walton,

2005), the study aimed to identify new patterns to be evaluated against the extant antagonistic

view of power and trust. The coding procedure involved descriptive codes rather than abstract

ones. New codes were generated if needed, and codes were refined or deleted in cases where

they proved unsuitable for the data or redundant. Intra-rater reliability was assessed by

applying the test-retest method (see Mackey and Gass, 2005; Philp, 2003). Based on the

percentage agreement, the intra-rater reliability was 90 per cent, which is conventionally

regarded as a value above the accepted reliability standards (Neuendorf, 2002). Next to first-

order themes, second-order themes were derived from the data when necessary, from which

18

generalizations were finally drawn (Saldana, 2013). The explanation building was inspired by

an iterative narrative process, changing between data interpretation and reference to the

existing literature and theory development (Yin, 2014). This served to establish

systematically a theoretical framework to develop an alternative view of power and trust next

to the conventional antagonistic view. Moreover, according to Yin (2014), in case study

analysis, the explanation-building approach enhances the internal validity.

-----------------------------------

Insert Table 4 about here

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Results

The nature of the power-trust relationship

The research assumptions developed at the outset of the study, which will be

discussed in the following, refer to (1) high power asymmetry, (2) trust, and (3) the

manageability of power and trust relations. Based on the interviews and supported by current

research in this field (Aoki and Wilhelm, 2017; Camuffo and Wilhelm, 2016), it can clearly

be stated that the power asymmetry between Toyota and its suppliers is high. Based on the

interviews, it can be summarized that Toyota itself does not believe that suppliers should rise

to at least an equal power level, and it tries through the use of multiple supply sources to

diversify power to hedge against the risk that can occur with a single-supplier approach (“We

follow a dual sourcing strategy so that we can balance power between suppliers”). However,

maintaining high power differentials is uncommon and rather undesirable between Bosch and

its customers, as mentioned by an interview partner, since an equal partnership, with at best

very small power differences, is more common, socially expected, and in line with Western

19

cultural standards. Some interview partners, although their firms have a large share in supply

for Toyota, describe Toyota as “reserved”, “aloof”, or “unapproachable” in personal

interactions. On the supplier side, Toyota’s position at the top of the hierarchy is accepted, as

this provides a positive impetus for improvement, exemplified by the statements of two

suppliers:

We receive a lot of price pressure from Toyota, but this pressure helps us to stay

competitive.

X[2]

is a very knowledgeable and competitive firm, but finally they always do what

Toyota tells them.

The cause of this commitment, while sustaining tensions, can be seen in Toyota’s

paternalistic care towards and between its suppliers:

Toyota cares very well about its suppliers. It is like a family and Toyota manages these

relationships very well.

In fact, through the interviews, the study found that Toyota has the power to sanction

suppliers (coercive power)—for example, if quality targets are not met—as well as to reward

outstanding suppliers (reward power) for excellent performance (see also Chae et al., 2017).

Among all the suppliers interviewed, Toyota is unanimously respected for its knowledgeable

engineers (expert power). Engineering competence is an integral corporate value that is

expected from the suppliers (legitimate power) and a source for gaining respect from Toyota

(referent power).

20

X’s engineers are very popular in general because they are very knowledgeable. That is a

source of trust building. There must be respect for engineering excellence that is a base

for establishing good friendships.

Traditionally, the common view in the literature is that power differences in business

relationships have a bad influence, whereas a high level of trust contributes to a good

relationship (Gangl et al., 2015; Kumar, 1996; Naudé and Buttle, 2000). Surprisingly,

though, the level of power asymmetry between Toyota and its suppliers is high; a low degree

of trust acting against sustainable collaboration, as former studies indicate, was not observed,

hence supporting the interrelated view of power and trust in the more recent literature. In fact,

exactly the opposite seems to be the case: trust between Toyota and its close suppliers is

either exceptionally high or expected to develop toward being pronounced over time, as

formally outlined in Toyota’s basic supplier policy (Toyota, 2007). However, there are

different levels of trust toward the suppliers, and the development of a deep relationship

depends on several factors. Firstly, as is well recognized in the literature (e.g., Matsuo, 2015)

and confirmed by the interviewees, trust takes a long time to establish. While the exact

pattern of trust development over time is not yet fully explored (van der Werff and Buckley,

2017), seminal work by McAllister (1995) suggests a timeline for the development of trust as

well as the distinction between cognitive and affective trust, whereby cognitive trust comes

first—i.e., a certain level of cognitive trust is a precondition for affective trust to develop (see

also Webber, 2008). Secondly, trust requires competence and a willingness to learn

continuously (see also Nishiguchi and Beaudet, 2016); and, thirdly, trust “is determined by

the supply share the supplier has with Toyota. If a supplier has a minimal share, relationships

are rather formal and less cooperative.” The latter statement by a supplier underlines the role

that the supply share plays in determining the relationship. It indicates that a large supply

21

share may be the result of a long-term trustful relationship. Following the literature on trust

development, this process involves many informal rather than formal transactions. Factors

such as interpersonal reciprocity play an important role (Berg et al., 1995; Lewicki et al.,

2006; Vanneste, 2016); for the specific case of Japan, following conventional wisdom, gift

giving and drinking events in particular still seem to play a key role: “social drinking in Japan

is widely noted as binding individuals in reciprocal relationships, and the amount consumed

as determining the level of intimacy and trust among individuals” (Lin, 2012, p. 94).

Surprisingly, the interview data were largely unable to confirm the importance of informality

including social drinking. Similar to the opinion of other suppliers, a tier 1 supplier clearly

stated: “we don’t do nomikais [drinking events] anymore.” The establishment of trustful

relationships between maker and suppliers is today largely detached from the frequent

informal exchanges on the individual level of 20 or 30 years ago. Interviewees then often

exemplified after-work social events, like drinking together, dinners, and so forth; today,

semi-formal or mixes of formal/informal events, such as golfing, are more likely to take

place:

Golfing we do quite often. Toyota sets up and organizes these events, but Toyota does not

pay for it. Participants have to pay individually.

Whereas most interviewees see such events as dominant today, representing examples

of business-level trust development, this study explored this aspect in greater depth through

questioning and found indications that informality still plays a role in establishing,

developing, and maintaining deeper relationships on a very personal level (personal-level

trust; see Vanneste, 2016), which is still seen as part of the business relationship (distinction

between professional and personal trust; see Alexopoulos and Buckley, 2013). This may be

22

regarded as usual from a Japanese or East Asian point of view generally, but is rather seldom

found in a Western context. For instance, in the frame of Kyorokukai meetings:

However, there are informal meetings among Toyota suppliers in order to establish

relationships with each other. That makes collaboration and information sharing easier.

Putting the private and formal dimensions together, they align quite well with

Vanneste’s (2016) theory on the development of interorganizational trust, according to which

interorganizational trust develops based on personal-level trust, while trust between

organizations emerges from the actions of individuals. Research at the personal level by

Alexopoulos and Buckley (2013) also distinguishes differences in personal and professional

trust as relevant in this regard, since the level of informality in interorganizational affairs in

Japan can still be considered to be pronounced. The development of trust through the

exchange of sensitive information may only work when a certain level of shared experience

exists between two actors. If this is not the case—i.e., if there is only a little shared

experience—consequences are likely to be negative.

When asking for details on how to manage collaboration between competitors

smoothly, it became clear that organizing meetings with two competitors—that is, suppliers

that develop the same product—is not feasible because they are competitors.

That does not work. Collaboration works best when suppliers are dependent on each

other or have complementary products.

23

Thus, Toyota’s ability to manage coopetition must not be confused with its ability to manage

competition; rather, it is the ability to create dependencies among suppliers with

complementary products.

The aspect of sharing information in an informal and a formal atmosphere is regarded

as an important component of developing deep and trustful relationships. The flow of

information is often determined by pre-existing community attachment, such as university

communities. As one interviewee reported:

There are several informal channels of information sharing. At Toyota and Mitsubishi

engineering, there is a large portion of engineers who graduated from Kyoto University.

Based on age, they have a kohai-senpai [junior-senior] relationship. So, in informal

meetings, engineers of both firms easily exchange information.[3]

However, it cannot be generalized that information flows freely between Toyota and its

suppliers. A distinction needs to be made depending on the nature of the information.

Suppliers (Japanese and foreign alike) are hesitant, for instance, when it comes to the

disclosure of component cost information. This information is regarded as supplier internal

information that should not be forwarded to customers. However, hesitation in delivering cost

information does not impede trust, which is still highly pronounced. Trust is integral to

maker-supplier relations in Japan:

Trust is fundamental in Japan. Even if you are the most powerful supplier, if they don’t

trust you, there will be no business. Trust plays a huge role, on firm and personal level

alike.

24

Nevertheless, different Japanese car makers are known for putting different emphases

on business and personal trust. Whereas Honda is known for emphasizing dyadic (i.e.,

personal-level) trust, Toyota seems to give more priority to business-level trust. This is an

interesting finding, since both firms are successful, although the characteristics of trust

development toward the supplier are very different. While future research may shed more

light on this phenomenon, it is important to point out that Toyota does not represent an all-

Japanese business model. Rather, each Japanese auto maker appears to have a unique

approach (see Wilhelm, 2008, 2011).

However, most importantly, instead of assuming power and trust to be two mutually

exclusive constructs, this case study identifies the coalescence of the two elements. Evidence

of power and trust antagonism is difficult to find in the case of Toyota’s approach toward its

suppliers and vice versa. Typical comments are the following: “We know that Toyota will

always help us”, “Toyota will never let us run out of business with them”, or “They are tough

to us, but this means that they really care about us”.

When speaking about Toyota, the Japanese supplier often referred to “family” or

“family-like” relationships and used the word “friends” often. This can be interpreted as a

sign of benevolence or a high level of goodwill trust between Toyota and its suppliers, which,

echoing Schoorman et al. (2007), takes longer to develop (on a similar note, see Aoki and

Wilhelm, 2017). In contrast, in the Western context, “client” or “customer” would be the

regular word to describe a business relationship, according to the interview partner. It was

mentioned that not having too close or too personal relationships in business is considered as

acting professionally. A further hint regarding the relational coalescence of power and trust

can be seen in the following statement:

25

More important is that Toyota trusts X because of its knowledge and the long

relationship. But it’s not only technology: it is also quality, service, delivery, and

especially the way X serves Toyota.

Of particular importance here, but rather difficult to define, is the way in which the

supplier treats the maker. On further inquiry, this dimension especially includes trust and

open information sharing, having no secrets between each other, being fully committed to the

relationship, carrying out whatever is demanded by the maker and thus honoring the natural

hierarchy between the two parties, and at the same time perceiving the other as completely

reliable. Confronting the foreign supplier with these descriptive terms describing how the

relationship works, it was seen that opinions on the appropriate way to handle a business

relationship are very different. Typical keywords from a Western point of view are, among

others, mutual respect, doing business on an equal level, negotiation, and professional

distance.

Managing the power-trust relationship

The insights from the above lead to the question of whether power and trust relations

can be actively managed. If so, what are the foundations? Based on the interviews, this study

conclude that they can, which speaks in favor of the assumption that power and trust

relations, if regarded as interrelated, can be actively managed.

By possessing the ability to regard power and trust not as antagonistic but rather as

coalescing, the interviews led to the derivation of six paradigms that are important for the

management of power and trust in collaborative business relationships as a result of the

dissolution of the power-trust antagonism. They are summarized below and illustrated in the

context of the established research concept (Figure 2).

26

-----------------------------------

Insert Figure 2 about here

-----------------------------------

(1) A relationship and competence focus. Competition between suppliers is

encouraged, coordinated by the auto maker: “Improvements within our network of suppliers

are realized by competition between the suppliers. Toyota, however, coordinates

improvement activities and brings in Toyota knowhow.”

(2) Proactive delegation of tasks to a trustworthy and competent tier 1 supplier.

Actively teaching the auto maker’s procedures, policies, and techniques to a tier 1 supplier,

which is in charge of teaching them to lower-tier suppliers:

Toyota’s procedures and training measurements are taught to the tier 1 suppliers and their

duty is to teach their suppliers accordingly.

(3) Setting up and organizing formally informal private events (such as golfing) to

increase the community spirit.

(4) Establishing a spirit that can best be called ‘paternalistic benevolence’ (Chen et

al., 2014) across the network, in which the hierarchy is considered to be natural, comforting,

and reliable. Herein, visually, Toyota is at the center rather than at the top, and certain tier 1

suppliers are closer to the center, granting them a higher degree of legitimate and referent

power:

X is a tier 1 supplier to Toyota and takes care of its sub-suppliers, the tier 2, tier 3

suppliers, and so on. But it’s not a hierarchy. Some tier 2 or 3 companies are quite big.

27

For example, X buys from A, B, or C, but X coordinates this business in the automotive

sector for Toyota because X knows Toyota processes and demands and has the closest

relationship to Toyota. That is X’s task. It is actually a team of companies, like a network.

(5) Establishing a spirit of open information sharing, collaboration, and

‘unconditional’ passionate commitment (business-level and private-level) to the auto maker

within the network, which at times includes taking on voluntarily extra work. Information

sharing is the key to developing relationships, as mentioned above, and foreign suppliers in

particular can improve here: “Habitually, Japanese suppliers provide us more information

compared to foreign suppliers.”

However, this is not enough to pass the critical stage of being regarded as seriously

committed. As one interviewee put it:

X knows that I will do whatever they want; no matter what kind of business or private

hardship it causes, they know I’ll do it. And that is also expected. It is a kind of master

and slave relationship. However, that is almost a guarantee that you will stay in business.

The focus on relationships will not change in Japan. But, of course, you need to be

capable and competitive as a firm. You need to maintain the relationship and that requires

an understanding of the Japanese culture.

(6) Finally, great emphasis should be placed on personal interaction, as being

committed to developing and maintaining human relationships is fundamental to a business

relationship in Japan. Table 5 summarizes these findings.

28

-----------------------------------

Insert Table 5 about here

-----------------------------------

Discussion

Studies on interorganizational relationships in Japan often report actors being

embedded in a highly affective and relation-based society, which is conventionally explained

by the well-known concept of amae[4]

(Doi, 1973). This study finds affirmation for a

developmental timeline of trust relationships, and even in such a relation-based environment,

cognitive trust comes before affective trust. Hence cognitive trust plays a crucial role and

represents a base for the development of affective trust (see Alexopoulos and Buckley, 2013;

McAllister, 1995; Webber, 2008). Our results imply that Toyota consciously oppresses

affective trust by, for instance, discouraging the drinking events (nomikais) common in Japan

or playing a more passive role in organizing informal community events. Instead, Toyota

actively supports and put an emphasis on developing cognitive trust, by focusing on

competence and professionalism.

Furthermore, the results of this study extend work the work Alexopoulos and Buckley

(2013), who introduced the distinction between personal and professional trust. Especially in

countries where informality is pronounced, information sharing becomes a pivotal

mechanism of governing informal relationships, but if actors do not fully understand the

norms guiding this conduct, as is potentially the case for international managers or

expatriates, it can become a delicate endeavor. Alexopoulos and Buckley (2013) found in

their study that when exchanging sensitive information with others with whom one has little

shared experience, it can easily cause negative results in case the actors involved do not

understand or share the same informal rules (norms) of exchange. This becomes even more

29

critical for (Western) expatriate managers in countries where informal social networks are

pronounced, such as in China (guanxi; see Luo, 2007; Park and Luo, 2001) or in Korea

(yongo; see Horak, 2017, 2018). Since people in these societies must be seen as members of

an informal network, as the societies are naturally structured this way, the dyadic level is

automatically connected to the network level. If an expatriate manager fails to act according

to the informal (network) rules, negative consequences can be severe, as other network

members will know quickly given that information travels fast within these networks (e.g.,

Horak, 2014). The notion of trust development by expatriate managers in the context of local

informal networks is of high practical relevance as well as scholarly interest, but has so far

largely remained unexplored. Future research in this direction would be timely and important

to understand better the development of personal and professional trust in a social network

context.

Of central interest, and in our opinion the foremost insight that this study gained from

its exploration, is that power and trust antagonism cannot be confirmed in the case of

Toyota’s approach to its suppliers and vice versa. Rather, power and trust coalescence is

seen. This insight contributes to the current evolving stream of research on power/control and

trust being either complements or substitutes (Cao and Lumineau, 2015; Long and Sitkin,

2006; Poppo and Zenger, 2002; Weibel et al., 2016). This study, guided by the yin-yang

view, suggests that power and trust are clearly complements. Since the state of research

distinguishing only complements and substitutes is a product of mostly Western thinking, this

bipolar view may need an extension that the yin-yang view can potentially deliver. From a

yin-yang point of view, power and trust may be described as opposites that naturally belong

together and cannot exist without each other.

How can Toyota and its suppliers’ ability to dissolve the paradox of power-trust

antagonism be explained? This is certainly a difficult question to answer. Nevertheless, it is

30

an important one, as it is rather surprising that this study could not find a contradictory view

of power and trust antagonism in the field. One way to explain the different natures of the

power and trust relationship may be seen in the emotional desire for belongingness in Japan

as a basic social configuration versus Western striving for independence and autonomy

(Hamamura, 2012). These are two fundamental opposites of social ideals. This study assumes

that the perception of power and trust as antagonistic was coined and influenced by Western

scholarly judgment. In Japan, this sharp distinction, or the opinion that power and trust

merging is a paradox per se, cannot be observed. Furthermore, drawing on the existing

literature, contradictory dynamics are discussed in the past literature in the frame of the

paradox debate (Beech et al., 2004; Eisenhardt and Martin, 2000; Lewis, 2000) or discourses

on ambidexterity (Aoki and Wilhelm, 2017; Im and Rai, 2008; O’Reilly and Tushman, 2013),

which during their course received contributions from the Eastern view on paradoxes (Chen,

2002; Li, 2016; Pauluzzo et al., 2018). Recent scholars are interested in how individuals deal

with and accept paradoxes (Jarzabkowski et al., 2013; Jay, 2013; Smith and Lewis, 2011;

Smith and Tushman, 2005). In the West, the word ‘paradox’ tends to have rather negative

connotations (Fang, 2012), and the coalescence of contradictory elements is conventionally

seen as irrational or not in tune with linear logic. However, to dissolve paradoxes, the authors

believe that the recent literature on yin-yang provides a suitable starting point. They assume

that the yin-yang view has the potential to shed new light on the conventional antagonistic

view of power and trust, which may open further doors to a better understanding of the

management of contradictory elements to use its potential to increase performance. En the

East especially, yin-yang can be regarded as a mediator in paradoxes (Figure 3). Though

recent literature may explain yin-yang from a theoretical point of view, future research may

place more emphasis on its applications in the field (Li, 2016; Pauluzzo et al., 2018). The

present study can be regarded as the first attempt in this direction.

31

-----------------------------------

Insert Figure 3 about here

-----------------------------------

While discussing the results with other scholars from the East and West alike, the

present authors were often confronted with the question of whether Japanese firms are better

at balancing the power-trust relationship just because they are Japanese. In this discussion,

one key argument was that, since amae is a typical Japanese emotional desire, not a Western

one, and this in turn may affect the development of trust and the willingness to accept

hierarchies and paternalism, it can be performed much better among Japanese people. More

generally formulated: do Japanese people perform better in terms of yin-yang balancing for

cultural reasons? This is a valid question, since the influence of culture on the Japanese

management approach has been studied by several authors (Jia et al., 2016; Saeki and Horak,

2014). In a narrow sense, two opinion groups can be distinguished: those who believe that

culture is relevant to the success of Japanese firms (Cousins and Stanwix, 2001; Herron and

Hicks, 2008; Hines et al., 2004) and those who believe that essentially it is not (Dyer, 2000;

Lamming, 1994; McMillan, 1990). Even though the former group regards culture as relevant,

the approach has several disadvantages: it often lacks empirical evidence and takes a no-go

position when it comes to the transferability of Japanese management practices to a non-

Japanese environment. The latter group focuses on rational processes and management

techniques but disregards the benefits of cultural diversity, implying that the success factors

of collaborative business relationships can be transferred without problems to other

environments, which definitely is not always the case (see Karn, 2009). Following the

literature, there seems to be no clear answer. However, based on this study’s results,

32

discussions with industry experts and experiences gathered during the field research, the

authors are convinced that managing the coalescence of power and trust relationships does

not seems to be something that Toyota is capable of only because it is a Japanese firm. It was

especially the non-Japanese interview partner with a) profound knowledge of the Japanese

culture; b) long business experience with Japanese customers; c) fluency in the Japanese

language; and d) equally importantly, the willingness to adjust by understanding the strengths

of the Japanese model who dissolved power and trust antagonism excellently. Hence, the

authors believe that, when the interpersonal-level preconditions are fulfilled (see Vanneste,

2016)—that is, when a deep understanding of the ideals between the counterparts in a

collaborative business relationship exists—cultural influences do not play a major role in

successfully managing the coalescence of power and trust relationships. Hence, it can be

assumed that if an auto maker and supplier create an open and trustworthy environment and

aim at establishing deep personal relationships, the management of the power and trust

coalescence is not culture-bound but rather can be applied universally.

Limitations

The results of this research should be seen against the background of its limitations.

The authors regard these results as first implications for an evolving research stream on yin-

yang applications on which future research can build. Firstly, this study collected interview

data from a limited number of firms serving Toyota. This causes validity concerns. Future

studies may take a larger pool of domestic and international suppliers into account. Secondly,

this study analyzed one maker-supplier network only. The implications that it draws and

discusses are not likely to be representative of a Japanese model of maker-supplier

cooperation in general, as prior research finds significant differences among the management

approaches of Japanese auto makers, concluding that Toyota’s situation is quite special and

cannot be regarded as representative of a typical Japanese management model (Wilhelm,

33

2008). Hence, future research might apply comparative case studies among multiple supply

networks to carve out the respective differences better.

Though the authors see a qualitative research approach as best suited to exploring

novel research themes, alternative research approaches may yield richer results. Thus, future

research can benefit from complementary or sole insider case studies, for example, conducted

by scholars who have spent time as residents within a maker and/or supplier firm in positions

that exposed them to maker-supplier interactions. Though time consuming and, for most

scholars, difficult to realize, it is assumed that this approach would result in deeper and richer

results on this research theme.

Implications for practice

The results have several implications to advise practice, as summarized in Table 5, in

particular for foreign automotive suppliers seeking to establish and deepen relationships with

Toyota. Next to the hard facts that need to be fulfilled, such as technological competence, the

authors feel that international suppliers should focus, too, on the soft facts, which actually

become hard facts in Japan. On the business level, firms need to work out a relationship-

building strategy by honoring the hierarchy within a network, ensuring open communication,

and being committed to integrating into a network by being a genuine team player.

Consequently, the challenge is to develop deep and trustful relationships that may work best

if a supplier understands how to develop trust—that is, by honoring the coalescence approach

to power and trust. This requires adequate staff at the managerial level. Key staff need to

have the skills to dissolve the power and trust paradox that obviously prevails in relationships

in the West. A precondition is profound knowledge of and experience with the Japanese

culture. Deep relationship trust evolves only over the long term. Hence, frequent job rotation

of key staff on a global scale acts against this and should be avoided if it includes job

34

assignment to different customers. Long-termism and loyalty should be incentivized—for

example, by job promotions.

Overall, the economic potential of the yin-yang approach can inspire firms from the

East and West alike to embrace yin-yang thinking. In contrast, while this study proposes six

antecedents of such a management approach, Western firms may face difficulties

implementing them, since they require a new view on competition. Paternalistic benevolence

is likely to be a principle that is difficult for Western firms to embrace, since it opposes the

Western understanding of competition, regarding (social) hierarchies as natural and normal.

In addition, information sharing and passionate commitment can be challenging for Western

firms, since the latter are often regarded as naïve in a business-to-business relationship and

information sharing bears the risk of transmitting a company’s internal information or

intellectual property.

Conclusion

The present study discusses the conventional antagonistic view of power and trust and

explores whether this concept can be found in collaborative business relationships in the case

of Toyota and its suppliers. It finds high power asymmetry between Toyota and its suppliers,

but at the same time a high level of trust between them. Hence, this research contributes to

the research stream considering power and trust as complements rather than substitutes.

Though usually considered to be a paradox, Toyota appears to have the ability to manage

these contradictory elements, which this study describes as the coalescence of power and

trust, thereby coordinating relationships within the network. As this study de facto cannot

confirm the antagonistic view of power and trust in the field, it draws on the recent paradox

literature by putting forward the epistemological system of yin-yang (Fang, 2012; Li, 2016;

Pauluzzo et al., 2018), explaining the non-paradoxical view of apparently mutually exclusive

elements. The study results in six antecedents for the management of power and trust

35

coalescence that are important to the practice of supply chain management. To understand

better the effect of yin-yang on management, the study recommends that future research

progress from theoretical discourse to making yin-yang central to applied management

research.

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Tables and Figures

Table 1. Power and trust antagonism

Quote Source “Trust and power are typically viewed as orthogonal”

Cook et al. (2005, p. 41)

“Power and trust are incompatible and the opposites of each

other” Gangl et al. (2015, p. 13)

“Power and trust are often regarded as substitutes” Edelenbos and Klijn (2007, p.

34), based on Luhman (1988) “Coercive power and goodwill trust cannot coexist in a relationship, as coercive power is mostly found in adversarial

asymmetric relationships (...) and may result in retaliation”

Meqdadi et al. (2017, p. 65)

“Horizontal relationships may involve trust and cooperation and vertical relationships power and compliance”

Granovetter (2002, p. 36)

Table 2: Power bases according to French and Raven (1959)

Power base Description Coercive Ability to manipulate the attainment of valences (“power to sanction”) Reward Ability to reward—for example, through incentives Expert Knowledge perception of a superior Legitimate Power of authority, which stems from internalized values that A has a legitimate right

to influence B, and B has an obligation to accept this influence Referent Desire to identify with a superior; feeling of oneness; desire to become associated

with a superior

45

Figure 1: Interview partner characteristics

Notes:

OES: Original equipment supplier (i.e. supplier)

OEM: Original equipment manufacturer (i.e. auto maker)

Table 3: Corporate profiles

Toyota Motors Denso Aisin Steel Bosch

Role Maker Supplier Supplier Supplier

Headquarters

location

Japan Japan Japan Germany

Est. (year)

1937 1949 1940 1886

Owned by

Toyota (%)

- 25% 30% -

Major

products Automobiles Automotive

components Steel products,

forgings and

electro-magnetic

products

Automotive

components,

power tools,

industrial

technology,

security systems

Focal market

International Japan,

increasingly

with non-

Japanese

customers

Japan, with

ambitions

abroad

International

Source: Annual reports, corporate websites

Japanese

origin

Foreign origin

Keiretsu Non-keiretsu

Toyota Bosch

Aisin Steel

Denso OES

OES

OES OEM

46

Table 4: Interview participants

Interview

no. Participants

* Location Firm Job level

GI1 2 (+3) Japan Toyota General Manager, Group Manager GI2 3 (+3) Japan Aichi Steel General Manager, Manager, Manager I3 1 (+1) Japan Denso Director I4 1 (+1) Japan Bosch Director Note:

* Participants: number of interview partners, with number of interviewers in brackets

Figure 2: Paradigms to manage the power and trust coalescence

Informal

institution Critical theme (base) Management

paradigm (codes)

Coercive Sanctioning power

Reward Annual rewards for outstanding supplier

Expert High in-house competence, technological

knowledge

Legitimate Engineering excellence as a corporate

value, long-termism, loyalty

Referent High attraction to and identification with

the industry leader

Goodwill

(benevolence)

Empathy, care, help, social cohesion

Competence

Knowhow, offering advice and free

assistance to the supplier

Trust

Power

Authority

Delegation

Community spirit

Paternalistic

benevolence

Collaboration

Commitment

47

Table 5: Suggested initiatives for managing the power and trust coalescence

Item Suggested initiatives Authority Enforce authority by focusing on relationship and competence alike.

Coordinate and encourage competition among network firms; offer

support where necessary. Delegation Empower close tier 1 supplier to execute and disperse the central firms’

policies towards lower-tier suppliers. Community spirit Set up formal events with strong informal components (e.g. team

sports). Paternalistic benevolence Establish a sense of belongingness and a culture of true paternalistic

benevolence towards and among network firms. Collaboration Enforce ‘togetherness’. Unleash passion for work and social interaction

among network firms. Incentivize open communication among network

firms. Commitment Create an environment transcending a sharp distinction between private

and business spheres. Establish friendships rather than business

partnerships between network firms.

Figure 3: Yin-yang to mediate paradoxes

Power

Trust

Yin–yang view Antagonistic view

Power Trust

48

Appendix 1

A. Interview instrument: OEM (auto maker)

A.1. Job-related demographic information

- Educational background and industry experience.

- Current position, tasks, and responsibilities.

- Formal (organization-related) links to the supplier (OES).

A.2. Relationship with the supplier in general

- Please describe the relationship with Japanese suppliers.

- Please describe the relationship with foreign suppliers.

- Are there any notable differences in dealing with Japanese and foreign suppliers?

A.3. Relationship with the supplier. Focus: trust

- Please describe the level of trust between you and your suppliers.

- Are the suppliers’ actions always transparent? - Do you think there are many secrets between you and your suppliers?

- Do you believe that your suppliers behave loyally?

- Do you believe that your suppliers honor the relationship even in times of crisis?

- Do you perceive your suppliers as not acting opportunistically? Or do they think about their

own interest only?

- Do you believe that your suppliers are always fully cooperative?

- How do you cope with failure on the side of your suppliers?

- Do you invest any resources (e.g., developmental) in your suppliers; if so, which?

- What other forms of support do you provide to suppliers?

- How do you and your suppliers cope with extra costs (monetary and non-monetary)—for

example, for additional engineering requests, additional tools needed, volatile part orders, and

material cost or delivery delays?

- Do you offer routinely ‘free assistance’ to suppliers without charge?

- Do you feel that you and your suppliers act on shared values, beliefs, and common goals?

- Does fairness play a role in the relationship; for example, are the set targets achievable, are

promises kept, and so on?

A.4. Relationship to the supplier. Focus: power

- How many options do you have available to choose from in terms of supplier selection?

- Are some suppliers more powerful than others? If so, why?

- Are suppliers very dependent on doing business with you? Do suppliers tend to be more

dependent or independent?

- Do you believe that you are perceived differently by Japanese and foreign suppliers in terms

of attractiveness?

- With reference to the relationship between you and your suppliers, how would you describe

the nature of your leadership?

- Can the relationship between you and your suppliers be described as being equal or does one

party have power over the other? If so, what are the causes?

- Please explain the sanctions or punishment and reward systems that you may have in place, if

any.

- What incentives do you provide to manipulate suppliers’ performance?

- How would you describe a) the distribution of technical and non-technical competence

between you and your suppliers; and b) the influence that this has on your authority in the

relationship?

49

(Appendix 1, cont’d)

B. Interview instrument: OES (supplier)

B.1. Job-related demographic information

- Educational background and industry experience.

- Current position, tasks, and responsibilities.

- Formal (organization-related) links to the OEM.

B.2. Relationship with the OEM in general

- Please describe the relationship with the OEM.

- Please describe the relationship with other suppliers (domestic and international) and the role

that the OEM plays therein.

- Please describe the OEM’s management style and approach toward suppliers.

B.3. Relationship with the OEM. Focus: trust

- Please describe the level of trust between you and the OEM.

- Are the OEM’s actions always transparent? - Do you think there are many secrets between you and the OEM?

- Do you feel that you are treated in a fair way by the OEM?

- Do you behave loyally to the OEM? If so, how would you describe this?

- Do you honor the relationship even in times of crisis?

- Do you perceive the OEM taking care of you in terms of support and commitment? Do you

perceive the OEM as behaving opportunistically?

- How would you characterize the method of cooperation between you and the OEM?

- What action does the OEM take in the case that you do not meet expectations?

- Does the OEM invest any resources to support you so that your performance increases?

- How do you and the OEM cope with extra costs (monetary and non-monetary) that may occur

on your side—for example, for additional development time, additional tooling, or increases

in material cost, and so on?

- Do you often receive ‘free assistance’ from the OEM without being charged?

- Do you feel that you and the OEM share the same values, beliefs, and common goals?

- Does fairness play a role in the relationship; f? For example, are the targets set by the OEM

achievable, are promises kept, and so on?

B.4. Relationship with the OEM. Focus: power

- Does your business depend on only one or a few OEMs, or do you have a diversified

portfolio?

- Do you perceive the OEM as being more powerful than you? If so, why? What are the

sources?

- Is the OEM from your point of view an attractive customer? If so, why?

- With reference to the relationship between you and the OEM, how would you describe the

nature of the OEM’s leadership?

- Do you feel that the OEM respects you?

- Do you feel that you and the OEM have an equal relationship or does one party have power

over the other? If so, why do you think that is? What are the causes?

- Please explain how the sanctions or punishment and reward systems that the OEM may have

in place work.

- What incentives does the OEM offer to push you toward higher performance?

- How would you describe a) the distribution of technical and non-technical competence

between you and the OEM; and b) how this influences your authority in the relationship?

50

Endnotes 1 Meanwhile, there is a journal solely dedicated to trust research. The Journal of Trust Research was

founded by Founding Editor in Chief Peter Ping Li and first published in 2011 by Taylor and Francis

(Routledge).

2 The supplier names are anonymized throughout the text, as explicitly requested by the interview

partners.

3 It is an interesting fact that alumni or university-based ties are mentioned here as serving as an

informal base for bonding and open information transfer. While university-based ties in many

Western countries generally do not have such an extraordinary impact on interpersonal relationships

in business, it is known that, for instance, Korean hakyon (i.e., university-based) ties can create a

lifelong lasting bond and are part of so-called yongo ties, which, defined on a very general level, have

identical characteristics to Chinese guanxi ties but are much more exclusive and to a great extent

preset (for details, see Horak, 2014; Horak and Klein, 2016; Horak and Taube, 2016).

4 Amae is an indigenous Japanese construct that translates into English as ‘dependency’ but has a

much deeper meaning. It is often described as like a mother-child relationship, with the child’s strong desire to be close to the mother. Other definitions use terms like ‘indulgent dependency,’ ‘dependency

wish’, or ‘drive to dependence’ (for more details, see Umemura and Traphagan, 2015).