Trust-based collaboration for suppliers and employees in an Internet-based world: An investigation of the relationships among ethical work climate, trust, commitment and innovation in Internet -enhanced manufacturing firms

This study examined Hosmer's (1994) proposition that an ethical approach to management engenders stakeholder trust, which, in turn, brings about commitment and innovation from the perspectives of traditionally out-group suppliers and in-group employees, respectively. Boundary-spanning employees of the Internet-enhanced manufacturing companies participated in the study in their roles as either suppliers or employees. A sample of 54 buyer-supplier inter-organizational relationships and 54 employer-employee intra-organizational relationships were used to test the proposition.;Hosmer's (1994) proposition was partially supported by the study. Suppliers had higher levels of trust in customer firms with higher level of perceived principle-cosmopolitan work climate, and lower levels of trust in customer firms with higher level of perceived egoism work climate. However, level of trust in customer firms was not a significant predictor of the existence of commitment and innovation in suppliers.;In contrast, employees had higher levels of trust in employing firms with higher levels of perceived benevolence work climate. Moreover, level of trust in employing firms was a significant predictor of the existence of commitment and innovation in employees. As such, trust matters more in intra-organizational relationships.