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«NAVAL POSTGRADUATE SCHOOL MONTEREY, CALIFORNIA MBA PROFESSIONAL REPORT Analysis of the Relationships among Trust Antecedents, Organizational ...»

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NAVAL

POSTGRADUATE

SCHOOL

MONTEREY, CALIFORNIA

MBA PROFESSIONAL REPORT

Analysis of the Relationships among Trust Antecedents, Organizational

Structures, and Performance Outcomes

By: Joseph T. Seykora

December 2009

Advisors: Edward H. Powley,

Mark E. Nissen

Approved for public release; distribution is unlimited

THIS PAGE INTENTIONALLY LEFT BLANK

REPORT DOCUMENTATION PAGE Form Approved OMB No. 0704-0188 Public reporting burden for this collection of information is estimated to average 1 hour per response, including the time for reviewing instruction, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to Washington headquarters Services, Directorate for Information Operations and Reports, 1215 Jefferson Davis Highway, Suite 1204, Arlington, VA 22202-4302, and to the Office of Management and Budget, Paperwork Reduction Project (0704-0188) Washington DC 20503.

1. AGENCY USE ONLY (Leave blank) 2. REPORT DATE 3. REPORT TYPE AND DATES COVERED December 2009 MBA Professional Report

4. TITLE AND SUBTITLE Analysis of the Relationships among Trust 5. FUNDING NUMBERS Antecedents, Organizational Structures, and Performance Outcomes

6. AUTHOR(S) Seykora, Joseph T.

7. PERFORMING ORGANIZATION NAME(S) AND ADDRESS(ES) 8. PERFORMING ORGANIZATION

Naval Postgraduate School REPORT NUMBER Monterey, CA 93943-5000

9. SPONSORING /MONITORING AGENCY NAME(S) AND ADDRESS(ES) 10. SPONSORING/MONITORING

N/A AGENCY REPORT NUMBER

11. SUPPLEMENTARY NOTES The views expressed in this thesis are those of the author and do not reflect the official policy or position of the Department of Defense or the U.S. Government.

12a. DISTRIBUTION / AVAILABILITY STATEMENT 12b. DISTRIBUTION CODE Distribution Statement A: Approved for public release; distribution is unlimited

13.

Abstract

(maximum 200 words) The project explores and seeks to identify relationships among four trust antecedents, two organizational structures, and two performance outcomes. The results will help to further explain associations between trust level (high or low) and organizational structure. Past research found that the edge organization operating in a high trust environment produces the most accurate results in the least amount of time. Additionally, the research found that accuracy performance in the rigid hierarchy was more resilient than the flexible edge structure to changes in trust level. What has yet to be determined is the extent to which factors leading to perceived trust, also known as “trust antecedents,” are responsible for performance in a given structure. To empirically study these relationships, the present research analyzes data collected during an ELICIT simulation experiment involving 135 subject responses. The objective of this project is to identify relationships among the trust antecedents (competence, openness, concern, and reliability), organizational structure (edge and hierarchy), and performance (speed and accuracy). Benefits of this research include recommendations for program/project managers of Integrated Product Teams in Defense Acquisition Programs who desire to optimize team performance by addressing trust antecedents and/or organizational structure.

In doing so, managers can make more informed decisions regarding team member organization and trust in order to more accurately and rapidly achieve organizational objectives.

–  –  –

The project explores and seeks to identify relationships among four trust antecedents, two organizational structures, and two performance outcomes. The results will help to further explain associations between trust level (high or low) and organizational structure. Past research found that the edge organization operating in a high trust environment produces the most accurate results in the least amount of time.

Additionally, the research found that accuracy performance in the rigid hierarchy was more resilient than the flexible edge structure to changes in trust level.

What has yet to be determined is the extent to which factors leading to perceived trust, also known as “trust antecedents,” are responsible for performance in a given structure. To empirically study these relationships, the present research analyzes data collected during an ELICIT simulation experiment involving 135 subject responses. The objective of this project is to identify relationships among the trust antecedents (competence, openness, concern, and reliability), organizational structure (edge and hierarchy), and performance (speed and accuracy).

Benefits of this research include recommendations for program/project managers of Integrated Product Teams in Defense Acquisition Programs who desire to optimize team performance by addressing trust antecedents and/or organizational structure. In doing so, managers can make more informed decisions regarding team member organization and trust in order to more accurately and rapidly achieve organizational objectives.





–  –  –

I. INTRODUCTION

A. THE DYNAMICS OF TRUST

B. ORGANIZATIONAL STRUCTURE

C. IMPACT OF TRUST AND STRUCTURE ON ORGANIZATIONAL

PERFORMANCE

D. RESEARCH PROJECT FORMAT

II. LITERATURE REVIEW

A. TWO ORGANIZATIONAL STRUCTURES

B. TRUST AS A CONTINGENCY FACTOR

C. TRUST DEFINED

D. TRUST ANTECEDENTS

III. METHODOLOGY

A. OVERVIEW

B. ELICIT INTELLIGENCE GAME AND MANIPULATIONS.................41 C. QUESTIONNAIRE AND MEASUREMENTS

IV. ANALYSIS AND RESULTS

A. DESCRIPTIVE STATISTICS

B. DESCRIPTIVE STATISTICS AND CORRELATIONS

C. MULTIVARIATE ANALYSIS

D. SUPPORT FOR HYPOTHESES

E. KEY FINDINGS

V. CONCLUSION

A. DISCUSSION

B. IMPLICATIONS

C. RECOMMENDATIONS FOR FUTURE RESEARCH

APPENDIX A.

APPENDIX B.

APPENDIX C.

APPENDIX D.

LIST OF REFERENCES

INITIAL DISTRIBUTION LIST

–  –  –

Figure 1. Comparison of Attributes of Hierarchies and Edge Organizations (From Alberts & Hayes, 2005, p.

218)

Figure 2. Topologies (from left to right) of the Hierarchy, Network, and Edge (From Alberts & Hayes, 2005, pp.

91-92)

–  –  –

Table 1. Descriptive Statistics by Group

Table 2. Descriptive Statistics and Correlations (n = 135)

Table 3. Results of Regression Analysis for (a) Speed and (b) Accuracy: Trust and/or Structure Typea

Results of Hypothesis Testinga for (a) Speed or (b) Accuracy: Trust Table 4.

Antecedentsb

–  –  –

DAU Defense Acquisition University DoD Department of Defense GAO Government Accountability Office (formerly, General Accounting Office) HE High trust Edge (configuration) HH High trust Hierarchy (configuration) IPPD Integrated Product and Process Development IPT Integrated Product Team LE Low trust Edge (configuration) LH Low trust Hierarchy (configuration) OIPT Overarching Integrated Product Team PBO Post-bureaucratic Organization RTR Risk Taking in Relationship SDT Self-Directed Team USD Under Secretary of Defense (AT&L) for Acquisition, Technology, and Logistics (AR) for Acquisition Reform WIPT Working-level Integrated Product Team

–  –  –

Sincere gratitude goes to Professor Mark Nissen, who kept this project “statistically significant,” and to Professor Ned Powley, who first piqued my interest in the multifarious and far-reaching nature of trust. Thank you, gentlemen, for entrusting me with this portion of your broader research.

*** Heartfelt thankfulness goes, as always, to my wife, Tara, who continuously offered encouragement through her excitement for me and this project, and who supported me by lovingly caring for our sons as she did during several deployments. To Luke, Ty, and Jadon: “Dada’s big paper” is finished!

***

–  –  –

This research examines trust within the context of two fundamental forms of organizational design: hierarchy and edge structures. Specifically, the extent of factors responsible for trust (high trust) or distrust (low trust) within these two structures is studied. Using a questionnaire survey after an ELICIT computer simulation experiment, the four factors, or “antecedents,” of trust—competence, openness, concern, and reliability—and their individual or collective effect on trust level and ultimately organizational performance outcomes in either organization structure is analyzed. This research seeks to identify which antecedent(s) may be primary or secondary reasons for trust and performance levels and, once identified, to recommend to Defense acquisition program managers and team leaders how to better create and sustain trust by focusing on particular trust factors within that manager’s given structural context. Furthermore, this research will help establish a foundation for trust as a contingency factor. Ultimately, the goal of this study is to provide organizational researchers and practitioners a means to address trust issues and improve performance outcomes within a given organizational structure.

A. THE DYNAMICS OF TRUST

Trust has varied meanings found in diverse arenas. As a reverential concept found in the Christian Bible, trust describes faith in God. Trust has also been adopted by the U.S. Marine Corps as one of fourteen desirable traits that leaders should develop. In market economies, trust refers to “a combination of corporations with the purpose of reducing competition and controlling prices” (Webster’s Collegiate Dictionary, 9th ed., 1983). Though it is commonly spoken of in conversation between individuals and amongst group members, the concept of trust continues to demand a great deal of multidisciplinary research (Schoorman, Mayer, & Davis, 2007; Kramer, 1999; Bigley & Pearce, 1998; Lewicki, McAllister, & Bies, 1998; Creed & Miles, 1996; Kramer & Tyler, 1996; Bromiley & Cummings, 1995; Mayer, Davis, & Schoorman, 1995). As Kramer and Cook (2004) state, “Trust often constitutes an important resource within social systems” (p. 1).

Within the social system of the American federal government, trust has been identified by the Department of Defense (DoD) as a critical ingredient of successfully acquiring products and services from industry for the Armed Services. In 1995, as part of the DoD’s Integrated Product and Process Development (IPPD) managerial concept, the Secretary of Defense directed the use of Integrated Product Teams (IPTs) as a means of promoting “flexible, tailored approaches to oversight and review [of acquisition programs] based on mutual trust” (OIPT-WIPT Information Guide, 1996, p. 26; Valdez & Kleiner, 1996). The Undersecretary of Defense for Acquisition, Technology, and

Logistics (USD [AT&L]) underscored the importance of trust in Defense acquisition:

“The two most important characteristics of IPTs are empowerment and cooperation— trust n’ teamwork by another name. The teams must have full and open discussions with no secrets. Team members must be empowered to speak for their superiors in the decision-making process” (OIPT-WIPT Information Guide, 1996, p. 50). The USD(AT&L) goes on to cite the Apollo 11 mission as an example of successful use of “trust n’ teamwork,” believing that “trust and teamwork is a topic of central importance to our ongoing acquisition reform efforts” (OIPT-WIPT Information Guide, 1996, p. 54).

Yet as successful as the Apollo 11 mission was, and as critically important as the DoD has deemed trust to be, Kramer and Cook (2004) reflect that trust is “a desired but elusive and fragile resource” (p. 1). For example, the events of the 9/11 attack and corporate scandals in recent years (Enron, WorldCom, Arthur Anderson, et al.), have challenged the trustworthiness of social organizations in general. A peculiar disenchantment with “command and control” managerial philosophies found in traditional organizations has brought trust to the center of scholarly research on organizations. In addition to identifying the essence of trust, researchers also postulate, for example, different ways trust operates across emerging innovative forms in response to such disenchantment. (Covey, 2006; Kramer & Cook, 2004) To recognize and thus utilize trust as a resource, a basic but solid understanding of the general essence and scope of trust must first be developed. Zand (1972) describes clearly the core nature of trust, in that it takes form in the interaction between two (or more) people. Trust is based in relationships (Schoorman et al., 2007). To fully understand the concept of trust (or trusting behavior), one must understand the dimensions (factors) that together help formulate trust and affect trustworthiness, and which are applicable to individuals, as well as groups or organizations (Schoorman et al., 2007; Mayer et al., 1995). Additionally, one must appreciate why people trust and the dynamics of trust in organizations (Kramer & Tyler, 1996).

The two dynamics of trust, identified by Kramer and Tyler (1996), involve macro level and micro level analyses. Macro level analysis refers to the study of the relationship between trust and management philosophy, whereas micro level analysis examines the relationship between trust and the psychology of the individual. Since the dimensions of trust may be applied to interpersonal, intergroup, and interorganizational levels of analyses, trust should be examined at both the macro and micro levels within a social organization (Schoorman et al., 2007).



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