An Empirical Study on the Organizational Trust

This case study explores the relationship between an organization and its employees. The researchers used social exchange theory and inducement-contribution theory to conduct the study. The research aimed to determine if employees are more innovative when organizational trust is high.

2. Theory and Hypotheses

2.1. EOR and Innovative Behavior

Based on the norms of reciprocity and social exchange theory, the employee-organization relationship (EOR) is either a formal or informal connection between an employer and its employees. Organizations (employer) expect employees to make designated contributions such as organizational commitment, high performance, or ideas for improving organizational performance. Simultaneously, employees expect organizations (employer) to provide a series of rewards and incentives to exchange for their contributions. EOR is a long-term, open-ended exchange relationship, which is characterized by mutual commitment and emotional investment. EOR can bring many beneficial outcomes to organizations, such as organizational commitment and individual performance.

Innovative behavior is a multi-stage process, which includes problem identification, idea generation, and implementation. Innovative behavior can be influenced by an employee's attitude. Tsui proposed that EOR does not just emphasize the degree of incentives provided by organizations, it also includes contributions that organizations expect to obtain from employees. Paying attention to expected contributions and offered inducements can help us better understand the effects of EOR on individual behaviors. March and Simon view the employment relationship as an exchange relationship between organization's inducements and employee's contributions. Organizations provide inducements to employees in accordance with their contributions as continuously required by the organization. In turn, employees also recognize their different contributions may bring these different organizational inducements. Therefore, employees may be more engaged in their job to get more organizational inducements. Previous findings provide evidence that high quality EOR can promote employee innovative behavior. For example, Liao discovered that high quality exchange relationships between leaders (to some extent, a supervisor might represent their organization) and employees can promote employee creativity. Tierney and Farmer stated that high quality exchanges between team leader and employees could increase employee innovative behavior by influencing the employee's self-judgment. Other studies discovered that high quality exchanges within organizations also can bring positive outcomes (e.g., organizational commitment, individual performance, organizational citizenship behavior). These studies provide evidence that high quality EOR will promote innovative behavior. High-quality EOR means that the employer provide employees with many inducements through a series of management practices, and in turn employees tend to be more engaged in positive behaviors, such as innovative behavior. Thus, employees continue to exert efforts to generate and implement ideas to fulfill organizational obligations and responsibilities when they receive fair treatment or high investment from organizations. Thus, we make the following prediction:

H1: EOR is positively related to innovative behavior.