**4.1. Contract failure perspective of organizational trust**

Among the most influential theoretical perspectives for understanding organizational trust is the economic theory of contract failure (TCF). Theory of contract failure was strategically built on the assumption that trust is very important in satisfying contractual obligations by the actors in work organizations. TCF shares the same theoretical soundness with rational choice by emphasizing the fact that employees and employers are actors who are motivated by their own self-interests, and the benefits they are likely to derive from working together for the production of goods and services [41, 42]. The working together of these actors contributes to the growth of market economies and reduction of societal uncertainty. TCF sees trust as the engine that sustains harmonious relationship, team work and partnership among the actors (employees and employers) in work relations [43]. Sustaining teamwork, collaboration and harmonious relationship in work relations inevitably reduce workplace disputes and counter-productive behaviors which significantly lead to successful attainment of organizational goals and objectives. On the other hand, TCF identifies that in a situation where there is a breach of contract between the actors of work organization, there is likely to be disagreement, distrust and counter-productive behavior that may degenerates to conflict situation between the actors [43]. Thus, conflict situation occur in work organization due to contract failure and lack of trust between the actors.

yet majority of the definitions described the term as networks of social relationships that bind people and organizations together for achieving desirable socio-economic benefits. These networks of social relationships are realized from constant social interaction to attain short and long term socio-economic benefits over time. For instance, Lyda Hanifan sees social capital as tangible assets such as goodwill, fellowship, sympathy, and social intercourse among the individuals and families who make up a social unit. In another view, social capital is described as the links, shared values and understandings that enable individuals and groups in a particular social setting to trust each other and so work together for productive benefits. Based on this premises, social capital theorists see trust as a very important part of social capital. For example, [53] argues that a system of mutual trust is an important form of social capital on which future obligations and expectations may be based. Also, [54] regards trust as a source of social capital that sustains economic dynamism and governmental performance while [55] (1998) perceives trust as a key facet in the relational dimension of social capital. Social capital perspective therefore emphasized the importance of trust in ensuring harmonious relationships between workplace actors. It also postulates that organizations that operate with trust, shared norms and cooperation instead of hierarchy or hierarchically defined carrots and sticks, formal monitoring and economic incentives, encourage the adoption and effectiveness of flexible or high-performance work practices [56]. This postulation is based on the fact that trust reinforce norms of reciprocity, reduce the volume of energy lost to doubt, unresolved issues, and associated uncertainty anxiety that otherwise often results in blame, gossip, resentment, frustration and conflict. It also reduces the time spent in the process of collective agreement enforcement and compli-

Organizational Trust as a Conflict Management Tool in Contemporary Work Organizations

http://dx.doi.org/10.5772/intechopen.73092

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**5. Organizational trust and organizational conflict: a framework of** 

Based on the evidences gathered from empirical studies conducted by scholars on organizational conflict and its management revealed that there is a connection between organizational trust and organizational conflict. This connection can best be described as consequential. It is consequential because lack or low level of trust among employees and employer can stimulate mixed feelings or lack of cooperation in an organization which may result in organizational conflict. For example, it is widely assumed that relationship between two or more individuals is sustained based on trust. This assumption is equally applicable to workplace relationships. That is, when there is lack or low level of trust in an organization there is disagreement and conflict situation in the organization [7, 8]. This is so because when there is lack of trust, there is lack of corporation and when there is absence of cooperation between employees and management, there will be conflict in the organization. While on the other hand, when there is trust or high level of trust in an organization; employees are more likely to avoid conflict situation [7, 8] by ensuring that they give the counterpart the benefit of doubt on issues that may generate conflict rather than jumping to conclusions [8]. To further expatiate on the nexus between organizational trust and organizational conflict, the diagram below

ance in work organizations [55].

**consequential relationship**

is presented (**Figure 2**).

#### **4.2. Cognitive sociology perspective of organizational trust**

The cognitive sociology perspective of organizational trust takes a different dimension from that of economic theory of contract failure. Cognitive sociology perspective (CSP) focuses on social and psychological perspectives of trust. CSP believes that trust is socially constructed and is fundamentally built on the level of motivation or kind of behavior display by actors in work relations or organizations. It is a theory that assumes that workplace actors (employees and employers) practically interact with, delegate responsibilities to or rely on the behavior of one another so as to achieve predetermined goals. More so, CSP postulates that trust emanates from constant and predictable human behavior, social environment, and social situations. The main tenets of CSP are as follows; in work organizations, actors depend on trust for necessary interaction, delegation and cooperation. As a matter of necessity, actors take for granted the actions of others and rely on normative infrastructures in performing the contractual duties or organizational activities. The reliance on normative infrastructures by the actors as a tool in dealing with each other stimulates organizational trust [44]). As such, [45] opined that there are three types of trusts which include *Characteristic-based trust* (this is trust tied to a person, depending on socio-demographic characteristics), *process-based trust* (this is a trust tied to previous or recent exchanges in reputation or gift exchanges between individuals), and *institutionally-based trust* (this is a trust based on institutions such as certifications, form characteristics, or legal constraints). Furthermore, CSP premised that organizational trust is a functional substitute to rational calculation that actors may adopt in the process of lessening social complexity. This is so because studies have shown that when there is trust in an organization, social interactions and activities occur on a simple and confident basis but in the absence of organizational trust, the fear of future contingency or social complexity influence work relations and behavior of actors in meeting organizational goal [46–49]. Organizational trust implies the social properties (roles, rules and relationships) of an organization [50]. The properties which make it possible for cooperative behavior to exist among workplace actors, across varying cadres, time and space which lend them systemic form [47]. So trust exist in work organization through cognitive process that imbibe in workplace actors with the capacity to do what ordinarily they would not have been willing to do in achieving organizational goal.
