Active trust development of local senior managers in international subsidiaries

Abstract

How can overseas headquarters actively build the trust of their local senior managers? Building on the theory of active trust development, this study examines the roles of three strategies-localization, communication, and control-and their combinations in building the trust of local senior managers in international joint ventures (IJVs). On the basis of a survey of 138 IJVs operating in China, localization, communication, and control are important drivers of the development of local senior managers' trust in overseas headquarters. Furthermore, the joint use of localization and communication represents a potent strategic combination for trust building. However, a localization strategy coupled with intense control hinders trust development. The findings provide important implications for foreign investors hoping to build the trust of local senior managers in uncertain environments such as China. © 2005 Elsevier Inc. All rights reserved.