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The role of competence-based trust and organizational

identification in continuous improvement

Article in Journal of Managerial Psychology · January 2004

DOI: 10.1108/02683940410551545

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Hyun-Jung Lee
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Trust and
The role of competence-based organizational
trust and organizational identification
identification in continuous
623
improvement
Hyun-Jung Lee
Department of Industrial Relations, London School of Economics, London, UK
Keywords Competence based training, Organizational analysis, Continuous improvement
Abstract This paper investigates the role of individuals’ competence-based trust and
organizational identification (OI) in employees’ continuous improvement efforts. The data were
collected in a high-tech multinational joint venture company with a sample of over 490 shop floor
workers. The results show that trust is positively related to continuous improvement efforts when
employees strongly identify with the organization. For individuals whose OI is weaker, however,
trust is not positively related to continuous improvement. OI, on the other hand, not only
moderated the relationship between trust and continuous improvement efforts, but also had a
strong and positive impact on employees’ continuous improvement efforts. Managerial
implications are discussed.

Trust is a word we have to put too much trust in (Muntean and Rosenblum).

Introduction
Continuous improvement is the propensity of an organization to pursue incremental
and innovative improvements of its processes, products, and services (Anderson et al.,
1994). It is generally believed that ever increasing global competition makes
continuous improvement strategically important to all kinds of organizations, whether
large or small, manufacturing or service. Continuous improvement links higher quality
to lower costs and higher market share (Deming, 1986).
There are a number of different perspectives in the literature on the management of
quality in organization (Crosby, 1979; Deming, 1986; Juran, 1986). Most commentators,
though, explicitly recognize the role of shop floor workers as crucial to organizational
success, including in more traditional manufacturing contexts. It is front line workers,
after all, who know best how to improve the quality of work processes. To the
extent that organizational success depends on the contribution of individual
employees working on the front line, management endeavours to promote
employees’ continuous improvement activities have been given special attention
(Parasuraman et al., 1985).
Although production-oriented or “hard” methods (such as TQM in the 1990s and
more recently “Six Sigma”) gained popularity among managers (Steel and Jennings,
Journal of Managerial Psychology
The author wishes to thank Riccardo Peccei, the special issue editors, Reinhard Bachmann, Vol. 19 No. 6, 2004
Guido Möllering, Soo Hee Lee, and two anonymous reviewers for their comments on earlier pp. 623-639
q Emerald Group Publishing Limited
drafts of this paper. He also thanks Yuhyun Hwang and Youngsoo Lim for their help on data 0268-3946
collection. DOI 10.1108/02683940410551525
JMP 1992), more human resource-based or “soft” management methods have also proved to
19,6 have profound effects on continuous improvement activities among front line
employees (Peccei and Rosenthal, 2001). Whereas the former usually involve “direct”
instructions on action plans of what to do, the “soft” version involves a more “subtle”
urge. Its primary aim is to “reform” the psychological and/or attitudinal states of
employees in order to achieve the goal of continuous improvement efforts by
624 employees.
The candidates for the “soft” determinants of continuous improvement suggested in
the present study are “trust” and “organizational identification”. Based on the
theoretical and empirical literature in the area, hypotheses are introduced and tested
using data collected from employees working in a Korean-US joint venture high-tech
manufacturing company based in Korea.

Theoretical framework and hypotheses

Continuous improvement is a consciously proactive form of employee activity.
Frequently described as a key element of TQM, continuous improvement involves the
recognition of and perceived responsibility for quality and participation in activities
aimed at improving quality. Shop floor workers’ efforts to improve quality are often
seen as critical in enhancing companies’ competitiveness, as traditional priorities and
practices of mass production are being challenged by a new paradigm of “new wave
manufacturing” (Storey, 1994). Specifically, this new manufacturing paradigm
involves a move away from the traditional view that it is sufficient for shop floor
employees to restrict their effort to maximizing volume. It, instead, involves employees’
endorsement of key strategies such as increased flexibility, the minimization of
inventory control, preventive problem-solving, and other principles of modern
organizations (Parker et al., 1997). However, evidence suggests that employees often
resist engaging in quality improvement activities, as they see those behaviours as
outside the boundaries of their job (Morrison, 1997).
A critical question is whether employees embody a broader and more proactive
approach to their roles in which they feel responsible for work beyond their immediate
operational tasks. Organizational researchers have taken an interest in the recognition
of positive work contributions that go beyond employees’ prescribed roles, as they
hope to understand and explain the motivational basis of such work contributions
(Van Dyne et al., 1995). The social exchange framework provides a conceptual
underpinning for research on employees’ broader role definition or extra-role
contributions in their workplace. While economic exchange rests on a formal contract
that prescribes the exact contents and quantities to be exchanged, social exchange is
described as the individuals’ voluntary actions that are motivated by the returns they
are expected to bring (Blau, 1964).
Unlike the specific rewards or benefits involved in an economic exchange, the
benefits exchanged in a social exchange are indicative of mutual support and
investment in the relationship. In other words, social exchange is premised on a
long-term exchange of favours that is based on a diffuse obligation to reciprocate. The
discretionary nature of extra-role contributions of continuous improvement described
earlier makes trust a critical component in employee-employer social exchange
(Konovsky and Pugh, 1994). As noted by Eigenberger et al. (1990), employees’ positive
work attitudes and behaviours result from trust that the organization will fulfil its Trust and
reciprocal obligations of noticing and rewarding employee efforts made on its behalf. organizational
identification
Trust
The field of research concerning trust is broad and encompasses varied approaches,
which most commonly focus on trust as a psychological phenomenon (Clark and
Payne, 1997). Whilst psychologists conceptualize trust as a psychological event within 625
the individual, sociologists are more interested in the conceptualization of trust as a
property of collective units (Coleman, 1990; Lewis and Weigert, 1985). The
organizational literature suggests that the most useful approach is to view trust as
resulting from an individual’s perception of the characteristics or qualities of specific
others, groups, or systems to be trusted (Butler, 1991; Cook and Wall, 1980).
In their extensive review of the research on trust, Mayer et al. (1995) defined trust as
“the willingness of a party to be vulnerable to the actions of another party based on the
expectation that the other party will perform a particular action important to the
trustor irrespective of the ability to monitor or control that other party (p. 709)”. As a
psychological state, McAllister (1995) distinguishes cognition-based and affect-based
trust. Cognition-based trust is described as a rational evaluation of an individual’s
ability to carry out obligations and, therefore, reflects belief about that individual’s
reliability, dependability, and competency, whereas affect-based trust reflects an
emotional attachment that stems from care and concern that exist between individuals.
Factors affecting a trustor’s degree of trust towards a trustee include the ability,
benevolence, and integrity of the trustee (Mayer et al., 1995). Other researchers have
identified similar factors that are believed to be the basis of trust: Cook and Wall (1980),
intention and ability, Deutsch (1960), ability and intention, Good (1988), ability and
intention, Kee and Knox (1970) competence and motive and Lieberman (1981),
competence and motive. In summary, trust generally refers to the beliefs that people
maintain about the other party’s future behaviour. The more the party A believes that
party B will fulfil the latter’s commitments to the relationship, whether arising from
party B’s good intention or competence, the more party A will trust party B.
Although researchers tend to decompose the concept of trust into cognition-based
and affect-based trust, or competence-based and intention-based trust, it is sometimes
very difficult to disentangle one form of trust from another. The construct of trust the
present study focuses on is cognition-based, competence trust. More specifically,
following the broad definition of competence-based trust given by Cook and Wall
(1980), trust is defined as a trustor’s belief about trustee’s competency or ability to
carry out obligations.
Trust is generally believed to be associated with willing cooperation and with the
benefits resulting from that cooperation (Axelord, 1984), including interpersonal and
group solidarity (Blau, 1964), and facilitating social infrastructure (Williamson, 1975;
Zucker, 1986). More specifically, trust has been found to be an effective means to
improve communication and information sharing among group members (Zand, 1972),
between subordinates and superiors (O’Reilly III, 1978, O’Reilly III and Roberts, 1974)
and between organizations (Smith and Barclay, 2000). Trust between negotiators has
been found to reduce conflict (De Dreu et al., 1998), and trust within groups has been
found to reduce conflict in teams (Porter and Lilly, 1996). Trust has also been found to
facilitate resource exchange between units (Tsai and Ghoshal, 1998).
JMP For organizational citizenship behaviour and individual performance, McAllister
19,6 (1995) has found that trust in co-workers was positively related to citizenship
behaviour. Robinson (1996) has also observed trust in organizations to be positively
related to individuals’ citizenship behaviour, and Rich (1997) has found that trust in
manager had a positive effect on individuals’ sales performance. Similarly, trust in
managers (Davis et al., 2000) and in leaders (Dirks, 2000) has been found to be
626 positively related to group performance.
Research on the consequences of trust in organizations has, however, tended to
focus more on intention – than on competence-based trust. In other words, the majority
of empirical studies described earlier tend to define trust as the extent to which party A
believes that party B “intends” to fulfil its obligations. In line with the general
prediction from the existing literature that emphasizes the direct effects of
intention-based trust on positive workplace attitudes, higher levels of cooperative
behaviours, and superior levels of performance, one would expect that
competence-based trust should have similar effects. It is this specific focus on the
effects of competence-based trust that the present study wishes to contribute to this
wider debate about the consequences of trust in organizations. Specifically, central to
the present contribution is the idea that individuals who trust their employing
organization’s competence are likely to exert more discretionary efforts, namely,
continuous improvement activities. Hence the first hypothesis of the present study is as
follows:
H1. Employees’ trust in their organization’s competence will be positively related
to continuous improvement efforts among employees.

Organizational identification
Associated with the earlier views on trust is a further assumption that broader role
definitions and diffuse obligations will develop only if employees perceive themselves
as part of the organization. Organizational identification (OI) is defined as “the
perception of oneness with, or belongingness to the organization” (Ashforth and Mael,
1989, p. 22), or “the degree to which a member defines him or herself by the same
attributes that he or she believes define the organization” (Dutton et al., 1994, p. 239).
According to social identity theory, the self-concept of individuals is comprised of a
personal identity and a social identity (Tajfel and Turner, 1985). Individuals tend to
classify themselves into various social groups, such as gender, age cohort, nationality,
and organizational membership. Classification or categorization enables individuals to
order the social environment and locate themselves within it. Social identification is the
perception of belongingness to a group. Through social identification individuals
perceive themselves as psychologically intertwined with the fate of the group. OI is a
specific form of social identification in which individuals define themselves in terms of
their organizational membership. This refers to the merger of the self and the
organization.
OI is important because it has substantial consequences at both the individual and
the organizational level. The OI literature indicates that individuals who identify with
their employing organization tend to choose activities that are congruent with
organizational identity and values (Ashforth and Mael, 1989; Cheney, 1983). Research
has shown that OI is related to extra-role behaviours, cooperative behaviour,
and intention to stay with the employing organization (Abrams et al., 1998; Mael and Trust and
Ashforth, 1995; Wan-Huggins et al., 1998). organizational
Psychological engagement is a key antecedent to behavioural engagement. This is
especially true for discretionary behaviours. Individuals who feel oneness with their identification
organization are likely to define their work roles more broadly and to feel more
responsible for matters around the workplace, thus choosing to engage in activities
that benefit the organization. Those employees who identify with their organization 627
will be more willing to act cooperatively towards the organization and to invest their
time and energy in working to see the organization succeed. Therefore the second
hypothesis in the present study is as follows:
H2. Employees’ organizational identification will be positively related to
continuous improvement efforts among employees.
In addition to the direct and positive influence of OI on continuous improvement efforts
suggested earlier, OI is likely to play an important moderating role in the
trust-continuous improvement relationship. The key issue here is whether or not trust
is enough to bring about positive cooperative behaviours in the part of employees.
Some research suggests, for example, that trust, on its own, does not always have a
beneficial impact (Dirks and Ferrin, 2001), and may not, in any case, be sufficient for
cooperative behaviours (Hwang and Burgers, 1997). There may be a number of factors
that affect the trust-cooperative relationship. The core of interest here is OI.
Specifically, the central idea to be tested in this study is the extent to which the
trust-continuous improvement relationship actually varies depending on the level of OI
of employees.
It is plausible that individuals who perceive their organization’s goals and successes
as their own (high on OI) will see their relationship with the employer as a long-term,
relational nature. As a result, higher levels of trust in the organization are likely to lead
employees to feel a greater sense of obligation towards the organization and to
reciprocate in ways such as extra efforts or continuous improvement efforts in the
present study. On the other hand, for employees who do not see their values and goals
as congruent with those of the organization, trust in the organization may not
necessarily mean a greater sense of obligation towards their employer. For instance,
agency theory, the principal-agent research framework in particular, assumes that
conflict between principal and agent is inevitable hence individuals are motivated to
maximize their returns in an economics exchange situation (Eisenhardt, 1989). Given
the discretionary nature of continuous improvement efforts, the agency theory
perspective implies that individuals are likely to be motivated to limit their
contributions to “clearly defined” roles as long as individuals are not punished for not
putting in extra (or discretionary) efforts.
In summary, although trust is expected to have a positive effect on individuals’
cooperative, voluntary contributions to the organization, trust alone may not be
enough to induce employees’ discretionary efforts, namely continuous improvement
contributions in the present study. Individuals’ identification with the employing
organization may be an important condition for trust to have a positive effect on
continuous improvement efforts. Based on the above line of reasoning, the third
hypothesis is as follows:
JMP H3. Organizational identification will moderate the trust-continuous improvement
19,6 relationship.
The main study variables and hypothetical links between them are graphically shown
in Figure 1.

628 Methods
The study reported here is part of a larger research project looking at the introduction
and consolidation of an innovative and cooperative organizational culture. The
research was conducted in a Korean-US joint venture multinational organization, a
high-tech manufacturing company based in Korea. A series of interviews with a variety
of employees from different functional and hierarchical levels gave the author a broad
picture of the atmosphere widely shared by the members of the organization.
Following these interviews, a structured questionnaire was designed and distributed to
the shop floor workers of the organization. Four hundred and ninety questionnaires
were returned, which represented a response rate of 91 per cent. The results reported in
this study were therefore based on the survey responses from these 490 respondents.
The majority of respondents (86 per cent) were male. Nearly 90 per cent were in their 20
and early 30s, with an average tenure of about four years.

Measures
Trust. One of the most interesting observations to emerge from the initial interviews
carried out in the company was that the shop floor atmosphere was very vibrant. The
company was continuously achieving rapid growth and high profit. Although trade
unions were not recognized, employees openly acknowledged that they worked under
the best working conditions among similar skilled jobs in the industry. The physical
surroundings were clean and tidy, pay and bonuses were excellent, and social activities
between workers and managers were frequently organized and enjoyed high
participation. However, there existed widespread doubts among employees as well as
management as to whether the company could maintain its rates of growth and profit
in the future. Thus, while the company was still growing, the uncertainty about its
future market position was also a big concern.
It is in this particular context that employees’ trust in the organization’s continued
capacity to prosper and, therefore, to maintain its commitments in the future might
play a crucial role in determining their behaviours. In other words, the extent to which
employees believe that their employing organization will continuously prosper (i.e. the
level of competence-based trust) may greatly influence their decision to engage in

Figure 1.
Research model
proactive continuous improvement activities. The concept of competence-based trust Trust and
in the present study was measured using three items in the questionnaire (see organizational
Appendix for the items). Employees were asked to indicate the extent to which they
agreed or disagreed with each description on a five-point Likert scale ranging from identification
5 ¼ “strongly agree” to 1 ¼ “strongly disagree”. The Cronbach’s internal consistency
a for this three-item scale is 0.76. The three items used are as follows:
Organizational identification. OI in this study captures the extent to which 629
employees feel part of the company, feel that their individual goals are congruent with
the company’s, and feel proud of belonging to the company. Four items (see Appendix,
Table AI) that represent each aspect of the above were taken from Cook and Wall
(1980) and Mael and Ashforth (1992). Individuals were asked to rate on a five-point
Likert scale, the extent to which they agreed or disagreed with the statements, and the
overall OI score was calculated by taking the mean score of the four items. The
Cronbach’s internal consistency a for the scale is 0.82.
Continuous improvement. The dependent variable was measured with four items
(see Appendix, Table AI) adapted from Peccei and Rosenthal (1997). The same
five-point Likert type scale was used as for trust and OI. The Cronbach’s internal
consistency a score for the four-item scale is 0.77.

Data analysis
Before conducting the main analyses, factor analysis was performed on all the items,
tapping the independent and dependent variables included in the study. The three
items measuring trust in organization, four items measuring OI, and four items for the
continuous improvement efforts scale were all included in the analysis. Three
varimax-rotated factors emerged, and the three-factor solution explained 62.8 per cent
of the total variance. Each and every item loaded clearly on the predicted factor, with
factor loadings ranging from 0.68 to 0.83. The results suggest that all the three scales
used in the study measure the proposed constructs distinctively and properly
(see Appendix, Table AI).
Hierarchical multiple regression analysis was used to test the main research
hypotheses. Several relevant background variables were included in the main
regression analyses for control purposes (in step 1). The background variables
included are age group, gender, job grade, production division that individual
employees work for and the tenure with the company.
The main effect hypothesis, the impact of trust in the organization and OI on
continuous improvement efforts, was then tested. This was based on change in the
proportion of explained variance in continuous improvement once the trust and OI
variables were included in the regression equation (step 2). Finally, the interaction
effect of trust in the organization and OI on continuous improvement was tested. This
was done by adding the interaction term of “trust X organizational identification” to
the equation in the final step (step 3). Both trust and OI were mean-centred before they
were multiplied for an interaction term.

Results
The means, standard deviations, and reliabilities of the scales, along with the
inter-correlations between the main study variables are reported in Table I. All three
main variables used in the study show high scale reliabilities, ranging from 0.77 to
JMP 0.82. The mean score for continuous improvement was 3.42 on a five-point scale. It is
19,6 not a “very” high score, but reasonable, leading to the conclusions that shop floor
workers in the company seem to engage in a moderate level of continuous
improvement activity. In terms of the independent variables, employees in the
company displayed a rather low level of trust towards their employing organization
ðmean ¼ 2:96Þ: This is slightly lower than the mid-point on the five-point scale. On the
630 other hand, the OI score for the sample was relatively high ðmean ¼ 3:43Þ:
Table II shows the results of the main hierarchical regression analyses. The
standardized regression coefficient bs for each antecedent variable in each step are
shown. H1, which posits a positive relationship between trust in the organization and
continuous improvement, was not supported. The results show that trust in the
organization had no direct significant impact on employees’ continuous improvement
efforts. The second hypothesis, stating a positive relationship between OI and
continuous improvement, was supported. OI had a strong and significant effect on
continuous improvement ðb ¼ 0:39; p , 0:001Þ: This significant impact remained
unchanged in the final step when the interaction term was added ðb ¼ 0:39;
p , 0:001Þ: H3, positing a moderating effect of OI on the trust-continuous
improvement relationship, was supported. The interaction term (trust X OI) that
was added in step 3 exhibited a positive and significant impact on continuous

Variables Mean SD 1 2 3

Table I. Trust 2.96 0.77 (0.75) – –

Means, standard OI 3.43 0.68 0.13** (0.80) –
deviations, reliabilities, Continuous improvement 3.42 0.58 0.01 0.43** (0.76)
and correlations among Notes: N ¼ 564; **p , 0.01. The main diagonal contains Cronbach’s internal consistency reliability
the study variables estimates

Dependent variable
Continuous improvement
Independent variable Step 1 Step 2 Step 3

Step 1
Age 0.03 0.01 0.04
Sex 2 0.26*** 2 0.20*** 2 0.19***
Tenure 0.12** 0.13** 0.12**
Grade 0.10 0.08 0.06
Division 0.07 0.03 0.03
Step 2
Trust – 2 0.04 2 0.05
OI – 0.39*** 0.39***
Step 3
Table II. Trust X OI – – 0.17***
Hierarchical regression DR 2 0.10*** 0.14*** 0.03***
analyses of continuous Adj. R 2 0.09*** 0.23*** 0.26***
improvement on trust (N) (490) (490) (490)
and OI Notes: **p , 0.01; ***p , 0.001; figures in the table are standardized beta coefficients
improvement ðb ¼ 0:17; p , 0:001Þ: This means that the nature of the Trust and
trust-continuous improvement relationship changes depending on the level of OI. organizational
In order to examine the precise nature of the interaction effect indicates a graphical
representation is shown in Figure 2. This was created by first dividing the entire identification
sample into three equal-sized groups according to the low- (the scores ranging from 1.0
to 2.9), medium- (the scores from 3.0 to 3.74), and high-OI scores (3.75-5.0). Next the
graphs representing the relationship between trust in organization and continuous 631
improvement were drawn separately for each group.
For the group of employees whose OI scores are high, the relationship between trust
and continuous improvement was positive, as predicted. This means that a higher level
of employees’ trust is related to more engagement in continuous improvement
activities. On the other hand, the relationship was the opposite for the low OI group.
For employees whose identification with the company was low, the relationship
between trust and continuous improvement was negative, meaning higher trust with
less engagement in continuous improvement efforts. For employees with a medium
level of OI, there seems to be no relationship between trust in organization and
continuous improvement efforts.
In summary, the positive and direct impact of trust on continuous improvement was
not observed in the present study. The impact of OI on continuous improvement was
found to be strong and positive. The results also show support for the moderating role
of OI in the trust-continuous improvement relationship. Specifically, a positive
trust-continuous improvement relationship was observed only when employees’ OI
was also high.

Discussion
The aim of this research was to investigate the role trust and OI in continuous
improvement efforts among shop floor workers in a high-tech manufacturing context.
It has been suggested that employees’ continuous improvement activities in the
manufacturing context are crucial to the organization, as it is the each individual
employee who knows best how to improve the quality of production and work
procedure. Organizational effectiveness in such cases is hence greatly dependent upon
individual employees’ voluntary contribution, namely, continuous improvement
efforts, in the present study.

Figure 2.
Moderating effect of
organizational
identification on
trust-continuous
improvement relationship
JMP One of the contributions of the present study involves looking at the trust construct as
19,6 “competence-based trust”. Although the concept of trust is believed to consist of at
least two components, intention-based and competence-based trust, research on the
consequences of trust in organizations has tended to focus on intention-based trust.
The present study wishes to contribute to the wider debate about the consequences of
trust in organizations by focusing on the effects of competence-based trust. In line with
632 the general prediction from the existing trust literature, the present study hypothesized
a positive relationship between employees’ trust in organization’s competence and
their continuous improvement efforts.
Another contribution of the present study is to look at the conditions for trust
to have positive effect on continuous improvement relationship. As some research
suggests, trust may not be sufficient to bring about positive cooperative
behaviours, hence the present study investigated the moderating role of OI in the
trust-continuous improvement relationship. OI was also hypothesized to have a
positive and direct impact on continuous improvement efforts. This is also in line
with the general implications from the latest OI literature, that individuals who
strongly identify with their employing organization will exert more effort on behalf
of the target organization.
Identification with the employing organization has a significant influence on the
continuous improvement form of voluntary cooperative efforts among shop floor
employees in the present study. In other words, this voluntary and cooperative
contribution to the organization is engendered to some extent by a sense of shared fate
with the employing organization. The more individuals link their personal growth and
development with the growth of their employing organization, or the more individuals
feel part of their employing organization, the more willing they are to exert extra effort,
which by implication will lead to the success of the company.
Whilst OI accounted for a significant amount of variance in continuous
improvement efforts, trust in organization did not, indicating that the
trust-continuous improvement relationship may not be so straightforward. Trust in
organization’s competence alone did not explain a significant amount of variance in
continuous improvement. It was, however, positively related with continuous
improvement efforts when the level of OI was high. For individuals whose
identification with the company is weaker, trust tends to imply lower levels of
continuous improvement efforts. It may well be that, as suggested earlier in the
theoretical part, the strength of OI indicates the nature of the employment relationship
that each individual is in.
The individuals with high OI may perceive the nature of their relationship with
their employer as “long-term” and/or “relational”, whilst the individuals with low OI
may define the employment relationship as “short-term” and/or “transactional”. As
psychological contract literature suggests (Rousseau, 1995), for the individuals who
define the employment relationship as “relational” or “long-term”, a higher level of
trust in organization is more likely to lead “more sense of obligation” towards the
organization, hence such individuals are more likely to exert extra efforts. On the other
hand, for the individuals who perceive themselves to be in a more “transactional” or
“short-term” relationship with their employing organization, trusting their employer
may well lead to reduced level of extra efforts at work. This is because the extra efforts
tapped by continuous improvement activities in this study are not “formally” specified
tasks, hence the employees who trust their employer’s competence may well think that Trust and
the company will do fine without “my” extra contribution, therefore they may well organizational
decide to enjoy a “free” ride.
A number of theoretical and practical implications emerge from the present study. identification
At a theoretical level, the study contributes to the growing literature on trust by
incorporating OI in the analysis. As noted by Dirks and Ferrin (2001), for instance, the
effects of trust on various workplace behaviours and performance outcomes in the 633
literature are relatively weak and inconsistent. It may be due to the fact that the earlier
research did not look at the “conditions” or “moderators” for trust to have a positive
effect on positive cooperative behaviours. In other words, trust may be a necessary, but
not a sufficient, condition for cooperative behaviour. By extending the analysis to
potential moderator variables, including OI, the role of trust in a variety of outcomes in
organizational settings will no doubt be better understood.
This study also contributes to the fast-growing literature on OI. Ever since Ashforth
and Mael (1989) explicitly re-addressed the importance of the identification issue in
organization literature, endeavours have been made to better understand the concept in
the literature, but empirical studies are still lacking. The present study introduced OI
as an important antecedent of continuous improvement efforts among front line
workers in a high-tech manufacturing context, and also proposed the OI variable as a
moderator for the relationship between trust and continuous improvement efforts. This
is to say that the present study provides empirical support for the “expanded” role of
OI in organizational research.

Managerial implications
The main practical implication of this study is that human resource management
systems can significantly affect shop floor workers’ continuous improvement efforts.
As many researchers and managers have suspected, the results strongly suggest that
employees’ OI can significantly help to enhance continuous improvement activities.
Given the importance of continuous improvement efforts in the manufacturing context,
where organizations are dependent upon individual workers’ voluntary contributions
for innovation, management should endeavour to promote individual employees’
identification with the organization. As the core elements of OI consist of a sense of
“common fate” and a close link between company’s goals and individuals’ own goals,
managers should clearly show the employees that organizational success will be
directly linked to individual benefits. Among a number of promising ways to signal the
link, workplace justice stands out. Organizational justice, including distributive,
procedural, and interactional justice, is expected to be the key factor (Brockner and
Siegel, 1996). This implies that any benefits of organizational success will be
distributed back to each and every individual “fairly”.
Organizations may well consider ways to improve distinctiveness and prestige of
the company. According to social identity theory (Tajfel and Turner, 1985) and self
categorization theory (Turner, 1985), individuals are more likely to classify themselves
into social categories, such as organizational membership, when the social categories
are perceived to be distinctive. Distinctiveness serves to differentiate the in-group from
out-group and provide a unique identity. By highlighting the “distinctiveness” of the
organization from others, employees are more likely to identify themselves with the
JMP organization. Managerial endeavours to promote a strong organizational culture could
19,6 be one way to improve employees’ OI.
It is also reasonable to suggest that the organizational efforts aimed at enhancing
employee OI should not, in multinational organizational setting, overly highlight or
emphasize the values and goals of the local culture to which employees belong. Social
identity theory also suggests that “them versus us” attitudes will lead to in-group
634 favouritism and negative out-group bias. The multinational joint venture context may
well be subject to a danger of unknowingly engendering in-group and out-group
division along the local-versus-partner culture division. This is particularly alarming
for partner companies whose broader national cultural context is more collectivistic.
Some of the latest research evidence indicates that, more so than in individualist
cultures, collectivist cultures encourage individuals to trust in-groups more than
out-groups (Huff and Kelley, 2003). Therefore, it may be that once in-group and
out-group division is made between local and partner organizations, dysfunctional
competition between the two partner companies may occur, and therefore cooperation
between the individuals from the two partner companies may well be damaged.
The implications related to trust must also be discussed. Although the results from
the present sample did not support the hypothesized main effect of trust on continuous
improvement efforts, one should not discard the importance of trust in positive
work-related outcomes, including continuous improvement efforts as studied here. It
has been suggested that trust is likely to have a direct impact on weak situations where
the system is loosely defined, only a contingent impact on midrange situations, and no
impact on strong (or highly structured) situations (Dirks and Ferrin, 2001). The main
implications are therefore that when trust is high, managers can make the situation
very weak, for instance by reducing the level of monitoring, so that outcomes are
determined by trust. On the other hand, when trust is low, managers can benefit by
creating a highly structured environment so that trust will not cause negative
outcomes. It is worth noting that the organizational context at which the study was
conducted was going through rapid expansion in a very short period of time, leading to
a relatively high degree of uncertainty and a shared sense of ambiguity among the
employees being observed. In other words, the organizational context at the time of
study was likely to reduce employees’ trust in the organization. Consequently, for this
type of particular organizational setting, managers should try to create a highly
structured environment, for instance by introducing strong and unambiguous cues,
including clear instructions and tight supervision, thereby preventing the low level of
trust causing any negative work-related outcomes.

Limitations of the study and future research direction

For a number of methodological reasons, one should be cautious in stating the
implications of the present results. First, although the sample size is large, it is based
on a single organizational unit. The interpretation of the results, as well as their
generalizability to other samples, may be limited. Second, because the study relied on a
self-report measurement strategy, spuriousness is a potential problem. Third, any
causal implications of this study should be interpreted cautiously since the data
reported in the study are cross-sectional in nature. Finally, the trust measure used in
this study is not comprehensive. It may be the case that a more comprehensive
measure of trust, for instance by adding more items and/or by including
intention-based trust, could show a stronger effect on employees’ continuous Trust and
improvement efforts. organizational
A number of relevant directions for future research are worth noting. The first
concerns whether the findings from the present study can be replicated across a range identification
of organizational settings. Without doubt, studies sampling more diverse settings can
make a significant contribution to further research in this area. Second, the role of OI in
relation to trust and continuous improvement should be explored more fully. Can the 635
moderating role observed in the study be sustained in other settings? This would
contribute significantly to the OI literature where empirical studies are much to be
desired. Also, given the importance of OI observed in the study, the antecedents of OI
need to be systematically explored in future research.

Conclusions
Continuous improvement efforts of shop floor workers in manufacturing organizations
are indispensable for organizational success amidst ever increasing global competition.
Incremental improvement and innovation can translate into lower costs, higher
customer satisfaction, hence higher market share. Popular work process improvement
technologies such as “Six Sigma” have epitomized the management trend in recent
years. Although more directly process-oriented problem-solving techniques can deliver
fruitful returns, a “softer” version of managerial efforts should not be ignored. By
building and improving trusting culture, and by promoting stronger employee
identification, organizations could benefit equally or much more than from direct
quality improvement technologies. This will be particularly pronounced when
organizations are going through changes or facing crisis. Employees who feel that they
share common fate with their employing organization will contribute more in times of
uncertainty. Employees who work in trusting organizational climates will not
disappoint the organization in times of trouble. Creating a trusting climate and
promoting strong OI among employees may require significant efforts and may take
long, but without a doubt it will prove to give companies a clear advantage.

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Appendix Trust and
organizational
Factor 1 Factor 2 Factor 3 identification
OI
This company’s goals are my own goals 0.81 – –
This company’s growth is directly connected to my own growth and 639
development 0.80 – –
I feel myself to be part of this company 0.75 – –
I am proud to be able to work for this company 0.72 – –
Continuous improvement
I voluntarily search for any work-related new information and
knowledge which may help improve the quality of work I do – 0.79 –
I make it routine to make suggestions about how to improve the work
procedure – 0.78 –
I am always monitoring if there is any room for improvement in the
work I do – 0.75 –
I am always working to continuously improve the quality of product
and work process – 0.68 –
Trust
I believe that this company has enough resources and capacity to
deliver what they promise to us – – 0.83
I believe that this company is technologically competent to
successfully achieve the goals and to realize all the promises they
made to us – – 0.82
I am confident that this company will be continuously competitive in
the market in future – – 0.78
Eigen values 2.54 2.37 2.02
Per cent variance explained 23.0 21.5 18.3
Total per cent variance explained ¼ 62.8 per cent Table AI.
KMO measure of sampling adequacy ¼ 0.78 Factor analysis of the
scale items with Varimax
Notes: N ¼ 490; factor loadings smaller than 0.40 were not reported rotation

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