Lost that lovin' feeling: The erosion of trust between small, high-distance partners

We investigate the role of high distance in trust erosion between small partners. High distance is known to hinder the formation of trust between potential partners, but its role in trust erosion in established partnerships is less understood by international business scholars. Through a qualitative longitudinal study, we extend current theory of how high distance effects the trust dynamics between cross-border partners. Specifically, we unearth three inter-related mechanisms that together explain how and why trust can erode due to high distance. We show that before a partnership is formed, high distance can lead partners to erroneously attribute cues to a potential partner’s high quality, leading to over-expectations of partner performance. Once the partnership is operational, high distance hinders actors’ ability to understand situational factors associated with disappointing outcomes, and so they are attributed to failings of the partner. At the same time, distance-related challenges of bounded reliability render partners reluctant to discuss partnership outcomes. This can result in a vicious cycle of inertia as partners strive to protect goodwill while abandoning efforts to produce partnership outcome because of doubts of the other’s quality. Thus, our theoretical model illustrates the limitations of trust and explains how, paradoxically, high distance can facilitate both trust formation and trust erosion.