The trust is built based on the other party’s professional qualifications or proven or certified technical capability or experience is known as…?

The trust is built based on the other party’s professional qualifications or proven or certified technical capability or experience is known as…?
A . Goodwill trust
B . Contractual trust
C . Irrevocable Trust
D . Competence trust

View Answer

Answer: D

Explanation:

Trust is the expectation that the other party will behave in a predictable and mutually acceptable way. In inter-firm relationships, the presence and absence of trust can affect the level of cost in a relationship. The existence of trust is taught to lower the transaction cost in a relationship. Dr. Mari Sako identified taxonomy of 3 types of trust in commercial relationship, which is very useful from the perspective of procurement.

Contractual trust: Trust based on the contract with TOP. This is potentially the weakest source of trust if there is nothing else to base the trust on, but it is the quickest to establish.

Competence trust: Trust based on TOP’s professional qualifications or proven or certified technical capability or experience.

Goodwill trust: Trust based on knowing TOP has your interest at heart and will not behave opportunistically. This is potentially the strongest type of trust, but it takes the longest time to build.