INTERPERSONAL TRUST AND RELATIONAL SWITCHING COSTS: EVIDENCE FROM OIL-FIRM HOST COMMUNITY RELATIONS IN NIGERIA

Abstract

This study aims to examine how interpersonal trust generates relational switching costs that sustain relationships between oil firms and host communities in Nigeria. Two theories (Relational Exchange theory and Social Capital theory) used in the development of this study conceptualize trust as relational assets, inducing the belief that disengagement during conflicts or dissatisfaction would result in switching costs. The study is a qualitative study involving a purposive sampling method. Semi-structured interviews were conducted with 20 respondents of the study (middle-level managers from oil companies and host community leaders in Rivers State Nigeria) and data analyzed using a thematic approach. Two themes emerged regarding trust-based switching costs; loss of privileges/special advantages and loss of beneficial/valued relationships. This enables relationships from deteriorating amidst problems to maintain continuity. The study also found that interpersonal trust between persons serves as an informal mechanism for relationship management and serves to reduce instability and enables relationship continuity in areas that are conflict-prone. The implications of this research are that the switching costs associated with relationships, besides economic costs, have social and emotional dimension that discourages a termination of relationships by the community.