
Trust, Performance and the Dark Side of Business Partnerships
We often think of trust as the key to strong business partnerships—but what happens when trust goes too far? In this episode, we sit down with Dominika Latusek, a leading researcher from the Polish Kozminksi University (Warsaw) on trust in business, to explore how companies build, maintain, and sometimes over-rely on trust in buyer-supplier relationships.
🔹 When is trust helpful, and when can it become a trap?
🔹 Why do some businesses stay in partnerships even when performance declines?
🔹 How can companies balance trust with reality checks and performance evaluations?
Drawing from her research and real-world examples, Latusek explains why trust is not always the magic solution and how companies can avoid common mistakes that come with over-trusting a business partner.
Over-embeddedness and path dependency explained
Over-embeddedness and path dependency refer to potential downsides of trust in inter-firm relationships.
- Over-embeddedness:
This occurs when business relationships become too closely tied to personal trust and social connections, to the point where they may hinder objective decision-making, innovation, or adaptability. When firms rely too much on existing trusted partners, they may overlook better opportunities, tolerate inefficiencies, or fail to respond to market changes effectively. - Path dependency:
This concept refers to how past decisions or established relationships create a self-reinforcing pattern, making it difficult to change course even when a better option arises. In the context of trust, it suggests that firms may continue relying on trusted partners out of habit rather than evaluating whether those relationships are still beneficial. This can lead to stagnation, inefficiency, or even vulnerability if market conditions shift.
Both of these ideas caution against blind reliance on trust—while trust is crucial, it needs to be balanced with performance evaluations, market awareness, and adaptability to ensure healthy and effective business relationships.