The Role of Trust in the Strategic Management Process: A Case Study of Finnish Grocery Retail Company Kesko Ltd

Abstract

Previous strategy management studies have devoted scant attention to the role of trust in the strategic management process (SMP). The purpose of this study is to investigate trust in the management of a grocery trade business. Prior literature was reviewed to deepen the current understanding of trust in the SMP, and then explored through a case study on a Finnish grocery retail company, Kesko Ltd. The study was conducted by employing a qualitative research methodology and is based on an interview with the president of Kesko, who is intensively involved in the SMP. This study stresses the consideration of trust development in strategy work. The findings indicate that trust considerations in the strategic choices of the top management team can provide efficiency, innovation, and engagement in strategy implementation. Research Questions In this article, we ask how trust develops during three phases of the strategy process: strategy formulation, strategic choices, and strategy implementation. Links to Theory Our analysis of trust development focuses on the five most operationalized dimensions of trust: (a) ability and competence, (b) benevolence, (c) integrity, (d) affective-based trust, and (e) cognitive-based trust (McEvily & Tortoriello, 2011). Strategic management is separated into three interlinked phases: strategic formulation, strategic choice making, and strategy implementation (Johnson et al., 2008). Phenomenon Studied The case focuses on trust development in the strategy management process. Case Context The context of the case is a participatory strategic management process in a large Finnish grocery retail chain in a highly competitive and concentrated market. The role of trust development was studied in the case company between the K-retailers, who are independent entrepreneurs, and Kesko management staff and actors responsible for management and constant development of the business model. Findings This study shows how trust emerged as a result of participatory practices and dialogue between actors from different levels of organization in the strategy formulation phase. Increased understanding and contribution to strategy empowered top management to make new and brave strategic choices. This study illustrates how consistency between the strategic choices and actions for implementation enhanced trust among the organizational actors, who felt a sense of enhanced engagement in the implementation of the new strategy in their everyday work. Discussions This study highlights the role of trust in strategy formulation, strategic choices, and strategy implementation. It contributes to the understanding of trust in the SMP, which has not been widely researched in previous literature. Based on our results, we suggest that trust between parties is earned and evolves at each of the three stages of the SMP.