Demographic homophily, communication and trust in intra-organizational business relationships

Purpose: The purpose of this study is to understand how employees of an organization build and maintain successful business relationships by analyzing major antecedents of relationship quality and relationship commitment. Design/methodology/approach: In this study, the authors develop a conceptual framework and formulate hypotheses regarding the relationships between demographic homophily, interpersonal communication, trust and dependent variables of perceived relationship quality and relationship commitment. This paper tests hypotheses presented in this study with the help of a structural equation model, based on a data sample from South Korea. Findings: Unlike common thinking, demographic homophily does not directly increase the perceived relationship quality. The authors find a significant direct effect of interpersonal communication on relationship commitment but no effect of commitment on perceived relationship quality. Both seem to play independent roles but are positively influenced through the emergence of trust. Research limitations/implications: By applying demographic homophily and interpersonal communication as antecedents and trust as mediator and main driver, the authors research effects on perceived intra-organizational relationship commitment and perceived relationship quality. In detail, the authors confirm the hypothesized centrality of trust in intra-organizational relationships between demographic homophily, interpersonal communication and dependent variables of perceived relationship quality and relationship commitment. Nevertheless, the authors surprisingly find neither significant evidence that demographic homophily increases the perceived quality of a relationship, nor does it lead to higher communication intensity directly, even in an environment (i.e. Korea), where it would be expected. Practical implications: Based on the findings of this study, there are several practical implications. Understanding the interpersonal relationship characteristics in an intra-organizational setting enables managers to optimize organizational efficiency and effectiveness. Intra-organizational relationships between employees’ are highly dependent on mutual trust as an indicator for relationship quality and relationship commitment. Organizations can also benefit from the understanding of the mechanisms of demographic homophily and interpersonal communication for the establishment of interpersonal trust as well. Originality/value: Research about the effect of demographic homophily and interpersonal communication and the central role of trust in an intra-organizational approach to business relationships on perceived relationship quality and relationship commitment is scarce. The mutual testing of the effects and interaction of established constructs like demographic homophily, interpersonal communication and trust on perceived relationship quality and commitment constitutes the main contribution of this study to the literature on management and business relationships. The insights of this study about interpersonal bonding help companies to establish long-term business relationships.