Abstract:
A hiring manager in the manufacturing sector grapples with much uncertainty when interviewing external candidates during candidate selection. This uncertainty arises due to the behavioural assumptions of transaction costs; firstly, the hiring manager’s cognitive ability is limited by bounded rationality and secondly, the hiring manager is uncertain whether the candidate acted opportunistically to securing the job. To reduce this behavioural uncertainty, hiring managers often incur significant transaction costs to vet candidates. However, trust can also reduce behavioural uncertainty. The objective of this quantitative research was to empirically examine, using transaction cost theory, whether the hiring manager’s perception of the candidate’s trustworthiness in an interview reduces behavioural uncertainty.
Prior transaction cost research has examined the inverse relationship between trust and behavioural uncertainty. However, there is a paucity of research on whether the antecedent of trust, trustworthiness, also reduces behavioural uncertainty. Moreover, fit is frequently used as a heuristic for candidate assessment, but little was known about whether fit mediates the relationship between trustworthiness and behavioural uncertainty. To test these relationships empirically, survey-based research was done with 318 manufacturing sector hiring managers. Results revealed that two dimensions of trustworthiness (ability and integrity) have a significant influence in reducing behavioural uncertainty. In contrast, the influence of the third dimension of trustworthiness (benevolence) on behavioural uncertainty was insignificant. Furthermore, the result revealed that fit significantly mediates the relationship between all three dimensions of trustworthiness and behavioural uncertainty.
These results contribute theoretically to transaction cost research by highlighting which dimensions of trustworthiness can significantly reduce behavioural uncertainty in a hiring transaction and demonstrates how fit can explain the relationship between trustworthiness and behavioural uncertainty. This research also has managerial implications; managers who align their hiring decisions to the dimensions of trustworthiness and fit can save time and money and reduce the influence of bias during candidate selection.
