Interpersonal trust, opportunism and business performance: an empirical evidence of gem dealers in Sri Lanka

This study primarily aims at investigating the effect of interpersonal-trust on the business performance of gem dealers in Sri Lanka. Empirical results were obtained using survey data gathered from 100 registered gem dealers in Ratnapura district in Sri Lanka. Partial least square-structural equation model was used to analyse the collected data. The results demonstrate that interpersonal trust, i.e., credibility, benevolence, and the ability among gem dealers have a significant impact on mitigating opportunism, thus on business improvements under all hypothetical relationships. Many previous studies have clearly pointed out the negative relationship between interpersonal trust and opportunism and a positive association between interpersonal trust and business performance. This study concludes that interpersonal trust has major impacts on the well-being of this industry highlighting it as the main characteristic among gem dealers. Thus, interpersonal trust lowers their transaction costs in exchanges and increases the profit levels of gem dealers in Sri Lanka.