Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- Notes on contributors
- Preface: discovering new territory in public trust in business
- Acknowledgments
- 1 Public trust in business: what’s the problem and why does it matter?
- Part I Trusting the institution of business
- 2 The economic crisis of 2008, trust in government, and generalized trust
- 3 Too big to trust? Managing stakeholder trust in business in the post-bail-out economy
- 4 At the crossroads of trust and distrust: skepticism and ambivalence toward business
- 5 Public trust in business and its determinants
- 6 The role of public, relational, and organizational trust in economic affairs
- Part II Public trust and business organizations
- Index
- References
3 - Too big to trust? Managing stakeholder trust in business in the post-bail-out economy
Published online by Cambridge University Press: 05 July 2014
Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- Notes on contributors
- Preface: discovering new territory in public trust in business
- Acknowledgments
- 1 Public trust in business: what’s the problem and why does it matter?
- Part I Trusting the institution of business
- 2 The economic crisis of 2008, trust in government, and generalized trust
- 3 Too big to trust? Managing stakeholder trust in business in the post-bail-out economy
- 4 At the crossroads of trust and distrust: skepticism and ambivalence toward business
- 5 Public trust in business and its determinants
- 6 The role of public, relational, and organizational trust in economic affairs
- Part II Public trust and business organizations
- Index
- References
Summary
EXECUTIVE SUMMARY
the situation
This chapter considers the aftermath of the financial crisis of 2008, and specifically the subsequent “bail-out” of the large financial institutions by the American government, from the perspective of trust in the post-bail-out economy. The author considers the impacts of both the compartmentalization of action within companies, and the increased complexity of interaction within business, on stakeholder trust in organizations.
key questions
To what extent does compartmentalization of action within companies inhibit trustworthy behavior on the part of organizations? To what extent does the complexity of interactions in business inhibit the ability of stakeholders to make accurate judgments of organizational trustworthiness? What is distrust in business and how is the nature of distrust evolving? Is stakeholder trust today more difficult to build and sustain than in response to previous crises?
new knowledge
Some of the operating assumptions made in most models of stakeholder trust may no longer hold. For example:
Relevant organizational actors, and associated behaviors, are no longer easily identified by the stakeholder.
The relevant trust dimension implicated in an organization’s behavior is no longer easy to identify.
Who an organizational decision will impact is no longer well understood.
The link between organizational action and organizational impact is no longer straightforward.
- Type
- Chapter
- Information
- Public Trust in Business , pp. 51 - 85Publisher: Cambridge University PressPrint publication year: 2014
References
and (2009), ‘Governance, incentives, and fair value accounting overview.’ In and (eds.), Restoring Financial Stability: How to Repair a Failed System. Hoboken, NJ: Wiley.CrossRefGoogle Scholar
and (2004), ‘The social psychology of ordinary unethical behavior.’ Social Justice Research, 17(2), 111–115CrossRefGoogle Scholar
and (2009), ‘In favor of clear thinking: incorporating moral rules into a wise cost–benefit analysis.’ Perspectives on Psychological Science, 5, 209.CrossRefGoogle Scholar
and (2003), ‘Perceived trustworthiness within the organization: the moderating impact of communication frequency on trustor and trustee effects.’ Organization Science, 14(1) 32–44.CrossRefGoogle Scholar
, , and (2006), ‘The antecedents and performance implications of cooperative exchange norms.’ Organization Science, 17(6), 724–740.CrossRefGoogle Scholar
(2009), ‘Financial reform to address systemic risk.’ Address to the Council on Foreign Relations, Washington DC, March 20.
and (1986), ‘Choice behavior in social dilemmas: effects of social identity, group size, and decision framing.’ Journal of Personality and Social Psychology, 50, 543–549.CrossRefGoogle Scholar
, , , and (2009), ‘The missing link between corporate and social responsibility and consumer trust: the case of fair trade products.’ Journal of Business Ethics, 84(1), 1–15.CrossRefGoogle Scholar
and (2008), ‘What’s in a name: anonymity and social distance in dictator and ultimatum games.’ Journal of Economic Behavior and Organization, 68(1), 29–35.CrossRefGoogle Scholar
, , and (2005), ‘Bounded ethicality as a psychological barrier to recognizing conflicts of interest.’ In , , , and (eds.), Conflicts of Interest: Challenges and Solutions in Business, Law, Medicine, and Public Policy. New York: Cambridge University Press.Google Scholar
and (2009), ‘The role of the Federal Reserve.’ In and (eds.), Restoring Financial Stability: How to Repair a Failed System. Hoboken, NJ: Wiley.Google Scholar
and (1995), ‘Measuring trust between organizational boundary role persons.’ Organizational Behavior and Human Decision Processes, 64(2), 151–170.CrossRefGoogle Scholar
and (1998), ‘Between trust and control: developing confidence in partner cooperation in alliances.’ Academy of Management Review, 23, 491–512.CrossRefGoogle Scholar
and (2003), ‘The role of trustworthiness in reducing transaction costs and improving performance: empirical evidence from the United States, Japan, and Korea.’ Organization Science, 14(1), 57–68.CrossRefGoogle Scholar
(2009a), Edelman Trust Barometer (available at: ).
(2009b), Special Midyear Trust Survey (available at: ).
and 2009. ‘Hoping for A to Z while rewarding only A: complex organizations and multiple goals.’ Organization Science, 20 (1), 4–21.CrossRefGoogle Scholar
(2004), ‘Business ethics and customer stakeholders.’ Academy of Management Executive, 18(2), 126–129.Google Scholar
and (2003), ‘The use of rewards to increase and decrease trust: Mediating processes and differential effects.’ Organization Science, 14(1), 18–31.CrossRefGoogle Scholar
(1970), ‘The social responsibility of business is to increase its profits.’ New York Times, September 13.
and (2009), ‘Trust repair after an organization-level failure.’ Academy of Management Review, 34(1), 127–145.CrossRefGoogle Scholar
(2007), ‘Stakeholder engagement: beyond the myth of corporate responsibility.’ Journal of Business Ethics, 74(4), 315–327.CrossRefGoogle Scholar
(2004), ‘Organizational trustworthiness: findings from the population of organizational ethnographies.’ Organization Science, 15(4), 432–445.CrossRefGoogle Scholar
and (2003), ‘Levels of organizational trust in individualist versus collectivist societies: a seven-nation study.’ Organization Science 14(1) 81–90.CrossRefGoogle Scholar
and (1998), ‘The nature, antecedents, and consequences of joint venture trust.’ Journal of International Management, 1, 1–20.CrossRefGoogle Scholar
and (2010), 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown. New York: Pantheon Books.Google Scholar
(1995), ‘Instrumental stakeholder theory: a synthesis of ethics and economics.’ Academy of Management Review, 20(2), 404–437.CrossRefGoogle Scholar
, , , and (2006), ‘When more blame is better than less: the implications of internal vs. external attributions for the repair of trust after a competence- vs. integrity-based trust violation.’ Organizational Behavior and Human Decision Processes, 99, 49–65.CrossRefGoogle Scholar
and (1996), ‘Developing and maintaining trust in work relationships.’ In and (eds.), Trust in Organizations: Frontiers of Theory and Research. Thousand Oaks, CA: Sage, 114–139.CrossRefGoogle Scholar
(2009), ‘Regulatory reform in the wake of the financial crisis of 2007–2008.’ Journal of Financial Economic Policy, 1(1), 4–43.CrossRefGoogle Scholar
, , and (1995), ‘An integrative model of organizational trust.’ Academy of Management Review, 20(3), 709–734.CrossRefGoogle Scholar
, , and (2001), ‘Bounded personal ethics and the tap dance of real estate agency.’ In , , and (eds.), Advances in Qualitative Organizational Research, 3: 1–40. New York: Elsevier/JAI.Google Scholar
(1996), ‘Trust, opportunism, and governance: a process and control model.’ Organizational Studies, 17(6), 985–1010.CrossRefGoogle Scholar
(1986), Complex organizations: A critical essay (3rd Edition). Newbery Award Records, Inc.: New York, NY.Google Scholar
(1990), ‘Dimensions of conflict frame: disputant interpretations of conflict.’ Journal of Applied Psychology, 75(2), 117–126.CrossRefGoogle Scholar
and (2010), ‘Antecedents of stakeholder trust: what matters to whom.’ Fordham University School of Business Research Paper No. 2010–016.CrossRef
(2010), Fault Lines: How Hidden Fractures Still Threaten the World Economy. Princeton, NJ: Princeton University Press.Google Scholar
and (2009), ‘Rating agencies: is regulation the answer?’ In and (eds.), Restoring Financial Stability: How to Repair a Failed System. Hoboken, NJ: Wiley.Google Scholar
, , , and (1998), ‘Not so different after all: a cross-discipline view of trust.’ Academy of Management Review, 23(3), 393–405.CrossRefGoogle Scholar
, , and (2009), ‘Enhanced regulation at large, complex financial institutions.’ In and (eds.), Restoring Financial Stability: How to Repair a Failed System. Hoboken, NJ: Wiley.Google Scholar
, , and (2007), ‘An integrative model of organizational trust: past, present, and future.’ Academy of Management Review, 32(2), 344–354.CrossRefGoogle Scholar
and (2005), ‘Reconceptualizing and managing reputation risk in the knowledge economy: toward reputable action.’ Organization Science, 16(3), 308–322.CrossRefGoogle Scholar
and (1998), ‘The grammars of trust: a model and general implications.’ Academy of Management Review, 23(3), 422–437.CrossRefGoogle Scholar
(2002), ‘Behavioral integrity: the perceived alignment between managers’ words and deeds as a research focus.’ Organization Science, 13(1), 18–35.CrossRefGoogle Scholar
(1995), ‘The science of complexity: an alternative perspective for strategic change processes.’ Strategic Management Journal, 16(6), 477–495.CrossRefGoogle Scholar
(2009), ‘Cognitive reactions to rare events: perceptions, uncertainty, and learning.’ Organization Science, 20(5), 925–937.CrossRefGoogle Scholar
(2009), ‘Poll: politicians trusted more than business leaders on economy.’ Retrieved from , February 24, 2009.
and (2004), Too Big to Fail: The Hazards of Bank Bailouts. Harrisonburg, VA: R. R. DonnelleyGoogle Scholar
and (1999), ‘Sanctioning systems, decision frames, and cooperation.’ Administrative Science Quarterly, 44(4), 684–707.CrossRefGoogle Scholar
and (2009), ‘The role of causal attribution dimensions in trust repair.’ Academy of Management Review, 34(1), 85–104.CrossRefGoogle Scholar
(2009), ‘Too big to fail? How about too big to exist?’ Harvard Business Review, 87(6), 16.Google Scholar
, , and (2005), ‘Normal acts of irrational trust: motivated attributions and the trust development process.’ Research in Organizational Behavior, 26, 75–101.CrossRefGoogle Scholar
, , , and (1998), ‘Managers as initiators of trust: an exchange relationship framework for understanding managerial trustworthy behavior.’ Academy of Management Review, 23(3), 513–531.CrossRefGoogle Scholar
2001. ‘In whom we trust: group membership as an affective context for trust development.’ Academy of Management Journal, 28(3), 377–396.Google Scholar
2007. ‘Shielding money clashes with elders’ free will.’ New York Times, December 24.
, , and (1998), ‘Does trust matter? Exploring the effects of interorganizational and interpersonal trust on performance.’ Organization Science, 9(2), 141–159.CrossRefGoogle Scholar