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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

By
Deepak Malhotra
Edited by
Jared D. Harris ,
Brian Moriarty  and
Andrew C. Wicks
Deepak Malhotra
Affiliation:
Harvard Business School
Jared D. Harris
Affiliation:
University of Virginia
Brian Moriarty
Affiliation:
University of Virginia
Andrew C. Wicks
Affiliation:
University of Virginia
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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 - 85
Publisher: Cambridge University Press
Print publication year: 2014

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