EXECUTIVE SUMMARY
the situation
The global financial crisis has made one thing abundantly clear: trusting too much, particularly without having any reliable control mechanisms in place, is a very risky strategy. If we trust too much and ignore the possibility of opportunistic behavior, greed, and fraud, we are likely to be disappointed and bitterly regret it.
key questions
What can provide protection from the forces of untamed capitalism? Clearly, trust and distrust have their legitimate places in business relationships. The crucial question, however, is how these two mechanisms may fruitfully coexist.
new knowledge
With reference to the two-tiered governance systems of incorporated companies in Austria and Germany, it is shown how interpersonal trust can coexist with institutionalized distrust mechanisms within organizations.
Reliance on a dominant form of interpersonal trust between organizational members, meant to create checks and balances within the network, could result in negative effects such as complicity and corruption. The latter, however, can be avoided by strong institutionalized forms of distrust that exist alongside trust within the organization. Such structures may be conducive to (re)establishing and maintaining the perceived trustworthiness of business organizations.