Trust
LaRue Tone Hosmer
Is clearly essential in the conduct of human affairs. Most people would agree that neither stable social relationships nor efficient economic transactions are possible without a high level of trust on all sides. Indeed, Fukuyama (1995: 7) went even further in his classic work on this topic, and claimed ‘‘a nation’s well being, as well as its ability to compete, is conditioned by a single, pervasive cultural characteristic: the level of trust inherent in the society.’’
Scholars, however, have never been able to agree upon a precise definition of trust. Part of the problem is the number of applications. Trust can be viewed as reliance upon the outcome of an event, the behavior of a person, the competence of a professional, the reciprocity of a group, or the loyalty of an organization. Another part of the problem is the multiplicity of the disciplines. Trust has been included in the conceptual frameworks of psychology, social psychology, sociology, organizational behavior, and eco nomic theory. But probably the main cause is the simple familiarity of the construct: ‘‘In both serious social thought and everyday discourse it is assumed that the meaning of trust, and its many apparent synonyms, is so well known that it can be left undefined or to contextual implications’’ (Barber, 1983: 7).
This entry will attempt to review, very briefly, the alternative definitions that have been pro posed over time for the construct of trust, and then combine the essentials into a new definition. The new definition will be relevant to business ethics. One of the unusual aspects of the existing definitions from both the behavioral and economic sciences is the frequent inclusion of implied moral duties, assumed personal virtues, and inferred benevolent outcomes. By making these explicit, moral philosophy may be able to provide a more exact definition of trust. This, at all events, will be attempted.
Position of vulnerability. One of the earliest definitions (Deutsch, 1958) proposed that trust was a non rational choice in which the possible loss if the trust was broken was much greater than the expected gain if the trust was fulfilled. Essentially, trust was viewed as an optimistic confidence in the outcome of an uncertain event.
Condition of dependence. Another early definition (Zand, 1972) accepted the vulnerability aspect, but felt that the decision to trust went beyond optimistic confidence in the outcome and necessarily involved giving up control and becoming dependent upon the actions of others. Trust was now viewed as an optimistic confidence in the behavior of another person.
Reliance on character. Barber (1983) added two necessary conditions to the decision by the trustor to give up control. The first was an assumption of technically competent role performance by the other person; the second was morally correct role performance by that person. Trust was now seen as reliance upon the competence and character of another person.
Dimensions of character. Butler and Cantrell (1984) emphasized character over competence, and attempted to define the character traits that were needed to develop trust. These were integrity (reputation for honesty and truth fulness), consistency (reliability and predictability), loyalty (benevolence and support), and openness (willingness to share ideas and information).
Probability of opportunism. Williamson (1985) proposed that it was impossible to determine the trustworthiness of others in economic transactions and therefore companies could not rely upon assumptions of competence or character. Instead, they had to negotiate detailed contracts and install explicit controls to ensure compliance. Trust was something to be imposed.
Control by tradition. Granovetter (1985) rejected the ‘‘trust has to be imposed’’ argument of the economists. He said that economic behavior was embedded in informal social relationships. Zucker (1986) followed with the definition that trust was a set of social expectations based upon ‘‘fair’’ social rules and generally accepted ‘‘rights’’ shared by all participants.
Probability of cooperation. Gambetta (1988: 217) also rejected the ‘‘trust has to be imposed’’ argument and thought the goal was unforced cooperation. Trust, he wrote, ‘‘is the probability that the person with whom we are in contact will perform an action that is beneficial or at least not detrimental high enough for us to consider engaging in some form of cooperation.’’
Emphasis upon benevolence. Butler (1991) later placed much greater emphasis upon the loyalty dimension of trust, moving from a general reputation for benevolence by the trustor toward an implicit promise by that person or organization not to bring harm to the trustee. Trust was now defined as an implicit promise of ‘‘fair’’ treatment.
Importance of reputation. Hill (1990) proposed that it was possible to reduce the transaction costs of contracts and controls in principal– agent relationships, and achieve greater cooperation at lesser cost, by evaluating the past opportunistic actions of agents. Trust became, once again, an optimistic expectation for the ‘‘proper’’ behavior of others.
Importance of reciprocity. Friedland (1990: 317) reported that in games with an infinite number of plays, a persistent finding was that a matching or ‘‘tit for tat’’ reciprocal strategy was the most favorable because it elicited in adversaries more cooperative than competitive behavior. Trust was said to be a ‘‘genuine responsiveness by one player to the needs of the partner.’’
Importance of responsiveness. Bromily and Cummings (1992:4) proposed very explicitly that ‘‘trust is the expectation that an individual or group will (1) make a good faith effort to behave in accordance with commitments both explicit or implicit, (2) be honest in whatever negotiations preceded those commitments, and (3) not take excessive advantage of others.’’
Importance of good will. Ring and Van de Ven (1992: 488) also provided an explicit definition of trust as a mixture of two aspects: ‘‘predictability in expectations [of the behavior of others] and confidence in the good will of others.’’ Good will was generally described as the benevolent duty to attend to the interests of others.
Clearly, under conditions of trust, the person who trusts (trustor) is vulnerable to the outcome of an uncertain event and dependent upon the actions of an uncontrolled person (trustee). Trustors place themselves in that awkward position because they rely on (1) the personal char acter of the trustee through a reputation for integrity, consistency, loyalty, and openness; (2) the social expectations of the group for ‘‘fair’’ rules and accepted ‘‘rights’’; (3) an implied promise from the trustee for ‘‘beneficial’’ treatment and ‘‘proper’’ behavior; (4) a general assumption of ‘‘good faith’’ negotiations and ‘‘good will’’ treatments.
These are all terms that have a moral base, and perhaps that is the underlying reason for the lack of a widely accepted definition of the construct of trust. Moral concepts are an anomaly in most of the behavioral and economic sciences. Perhaps what is needed is to make the moral content explicit rather than implicit, and that can be done by reference to the ethical principles of moral analysis, with the following proposed definition: ‘‘Trust is the expectation by one person, group, or firm of ethically justifiable behavior – that is, morally correct decisions and actions based upon ethical principles of analysis – on the part of the other person, group, or firm in a joint endeavor or cooperative exchange.’’
Bibliography
Barber, B. (1983). The Logic and Limits of Trust. New Brunswick, NJ: Rutgers University Press.
Bromily, P. and Cummings, L. L. (1992). Transaction costs in organizations with trust. Working paper No. 28, Strategic Management Research Center, University of Minnesota.
Butler, J. K. (1991). Towards understanding and measuring conditions of trust: Evolution of a condition of trust inventory. Journal of Management, 17, 643 63.
Butler, J. K. and Cantrell, R. S. (1984). A behavioral decision theory approach to modeling dyadic trust in superiors and subordinates. Psychological Reports, 55: 190 28.
Deutsch, M. (1958). Trust and suspicion. Journal of Conflict Resolution, 2, 265 79.