Other Theories on Trust

Defining Trust

When defining trust Cook, Hardin and Levi (2005, p. 2) write, “Trust exists when one party to the relation believes the other party has incentive to act in his or her interest or to take his or her interests to heart.” Rotter (1971, p. 444) also writes that interpersonal trust is “… an expectancy held by an individual or a group that the word, promise, verbal, or written statement of another individual or group can be relied on” (Rotter, 1971, p. 444). The important factors of these definitions are the expectations that someone has of another party. This was a development from the original idea that other psychologists held of trust being “…a belief in the goodness of others or in the benign nature of the world” (Rotter, 1980, p. 1).

Gambetta (1988, p. 219) expands on these definitions when he writes,

“Trusting a person means believing that when offered the chance, he or she is not likely to behave in a way that is damaging to us, and trust will typically be relevant when at least one party is free to disappoint the other, free enough to avoid a risky relationship, and constrained enough to consider that relationship an attractive option.”

This shows that in trusting another person there is an element of risk involved, however, as Gambetta explains, it is the probability that the other will not harm self that is called trust. Gambetta (1988, p. 218) also wrote that people have

different levels of trust, distrust ranging from 0-0.5 and trust ranging from 0.5-1.0.

Trust has been examined from several angles by researchers which has brought rise to a number of theories on the issue. The encapsulated interest theory was first outlined by Hardin (2002, p. 3) who explained it when he wrote, “I trust you because your interest encapsulates mine, which is to say that you have an interest in fulfilling my trust. It is this fact that makes my trust more than merely

expectations about your behaviour.” He continued by explaining how the relationship becomes more valuable over time as people’s interests become

entwined in each others. A trust relationship develops over time from both parties’ mutual interdependence and the understanding of their reciprocal trustworthiness.

53 Also, if one person finds out his or her interests are no longer encapsulated by the other then their trust will diminish or be broken.

Outside of encapsulated interest theory is moral theory and disposition to trust theory (Cook et al. 2005, pp. 8-10). Moral theory is the idea that people act in a way that is morally motivated. However, this can be confused with the

commitment to be trustworthy rather than the actual concept of trust. Even though there is little literature on moral motivations most assert that it affects trust. Secondly, is the disposition to trust theory which claims some people tend to trust others even in new situations while others are generally low at trusting (Rotter, 1971; Rotter, 1980). This idea was further developed by Yamagishi, Kikuchi and Kosugi (1999) who found that people who are generally high trusters are more likely to be able to identify people who are not trustworthy than low trusters. This ability is termed “social intelligence”. Those who have a higher level of trust, or in general are more trusting, can also be described as having generalized social trust.

Antitrust

Although China is often referred to as a high trust society, it could be argued that because people lack trust in strangers, trust is needed to deal with each other. This lower level of trust has also been observed in China’s business environment. Bjorkman and Kock (1995) found that in China Scandinavian managers selling industrial products needed to establish more trust with potential buyers than in other countries. Rao, Pearce and Xin (2005) examined the levels of trust in countries where the governments were considered both facilitative and non- facilitative. Out of 399 managers interviewed from Thailand, China, Hong Kong and the United States it was found that the Chinese had the lowest levels of trust even with their closest business associates in comparison to the other countries. In order to counteract this lack of trust, business managers tried to build reciprocal relationships with their associates. The strongest reciprocal relationships had the highest levels of trust.

This difference in levels of trust may be what was originally referred to by Geller (1971, p. 445) as ‘generalised expectancy of trust or distrust’. This was later

54 10) wrote, “If most people you have dealt with have been trustworthy, you may typically expect to find it easy to develop relationships of trust with new people with whom you come to deal.” It may be that in China people have had more experiences where people they dealt with should have been trustworthy but were not. This could lead to a societal phenomenon where there is a greater tendency towards a lower disposition to trust.

Trust and Management Research

The majority of research on trust was not initially conducted in the management field but rather in sociology or psychology. Hosmer (1995) examines trust from both a philosophical and organisational point of view in order to define trust and identify areas for future research in the management field. After analysing the different intellectual traditions he writes, “Trust is the expectation by one person, group, or firm of ethically justifiable behaviour – 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 endeavour or economic exchange” (Hosmer, 1995, p. 399). He reached this definition by analysing the individual expectations,

interpersonal relationships, economic exchanges, social structures and ethical principles of trust. However, he writes that although this is the definition of trust in relation to organisational theory, it is difficult in practice as there are no standards as to what the protection, rights and interests of others are. Moreover, the individual must weigh the rights and interests of others with their own personal interests and needs.

One of the first models of trust developed in organisational theory was that by Mayer, Davis and Schoorman (1995) (see Figure 2.4 below). They define trust as, “The willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party” (Mayer et al., 1995, p. 712). They propose that an individual’s personality will determine their likelihood to trust another. This is the concept discussed earlier on

generalized social trust (Rotter, 1971; Rotter, 1980; Yamagishi & Yamagishi, 1994; Yamagishi et al. 1999). The individual’s generalized trust, defined by

55 Mayer et al. (1995) as the propensity to trust, influences the level of ability,

benevolence and integrity that is contributed to trust.

The trustor also takes into consideration how he or she perceives the trustee’s ability, benevolence and integrity (Mayer et al., 1995). Ability is also referred to as competence, a task based concept, and if one is perceived to be more competent others will be more willing to trust them. Benevolence refers to how much the trustee actually wants to help the trustor whereas integrity is the set of principles the trustee is seen to hold that the trustor agrees as being acceptable. As is shown in Figure 2.4, trust in a dyadic relationship will be influenced by how the trustor perceives the trustee’s ability, benevolence and integrity, and the trustor’s own propensity to trust.

Mayer et al. (1995) then differentiate between having trust in another person and actually participating in action that requires risk. They call this risk taking in relationship (RTR). It is possible to trust a person without requiring or expecting them to do anything. Once they do however, some risk will be involved. If the trust is more than the perceived risk then the trustor will be willing to participate. If the outcome is positive then the trustor’s trust in the trustee will increase. If on the other hand the outcome is negative then the level of trust will decrease.

Ability

Benevolence

Integrity

Trust Risk Taking in _Relationship Outcomes Perceived Risk

Trustor’s Propensity

Factors of Perceived Trustworthiness

56 Due to the attention and value of the model of trust proposed by Mayer et al. (1995), a number of issues were raised that enabled Schoorman, Mayer and Davis (2007) to develop it further. Schoorman et al. (2007) identified that their original model shown in Figure 2.4 only applied to micro rather than macro factors of trust, that is, at the individual rather than the organisational level. Of the three factors of perceived trustworthiness, Schoorman et al. (2007) acknowledged that ability and integrity have received a lot of attention in the literature but benevolence has not. Also, their original model of trust did not demonstrate the difference of time on each factor. The propensity to trust will be more important at the initiation of the relationship along with ability and integrity. However, it is likely that it takes a longer time to discern benevolence in the relationship.

Schoorman et al. (2007) also outline some factors that need to be included in the model when analysing trust within organisations. Firstly, the effects of control systems need to be factored into the model. Although they are used to reduce risks, control systems often lead to a reduction in trust. Furthermore, the concept of reciprocal trust has not been examined. In a dyadic relationship one person may trust the other without the feeling being reciprocated. Finally, the model shown in Figure 2.4 does not include the impact of affect on trust. It is purely cognitive and does not show how emotions influence an individual's decision to trust another person. Schoorman et al. (2007) believe that affection will affect the trustor’s perceptions towards the antecedents of trust. They also write that it is likely emotions will dissipate as soon as the trustee is found to be untrustworthy and then a return to cognitive decision making will occur.

Mayer et al.'s (1995) model of trust may not apply to the context of China. Yang, Shuai, and Ghazanfar (2012) found that in the construction industry competence and intuitive based trust applied but instead of integrity based trust it should be readjusted to guanxi based trust. Guanxi based trust refers to the emotional bonds that are built between business partners based on the expectation of reciprocity. The importance in the difference between cognitive and affective trust in China was tested by Huang et al. (2011) in the areas of the sharing of tacit and explicit knowledge. It was found that cognitive trust had no effect on the intention to share either types of knowledge while affective trust did. It may be that in China people

57 rely more on a gut feeling until the actual trustworthiness, the cognitive aspect is known.