You are here

The role of trust in business success

Demonstrating integrity is a key factor for organisations keen to build trust within their ranks

BT_20200115_SMUJAN_PROF2_3996539.jpg
Associate Professor Tan Hwee Hoon.

Whether it's between managers and their subordinates or a brand and its customers, trust is an important factor for success in any organisation.

And in today's globalised world, it is critical that business leaders understand how different cultures build trust.

A lack of trust in a relationship at the workplace can create conflict and, over time, further reduce trust and adversely affect group performance.

While there has been research that focuses on factors leading to trust, such as ability, benevolence and integrity of the trustee, there is very little understanding on how these three factors of trustworthiness vary in terms of importance in trust-building across countries.

sentifi.com

Market voices on:

In addition, it is unclear how one's general willingness to trust, a trait-like factor termed propensity to trust, affects relationship-building in different countries.

Associate Professor Tan Hwee Hoon from SMU's Lee Kong Chian School of Business was part of a team that conducted a multi-year study spanning 30 countries across six continents using a dataset of 2,715 individuals that examined the above two issues.

Integrity and trust-building

The team aimed to provide individuals from different cultures with a road map for successful trust-building.

The project, which was conducted with two other trust researchers, Roger Mayer from North Carolina State University and David Schoorman from Purdue University, found that integrity plays the biggest role in trust-building in all 30 countries except for Ethiopia.

"This was sort of a surprising finding for us as we had earlier theorised that the factor of benevolence would be more important in trust-building in more collectivistic cultures.

Hence, we expect benevolence to be of more importance in Singapore and in Asia compared to the United States and Europe," said Associate Prof Tan.

She suggested that integrity could have become more salient in the last few years given the current global environment marked by the emergence of US President Donald Trump and Brexit, where outrageous claims that are clearly not true have taken centre stage.

"Being primed of this situation on an almost daily basis could affect one's consideration of what is considered trustworthy."

Based on the team's findings, she argued that businesses should work to create a reputation that focuses on integrity and "doing the right thing".

She said, "At the individual level, supervisors or anyone who wants to build trust, should walk the talk, be reliable, and focus on the larger interest of the organisation, rather than on one's self-interest."

As behaviours are what others can see, this will be an important focus. Not just by talking, but by doing."

Indeed, in an increasingly complex and impersonal world, building a reputation for trust and integrity will help businesses succeed by enhancing their ability to attract talent and customers.

The 2018 Edelman Trust Barometer Report found that 42 per cent of respondents felt they were not sure which brands or companies they could trust.

Against this backdrop, it is critical that businesses demonstrate integrity if they want to gain an edge over the competition.

More certainty is related to greater willingness to trust

Another finding in their study was that the propensity to trust, that is, the general willingness to trust others, was higher in societies which are higher in uncertainty avoidance.

"Our study found uncertainty avoidance to positively impact propensity to trust. It supports our theorising that the rules and processes that are built into a society with a high level of uncertainty avoidance allow for higher propensity to trust," she said.

She explained, "Societies high in uncertainty avoidance build rules and processes to cope with the ambiguity they face. The prevalence of rules and processes likely protects one against uncertainty. When there is a strong safety net, one's general willingness to trust strangers would be higher."

This has practical implications for a high uncertainty avoidant society such as Singapore.

Singaporeans have a greater willingness to trust others as the Singapore society has structures built in to facilitate trust-building.

Perhaps the implication for organisations is to build sufficient structures to foster a willingness to take risk in trusting others. This finding is paradoxical in that to enable risk taking, one needs to build safety nets.

A special feature brought to you by Singapore Management University

This is a monthly series on SMU research which aims to create significant impact by addressing these five societal challenges: Economies & Financial Markets, Social Fabric & Quality of Life, Boundaries & Borders, Sustainability, Innovation & Technology.

In this issue, SMU researchers offer insights on tackling the societal challenge of navigating boundaries & borders.

For more information on SMU research, visit https://www.smu.edu.sg/research