Trust management (managerial science)

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Trust management (management by trust, management through trust) deals with how people or groups determine who or what to trust.

Contents

Definitions

Trust management can be conceptualized in two ways, the process by which an individual becomes trustworthy and second, the process of assessing the reliability of other individuals. Both concepts of trust are considered as equally significant in the context of trust management.

Becoming trustworthy on a personal level is a significant criterion of success and survival as it allows cooperation and collaboration between the individual and other people. Thus it is an important principle as it common for a majority of people attempt to build up a "fake image" of their reliability for personal benefits. Having the ability to assess the reliability of other individuals is equally as important as being trustworthy oneself. Through being able to detect reliability, one can make better decisions and employ trust in the right people.

Taking these two aspects together, the following definition of trust management can be formulated: [1]

“The activities of creating systems and methods that allow relying parties to:

1. Make assessments and decisions regarding the dependability of potential transactions involving risk
2. Allow players and system owners to increase and correctly represent the reliability of themselves and their systems.”

Trust is a container concept used in a broad variety of disciplines. Much work has been done in the field of psychology, sociology, economics, political sciences, philosophy, anthropology and management sciences. Simply defining "trust" is a milestone in the management sciences. One can barely speak of coherent research in the field of trust and trust management.

For trust management defined above, there are some crucial assumptions as follows:

1. Some suspicion is often well-founded in competitive organizations; as in the course of unforeseeable political circumstances, the cost of misplaced trust can have a disastrous effect,
2. In a potentially uncertain, dangerous and risky environment people need to know very well who can be trusted and under what circumstances. Moreover, it is essential to see the necessity of being aware of potential dangers.

The essence of trust management is not only to trust but to decide to what extent to trust-- and how to create and develop trusting relationships.

When there is a trust deficit a climate of resignation ensues. It brings on consternation and makes it hard to concentrate on agreed targets. People tend naturally to limit these effects and create "trust substitutes to counteract the climate of uncertainty generated by these effects". [2] These equivalents of trust are as follows:

1. Providentialism – meaning supernatural forces, fortune, God or metaphysical forces.
2. Corruption – predicting and having control under the other’s people's actions using bribes, favors, favoritism and so on.
3. Pressure – directly and unconditionally controlling the other’s people's actions.
4. Isolation (ghettoization) – separating certain ethnical, religion or professional groups in unfavorable and threatening its environment, with strong internal loyalty strengthened by Xenophobia and lack of tolerance for the others.
5. Paternalism – considered as going in search of strong authority, leader – „quasi father” – who assures missing order, hierarchical harmony and predictability of the group’s life.
6. Externalization – meaning transferring trust in other external groups or communities together with a tendency to idealize the procedure of operations, organizational solutions or total quality of an institution of a targeted group.
7. Excessive assistance of legal institutions – when businessmen do not trust each other, they need formal means to secure the transaction (for instance, detailed contracts, bank guarantees, employing certifying notary, and tendency to sue).

Application

Trust management needs to be put in practice. The strategy that leads to this is trust building. The rules of trust creation refer to rules and guidelines which have a far- reaching influence on the formation and development of trust. Trust building is the kind of the management strategy because it is strongly focused not only on the present, but first of all on the future cooperation.

The level of trust determines not only individual development, but above everything else it fosters the social and economic evolution of the whole communities. Therefore, trust management is the best solution to develop. However, it is possible only when people act in the atmosphere of trust where trust culture in commonly acceptable and required by every member of the society.

Culture of trust

Trust culture stands for disseminated in society rules which oblige every citizen to treat trust and trustworthiness as common shared values. In this culture well-rooted norm is to redeem the obligations, be honest, open to collaborate with others. Trust culture negates the existence of corruption.

Culture of trust is helpful in insecure and unorganized situations. [3] Trust can be recognized as the strategy of dealing with uncertainty. Distrust culture is based on cynicism, disorder, corruption, exploiting others, deceiving, great care. In order to function in distrust culture there are implemented various formal legal remedies.

Trust has focal meaning for the success of every transaction. It stimulates the human activities. In countries with trust culture there is higher social well-being and economic growth. [4] In distrust culture those who trust in others are believed to be naive and simple-minded and they are the victims of unfair transactions. Cynicism limits the collaboration, the freedom of activity, destroys communication and divides people. Trust is depreciated.

Building trust

Building trust has special meaning for social capital. According to Putnam trust is one of elements constituting social capital, together with norms and networks. Without this capital there is impossible the economical and social growth and building capitalism and democracy. Citizens need to have the feeling that they influence state affairs and live in the country characterized by culture of trust. Fukuyama, American politician, economist and political philosopher brought forward the issue of trust and social capital in his famous book entitled Trust: The Social Virtues and the Creation of Prosperity. [5]

Related Research Articles

Security Degree of resistance to, or protection from, harm

Security is freedom from, or resilience against, potential harm caused by others. Beneficiaries of security may be of persons and social groups, objects and institutions, ecosystems or any other entity or phenomenon vulnerable to unwanted change.

Social capital is "the networks of relationships among people who live and work in a particular society, enabling that society to function effectively". It involves the effective functioning of social groups through interpersonal relationships, a shared sense of identity, a shared understanding, shared norms, shared values, trust, cooperation, and reciprocity. Social capital is a measure of the value of resources, both tangible and intangible, and the impact that these relationships have on the resources involved in each relationship, and on larger groups. It is generally seen as a form of capital that produces public goods for a common purpose.

Guanxi

Guanxi defines the fundamental dynamic in personalized social networks of power, and is a crucial system of beliefs in Chinese culture. In Western media, the pinyin romanization of this Chinese word is becoming more widely used instead of the two common translations of it—"connections" and "relationships"—as neither of those terms sufficiently reflects the wide cultural implications that guanxi describes.

Organization development (OD) is the study and implementation of practices, systems, and techniques that affect organizational change. The goal of which is to modify an organization's performance and/or culture. The organizational changes are typically initiated by the group's stakeholders. OD emerged from human relations studies in the 1930s, during which psychologists realized that organizational structures and processes influence worker behavior and motivation. More recently, work on OD has expanded to focus on aligning organizations with their rapidly changing and complex environments through organizational learning, knowledge management, and transformation of organizational norms and values. Key concepts of OD theory include: organizational climate, organizational culture and organizational strategies.

Cross-cultural communication is a field of study that looks at how people from differing cultural backgrounds communicate, in similar and different ways among themselves, and how they endeavor to communicate across cultures. Intercultural communication is a related field of study.

The reputation of a social entity is an opinion about that entity typically as a result of social evaluation on a set of criteria, such as behaviour or performance.

Trust (social science) Assumption of and reliance on the honesty of another party

Trust exists in interpersonal relationships. Humans have a natural disposition to trust and to judge trustworthiness. This can be traced to the neurobiological structure and activity of a human brain. Some studies indicate that trust can be altered e.g. by the application of oxytocin.

Trust metric Term in psychology and sociology

In psychology and sociology, a trust metric is a measurement or metric of the degree to which one social actor trusts another social actor. Trust metrics may be abstracted in a manner that can be implemented on computers, making them of interest for the study and engineering of virtual communities, such as Friendster and LiveJournal.

Distrust Not trusting

Distrust is a formal way of not trusting any one party too much in a situation of grave risk or deep doubt. It is commonly expressed in civics as a division or balance of powers, or in politics as means of validating treaty terms. Systems based on distrust simply divide the responsibility so that checks and balances can operate. The phrase "trust, but verify" refers specifically to distrust.

In marketing, promotion refers to any type of marketing communication used to inform target audiences of the relative merits of a product, service, brand or issue, most of the time persuasive in nature. It helps marketers to create a distinctive place in customers' mind, it can be either a cognitive or emotional route. The aim of promotion is to increase awareness, create interest, generate sales or create brand loyalty. It is one of the basic elements of the market mix, which includes the four Ps, i.e., product, price, place, and promotion.

Internet identity (IID), also online identity or internet persona, is a social identity that an Internet user establishes in online communities and websites. It can also be considered as an actively constructed presentation of oneself. Although some people choose to use their real names online, some Internet users prefer to be anonymous, identifying themselves by means of pseudonyms, which reveal varying amounts of personally identifiable information. An online identity may even be determined by a user's relationship to a certain social group they are a part of online. Some can even be deceptive about their identity.

Organizational architecture

Organizational architecture has two very different meanings. In one sense it literally refers to the organization's built environment and in another sense it refers to architecture metaphorically, as a structure which fleshes out the organizations. The various features of a business's organizational architecture has to be internally consistent in strategy, architecture and competitive environment.

Media transparency, also referred to as Media Opacity, is a concept that explores how and why information subsidies are being produced, distributed and handled by media professionals, including journalists, editors, public relations practitioners, government officials, public affairs specialists, and spokespeople. In short, media transparency reflects the relationship between civilization and journalists, news sources and government. According to a textual analysis of “Information Subsidies and Agenda Building: A Study of Local Radio News”, an information subsidy is defined as “any item provided to the media in order to gain time or space”. In order to understand media transparency, one must gain an understanding of the different aspects in which media transparency is researched, understood, and explored. The following page will attempt to examine media transparency as it has grown and how it affects the modern world.

Social entrepreneurship Approach to develop, fund and implement solutions to social, cultural, or environmental issues

Social entrepreneurship is an approach by individuals, groups, start-up companies or entrepreneurs, in which they develop, fund and implement solutions to social, cultural, or environmental issues. This concept may be applied to a wide range of organizations, which vary in size, aims, and beliefs. For-profit entrepreneurs typically measure performance using business metrics like profit, revenues and increases in stock prices. Social entrepreneurs, however, are either non-profits, or they blend for-profit goals with generating a positive "return to society". Therefore, they use different metrics. Social entrepreneurship typically attempts to further broad social, cultural and environmental goals often associated with the voluntary sector in areas such as poverty alleviation, health care and community development.

Knowledge sharing is an activity through which knowledge is exchanged among people, friends, peers, families, communities, or within or between organizations. It bridges the individual and organizational knowledge, improving the absorptive and innovation capacity and thus leading to sustained competitive advantage of companies as well as individuals. Knowledge sharing is part of the Knowledge management process.

In information security, computational trust is the generation of trusted authorities or user trust through cryptography. In centralised systems, security is typically based on the authenticated identity of external parties. Rigid authentication mechanisms, such as public key infrastructures (PKIs) or Kerberos, have allowed this model to be extended to distributed systems within a few closely collaborating domains or within a single administrative domain. During recent years, computer science has moved from centralised systems to distributed computing. This evolution has several implications for security models, policies and mechanisms needed to protect users’ information and resources in an increasingly interconnected computing infrastructure.

Cynicism is an attitude characterized by a general distrust of others' motives. A cynic may have a general lack of faith or hope in people motivated by ambition, desire, greed, gratification, materialism, goals, and opinions that a cynic perceives as vain, unobtainable, or ultimately meaningless and therefore deserving of ridicule or admonishment. The term originally derives from the ancient Greek philosophers, the Cynics, who rejected conventional goals of wealth, power, and honor. They practiced shameless nonconformity with social norms in religion, manners, housing, dress, or decency, instead advocating the pursuit of virtue in accordance with a simple and natural way of life.

Naïve cynicism cognitive bias

Naïve cynicism is a philosophy of mind, cognitive bias and form of psychological egoism that occurs when people naïvely expect more egocentric bias in others than actually is the case.

Social Axioms Survey

For the last several decades research in cross-cultural psychology has focused on the cultural patterning and positioning of values. Unfortunately, values have low predictive power for actual behavior. Researchers at the Chinese University of Hong Kong decided to develop a questionnaire to measure beliefs, i.e., what is believed to be true about the world, to add to the power of values, i.e., what the person believes is valuable, in predicting behavior.

Trust capital refers to the established trustworthiness of an entity, considered as a resource which is gained or spent through various activities.

References

  1. (Grudzewski, Hejduk, Sankowska, Wańtuchowicz, 2008)
  2. (Sztompka, 1998, 2007)
  3. (Bjerke, 1999)
  4. (Fukuyama 1995)
  5. New York: Free Press, 1995
Notes