THE CONCEPT OF TRUST IN ORGANIZATIONAL LIFE IN EXAMPLE OF POLISH ENTERPRISES1 Joanna Paliszkiewicz, Warsaw University of Life Sciences Joanna_paliszkiewicz@sggw.pl ABSTRACT The concept of trust has become popular in public debate and academic analysis. In high income countries this interest is associated with concern for the decline of trust in governments and professionals, and in developing countries has been prompted by debates around the motion of social capital. Trust has been identified as a major factor influencing such thing as capital investment, relationship marketing, cross-cultural communication, learning and various types of cooperation. Trust management become also very important inside organization. The study will examine empirical research on organizational trust inside organization in opinion of polish managers. The research was done in 163 polish enterprises among 335 managers. Key words: trust management, organizational trust, building trust INTRODUCTION Trust is a topic that has been studied a lot lately. The world in which we live has become extremely interdependent. Extremely high uncertainty has become the institutional context of postmodern societies, and therefore there is great need for trust and social capital. Trust enables people to live in risky and uncertain situations (Deutsch, 1962; Mayer et al., 1995). It provides the means to decrease complexity in a complex world by reducing the number of options one has to consider in a given situation (Luhmann, 1979; Barber, 1983; Lewis and Weigert, 1985). Trust can also be viewed as a kind of social capital that makes coordination and cooperation between people possible (Putnam, 1995; Misztal, 1996). Trust leads to successful relationships and improves communication and satisfaction (Anderson and Narus 1990; Doney and Canon 1997; Mohr and Nevin 1990; Morgan and Hunt 1994). It binds friendships (Gibbons, 2004), facilitates negotiations (Olekalns, Smith 2005), and even resolves international political conflicts (Kelman, 2005). It is a fundamental ingredient in any positive and productive social process. In the world of business, trust is key to successful transactions and long-term relationships (Bharadwaj, Matsuno 2006; Koehn, 1996). It has even been proposed as an alternative form of control in place of price and authority (Creed and Miles, 1996). Within organizational settings, trust has been demonstrated to be an important predictor of outcomes such as cooperative behavior (Zalabak, Ellis, Winograd, 2000), organizational citizenship behavior (Van Dyne, Vandewalle, Kostova, Latham, Cummings, 2000), organizational commitment (Aryee, Budhwar, Chen, 2002), effectiveness in organization (Zand, 1972; Zand, 1997; Lewis and Weigert, 1985; McAllister, 1995; Lane, 1998; Rousseau et al., 1998; Nooteboom, 2002), and employee loyalty (Costigan, Ilter, Berman, 1998). To build employees’ trust in an organization should be a desirable goal for all employers (Zhang, Tsui, Song, Ch, Jia 2008). Article connected with the realization of research project entitled “Orientation on trust and organizational performance” (No. N N115 549238) financed by Ministry of Science and Higher Education in Poland. 1 The aim of the article is to define elements of the trust in organization, which influence on trust building among managers and subordinates and to present conclusions from the research connected with this topic, made in polish enterprises. CONCEPTUAL BACKGROUND OF TRUST Trust as an individual future Viewed from the individual level, trust is best understood by looking at the psychology of the person. Such a perspective can explain why a person trusts and why trust declines or increases (Tyler & Kramer, 1996). Personality psychologists such as Wrightsman (1966) and Rotter (1967) have viewed trust as a personality trait that reflects the general expectancies of the trustworthiness of others. These expectancies are relatively stable dispositional characteristics that depend on personal experiences and previous socialization. This observation also confirms Luhmann (1979). According to him risk and some information about the potentially trusted person or situation are seen as necessary conditions for trust to exist. J.R. Gibb (1978) a psychologist has created theory that trust is instinctive, and, as a feeling, is so close to love. Trust is also regarded as an attitude, which is neither subjective nor objective, and does not simply involve mechanical influences from the environment since it has to be learned (Luhmann, 1979). Viewing trust as a psychological state implies that people vary in terms of when and how much they are willing to trust (Das & Teng, 2004). Such willingness to trust, according to Tyler and Kramer (1996), is based on people’s estimation of the probability that those trusted will reciprocate the trust. Trust as a part of relationship Lewis and Weigert (1985) stress that individuals would have no occasion or need to trust apart from their relationships with others. This assertion emphasizes the sociological function of trust instead of its supposed psychological function. Trust is an essential ingredient in the initiation and maintenance of stable social relations, just as exchange obligations promote trust (Blau, 1964). Barber (1983) identifies three kinds of expectations in relation to trust: (1) an expectation of the persistence and fulfillment of the natural and social order, (2) an expectation of the technically competent role performance from those involved with an individual in social relationships, and (3) an expectation that partners in interactions will carry out their fiduciary obligations and responsibilities. The three presented perspectives on trust as an expectation highlight trustors’ beliefs that the trustees are good and honest in dealing with the goods, material or non-material, entrusted to them despite their ability to cheat or betray the trustors. Trust is partially a product of people’s capacity to assess the trust- worthiness of their potential partners (Sheppard & Sherman, 1998). Commonly, trust has been viewed as an expression of confidence between the partners in an exchange or a relationship of some kind (Bateson, 1988; Garbarino and Johnson 1999), a belief that no partner to the exchange will exploit the other's vulnerability (Dwyer and Oh, 1987), or the willingness to rely on the other party (Moorman, Deshpandt, and Zaltman 1993). Similarly, trust has been defined as positive expectations about another party's motives in situations entailing risk (Das and Teng 1998). Lindskold suggests that there are four different kinds of trust, which exist in any relationship. These relate to the following: objective credibility (It can be viewed in terms of whether that person’s or group memebrs’ words can be believed, and whether their actions correspond with their words); the attribution of benevolence (examines the motives of an individual’s actions); non-manipulation (based on the perceived level of self interest of the party); costs for lying (balances the costs of deceit against the possible gains). In organization trust facilitates more open communication, information sharing and conflict management. Trust is believed to be critical as it is seen to increase predictability, adaptability, and strategic flexibility. In general trust is seen to reduce transaction costs such as management costs, internationalization costs, social complexity. It also paves the way for informal network collaboration and collaborative innovation. It is also acknowledged that trust may be a critical factor in enhancing business performance and a source of sustainable competitive advantage (Seppanen, Blomqvist, Sundqvist, 2007). Trust is not static; it is a dynamic process that evolves according to the development of the relationship (Porras, 2004). Lewicki and Bunker (1996) established a model of trust in three levels linked in a sequence where, once trust has been established in one level, it moves to the next level. Those levels of trust are calculus-based, knowledge-based, and identiﬁcationbased. At the calculus-based level, parties fear punishment, but also anticipate the rewards from preserving trust; in other words, trust is based on a calculus of costs and beneﬁts. Knowledge-based trust develops over time in the permanent contact between participants; it is “grounded in the other’s predictability - knowing the other sufficiently well so that the other’s behaviour is anticipatable. Knowledge-based trust relies on information rather than deterrence” (Lewicki, Bunker, 1996). Identiﬁcation-based trust is “based on identiﬁcation with the other’s desires and intentions” (Lewicki, Bunker, 1996). At this stage, parties know each other and may anticipate the reactions of the other participant; thus, they can act for the other. Ultimately, high trust implies an expectation that a relationship will continue in the future. Trust is highly relevant when the trustor depends on the trustee’s future action(s) to achieve her own goals and objectives (Lane, 1998). For trust to develop, it is required that the trustee does not indulge in opportunistic behaviour, so that the trustor can put herself in a vulnerable position with regard to the action(s) of the trustee. This requires a stable normative frame. In other words, for trust to be possible, the trustor needs to believe that the trustee wishes to continue the relationship into the future (Lindenberg, 2000; Hardin, 2002). For interpersonal trust to be built in long-term work relations, both individuals need to have their actions guided by a stable normative frame. According to Six (Six, 2007) there are four operative conditions that play an essential role in stabilizing normative frames: (1) the suspension of opportunistic behaviour, or the removal of distrust; (2) exchange of positive relational signals; (3) avoiding negative relational signals, i.e., dealing with trouble; (4) the stimulation of frame resonance, or the introduction of trust-enhancing organizational policies. An organization needs to ensure all four conditions, but depending on the particular environment it operates in, the emphasis may differ. The more an organization meets all four conditions, the more likely it is that interpersonal trust can be built successfully in the work relations within it (Six, 2007). Trust as a part of social and economic exchange Trust is essential in economic and social exchange. According to Blau (1964) social exchange is the voluntary action of individuals who are motivated by the returns they are expected to bring and typically do in fact bring from others. He wrote that the benefits involved in social exchange are not definitively priced in terms of a single quantitative medium of exchange. This is the reason why obligations in social exchanges are not specific, while economic exchanges are moored on a formal contract that specifies the exact amount to be exchanged. Though both exchanges conceptually differ, both depend on trust for their continuation (Buskens, 1998; Doney et al., 1998; James, 2002), and both exchanges involved varying amounts of uncertainty and risks (Molm, Takahashi, Peterson, 2000). Viewed from an economic standpoint, trust is an expectation that people will not be exploited by others, which exists when there are no strong incentives for people to behave opportunistically (James, 2002). Hosmer (1995) refers to trust as the reliance by one person, group, or firm upon a voluntarily accepted duty on the part of another person, group, or firm to recognize and protect the rights and interests of all parties engaged in a cooperative endeavor or economic exchange. According to Anderson and Naurus (1990) trust is the firm’ belief that another company will perform actions that will result in positive outcomes for the firms as well as not take unexpected actions that result in negative outcomes. Tullberg (2008) argues that in most economic exchanges, not everything can be verified before the occurrence of a transaction, thereby making the elimination of risks impossible and thereby necessitating trust. For example, within marketing, customers need to determine the extent to which they trust the company and its personnel to make purchases and long-term relational commitments (Doney & Cannon, 1997). According to M. Sako (1992) trust can be treated as a state of mind, an expectation held by one trading partner about another, that the other behaves or responds in a predictable and mutually acceptable manner. The concept of trust can be explain in different ways for example as an individual future, as apart of relationship and as a part of economic and social exchange, also we can look at definition of trust in different disciplines. For example, the economists define it as trusting the institutions and their accounts while the psychologists explain it with the reliable and unreliable behaviour of the individual and the sociologists use it as the reliable, fair and ethical behaviour in interpersonal relations. Author (Paliszkiewicz, 2010) see trust as the belief that another party: a) will not act in a way that is harmful to the trusting firm, b) will act in such a way that it is beneficial to the trusting firm, and c) will act reliably d) will behave or respond in a predictable and mutually acceptable manner. Trust can be seen as a bridge between past experiences and anticipated future. THE STRUCTURE OF TRUST Trust has emerged as a critical construct in a variety of disciplines, and, as a result, there exist several different conceptualizations of the structure of trust. Despite its importance in organizational research, the study of trust has not been without problems. There have been some inconsistencies in the conceptualization and measurement of trust in previous research (Bigley, Pearce, 1998; Dirks, Ferrin, 2002). The most serious criticism is the lack of agreement about the structure of trust, and in particular the inability of researchers to distinguish between the antecedents and the construct of trust itself (Bhattacharya, Devinney, Pillutla, 1998; Mayer, Davis, Schoorman, 1995). For example, Costa, Roe, and Taillieu (2001) conceptualized trust as a multi-component variable with three distinct but interrelated dimensions. These dimensions consist of propensity to trust, perceived trustworthiness, and cooperative and monitoring behaviors. This definition includes a dispositional variable, propensity to trust, as well as cognitive and behavioral dimensions. In order for the field to move forward, it is imperative that researchers maintain a clear conceptual distinction between propensity to trust, defined as an individual’s general willingness to trust others, and actual trust or trusting behaviors (Mayer et al., 1995). Variations in propensity to trust among people can be attributed to their developmental experiences, personality types, and cultural backgrounds (Mayer et al., 1995). Trusting propensity or trusting impulse could be specific or general – it could refer to a specific category of people or it could encompass all people (Sztompka, 1999). As a stable factor, trust determines the likelihood that people will trust, just as it influences how much they trust others prior to the availability of any data about them (Mayer et al., 1995). Rotter (1971) argues that people’s propensity to trust influences their levels of trust in their interactional partners, especially in cases when the former has limited knowledge about the latter. In the model of initial trust formation by McKnight, Cummings, and Chervany (1998), propensity or disposition to trust is proposed to be one of the determinants of trusting intention. They identify two types of disposition to trust: faith in humanity and trusting stance. Faith in humanity refers to the belief that others are well- meaning and reliable; whereas trusting stance means that people believe that they will obtain better interpersonal outcomes by dealing with others as though they are well-meaning and reliable, regardless of whether those others are reliable or not. McKnight, Choudhoury, and Kacmar (2002) define trusting intention as people’s willingness or intention to depend on their interactional partners. Willingness to depend (volitional prepared- ness to make oneself vulnerable to the trustee) and subjective probability of depending (perceived likelihood that one will depend on the other) form two distinct subconstructs of trusting intention. Mayer et al. (1995) proposed the Integrative Model of Organizational Trust, a theoretical framework examining trust in an organizational setting involving two individuals: a trustor (the individual trusting) and a trustee (the individual being trusted). In their model, trust is defined 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., p. 712). Mayer et al.’s definition of trust has become widely accepted in the organizational literature (e.g., Rousseau, Sitkin, Burt, Camerer, 1998). Unlike past conceptualizations of trust, this definition separates trust from its antecedents. In Mayer et al.’s (1995) model, both the disposition of the trustor and the perceived characteristics of the trustee influence trust. According to this model, trust does not involve risk per se, but rather a willingness to engage in risk-taking with the trustee (e.g., sharing sensitive information). Thus, trust represents an intention to take a risk in a relationship. In assessing the trustworthiness of interaction partners, people can use a set of criteria to come with a reliable assessment. These criteria or factors of trustworthiness (Mayer et al., 1995) include ability or competence (Barber, 1983; Luhmann, 1979; Mayer et al., 1995; McKnight et al., 1998), benevolence (Luhmann, 1979; Mayer et al., 1995; McKnight et al., 1998), integrity or honesty (Mayer et al., 1995; McKnight et al., 1998). Based on the characterization of Mayer et al. (1995), parties in transactions are assessed to be trustworthy when they (1) have the required skills, competencies, and characteristics that enable them to exert influence within a specific domain – a description for the ability or competence criterion, (2) are believed to do good to trustors, setting aside an egocentric motive – thereby meeting the benevolence criterion, and (3) are perceived to adhere to a set of principles that trustors consider acceptable – a definition of integrity. Sztompka (1999) also claims that people employ three criteria in estimating the trustworthiness of their transactional partners: reputation, performance, and appearance. Reputation refers to a record of past deeds; whereas, performance includes actual deeds, present conduct, and currently obtained results. Appearance also matters as one’s look and self-presentation can exude trustworthiness or stimulate suspicion on the part of the looker. In the literature we can find also different models of trust a lot of them are static or take the perspective of the trustor only (for example, Mayer, Davis, Schoormann 1995). Zand (Zand 1972) is one of the few who propose a truly interactive model: “Let P denote one person and O the other. If (1) P lacks trust, (2) he will disclose little relevant or accurate information, be unwilling to share inﬂuence, and will attempt to control O. (3) Assume O also lacks trust, (4) perceives P’s initial behaviour as actually untrusting, and (5) concludes he was right to expect P to be untrustworthy; then (6) he will feel justiﬁed in his mistrust of P. Since (7) P sees O’s behaviour as untrusting, he (8) will be conﬁrmed in his initial expectation that O would not be trustworthy and (2) P will behave with less trust than when he entered.” Some features of trust were presented by A. Argandoňa (1999): It is interpersonal: between concrete individuals; Situational rather than global: trust is placed in one particular person; Voluntary: properly, trust must spring from choice and cannot be compulsory; Fee, since no party can (sufficiently) control the other party’s behavior; Committed, since each party depends on the other (without being able to control her); Conscious: each party is aware of the other party’s trust; Vulnerable, because betrayal or breach of trust are possible; Relevant, in the sense that the consequences of breach of trust by one of the parties cannot be considered insignificant by the other; Dynamic or temporal, because it evolves over time: trust is established, grows, diminishes and dies; Action oriented, implicit in the goal of the alliance; Uncertain, since before the alliance is established it is possible to question the reliability of the other party and, once it is under way, the question is whether the other party will have change of heart and betray the terms of the relationship; Based on communication, and Experimental. Bidault and Jarillo (1997) argue that trust can be based on different sources. Contract establish a foundation for developing trust; ethics provides rules and values for actors to behave in different circumstances; the role of time and experience is important because trust increases with the number of transactions made by participants while familiarity relates to participants knowing each other before a transaction. Bidault and Jarillo (1997) consider trust as a coordinating mechanism that can make transactions cheaper, in the sense that, once trust has been established, contracts will not be needed between participants. Nicholson, Compeau, Sethi (2001) define trust as confidence in the other party's reliability and integrity. Recently, some researchers in marketing have suggested that in addition to integrity and reliability (which they equate with credibility), trust also consists of a benevolence dimension (Ganesan, 1994; Kumar, Scheer, Steenkamp, 1995). A closer examination of the benevolence dimension reveals that it encompasses both friendship between partners and making sacrifices for the other partner (Ganesan, 1994). McKnight, Cummings, and Chervany (1998) also suggest that trust consists of two main dimensions: trusting intentions (i.e., willingness to depend on other) and trusting beliefs (i.e., believing that the other is benevolent and honest). TRUST IN ORGANIZATIONS IN OPINION OF POLISH MANAGERS The research was done in enterprises from Mazovia Province. The questionnaire was done among 335 managers from 163 companies from November 2010 to February 2011. The enterprises are the best enterprises according to Journal Forbes in Mazovia Province. According to the author trust in organization consists of reliability, intention and abilities (Figure 1). TRUST IN ORGANIZATION RELIABILITY INTENTION ABILITIES Figure 1: The model of trust in organization. Source: Author’s research Reliable means capable of being relied on. In the table 1 there are presented questions which were used to check opinion of managers about reliability in organization. The possible answers for the questions were: 1 - I strongly disagree, 2 - I disagree, 3 - I do not know, 4 - I agree, 5 - I strongly agree. Table 1: Questions connected with reliability. No Reliability 1. I trust my subordinates 2. All employees are treated fairly 3. Company cares about employees' interests 4. Most people in company keeps promises 5. People in company avoid the gossip and participation in an unfair criticism of others 6. In company there are good relations between employees Source: Author’s research After suming a points, the answers were divided into three groups. The best from 23 to 30 points, the medium from 15-22, and the weak from 6–14 points. The results are presented in table 2. Table 2: Level of reliability. Groups Number of managers (in%) Source: Author’s research Group I 23-30 points 52% Group II 15-22 points 47% Group III 6-14 points 1% According to opinion of managers, 52% of them have a very good opinion about reliability in their organizations, 47% medium and only 1% weak. The next element of trust in organization is intention. Intention is a course of action that one intends to follow. In table 3 there are presented question, which were used to check opinion of managers about intention in opinion of managers. The possible answers for the questions were: 1 - I strongly disagree, 2 - I disagree, 3 - I do not know, 4 - I agree, 5 - I strongly agree. In this case the best answer for organization have 5 points, so the answer for the questions from 1 to 5, were accounting as follows: if the answer was 1 it has 5 points, for the answer 2 – 4 points, for the answer 3 it was 3, for answer 4 it was 2 points, and for an answer 5 – one point. Table 3: Questions connected with intentions. No Intentions 1. In dealing with others, people never should be too careful 2. You should not trust other people until you do not know them well 3. Most people will lie if it enable then to get something 4. Employees in your company when the opportunity arises to gain something will be dishonest 5. In these days in your company you can only count on yourself and only trust yourself 6. In your company employees can openly talk about what they do not like, or how something should be changed Source: Author’s research After suming a points, the answer were divided into three group as in the first case. The best group from 23 to 30 points, the medium group from 15-22, and the weak group from 6 – 14 points. The results are presented in table 4. Table 4: Level of intentions. Groups Number of managers (in%) Source: Author’s research Group I 23-30 points 20% Group II 15-22 points 70% Group III 6-14 points 9% According to opinion of managers, 20% of them have very good opinion about intentions in their organizations, 70% medium and only 9% weak. The next elements of trust in organization are abilities. Ability is the group of skills, competencies and characteristics that enable a party to have influence within some specific domain. In table 5 there are presented question, which were used to check opinion about abilities. The possible answers for the questions were: 1 - I strongly disagree, 2 - I disagree, 3 - I do not know, 4 - I agree, 5 - I strongly agree. Table 5: Questions connected with abilities. No Trust: Building abilities 1. In the company managers are primarily advisors and intellectual partners to subordinates 2. In your company results are most important, the main concern is how to do the best tasks, the employees are very ambitious and driven to achieve 3. Your company is implementing new ideas and improving work conditions 4. In your company your employees feel accountable for their tasks and do not have to be monitored 5. In your company staff for most of the time trying to be helpful to others and do not care only about self-interest 6. Your company prefers a stand-alone risk-taking, innovation, originality Source: Author’s research After suming a points, the answer were divided also in three groups as in the other cases. The results are presented in table 6. Table 6: Opinion about abilities. Groups Number of managers (in%) Source: Author’s research Group I 23-30 points 40% Group II 15-22 points 58% Group III 6-14 points 2% According to opinion of managers, 40% of them have a very good opinion about abilities connected with trust in their organizations, 58% medium and only 2% weak. At the end of analysis all elements were bring together and the level of trust was account. The results are presented in table 7. Table 7: Level of trust according to opinion of managers. 66-90 42-65 Groups Number of managers (in %) 37% 63% Source: Author’s research 18-41 0% Among researched managers, most of them present medium level of trust – 63%. Very high level was identified in the group of 37% of managers. No one of them was in the worst group. The research was done in the best enterprises, so maybe that is way the managers present so high scores and the good level of trust. CONCLUSIONS, LIMITATIONS AND MANAGERIAL IMPLICATION There are several reasons why the research of trust has long remained problematic. First of all, there has been lack of clarity of the key concepts such as trust and risk. The antecedents and outcomes of trust have also been blurred and the roles of trustor and trustee haven’t been clear enough. Perhaps the interdisciplinary interest in trust is one of the reasons why the concept of trust lacks clarity. Since trust research has spread to several disciplines, a single researcher needs to collect the bits and pieces of trust related studies in various disciplines and try to make his or her synthesis to add something new to the scientific discussion of trust. However, for a new researcher, trust as a research topic gives many possibilities. For example, trust is also one of the key concepts in the knowledge-based competition of the network era and has been kindly studied recently in computer science related areas. New technologies have raised the interest in trust all around the world. Examples of currently researched topics are studies questioning what make consumers trust a certain webside and how trust can be built in online buyer-seller relationships. Several limitations to the proposed theory should be recognized. First, the theory presented here is limited to trust declared by managers to subordinates and further research is needed to extend it to other forms of trust such as trust in organizations or trust among all members of organizations. A second limitation is that the article focused on work relations within organizations, and the research was done only in the best enterprises. The research contributes to the understanding of trust by proposing the method of measurement. The findings of the current study have implications for organizations. Some recent changes in the workplace, such as an increase in the use of project-based and virtual teams, require employees to form new cooperative relationships quickly, often based on limited information about the coworkers. Given this new reality, it is important for researchers and practitioners alike to explore how trust forms initially, and how it can be maintained over time. 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