We propose a construct, the Trust Triangle, that highlights three primary mechanisms that provide ex post accountability for opportunistic behavior and motivate ex ante trust in economic relationships. The mechanisms are a society’s legal and regulatory framework, market-based discipline and reputational capital, and culture, including individual ethics and social norms. The Trust Triangle provides a framework to conceptualize the relationships between trust, corporate accountability, legal liability, reputation, and culture. We use the Trust Triangle to summarize recent developments in the empirical (...) finance literature that examine how trust is formed and how trust, or its absence, affects financial markets, firm performance, and the incidence of financial fraud. To date, most studies examine only one leg of the Trust Triangle in isolation. The evidence, however, indicates that all three legs of the Trust Triangle have first-order effects on a wide range of financial outcomes and that they are interrelated. Attempts to model trust and trustworthiness that do not incorporate all three aspects of the Trust Triangle will therefore miss essential aspects of the basic economic problem of how counterparties overcome the risks of moral hazard, asymmetric information, and opportunism to engage in mutually beneficial exchange and production activities. We focus especially on culture-related mechanisms, a recently developed area in empirical finance research that has potential to influence the more established research on laws and reputation. (shrink)

This article presents an alternative rationale for corporate philanthropy based on managerial values of benevolence and integrity. On the one hand, top managers with benevolence and integrity values are more likely to spread their intrinsic concern for others into the wider society in the form of corporate philanthropy. On the other hand, top managers high in benevolence and integrity are likely to contribute to improved managerial credibility and trusting firm-stakeholder relationships, thereby improving corporate financial performance. Therefore, the article makes the (...) argument that both corporate philanthropy and corporate financial performance can better be interpreted as resulting from managers’ benevolence and integrity values. (shrink)

At the centre of responsible management (RM) learning is the development of managerial competence for ethics, responsibility, and sustainability (ERS). Important contributions have been made from each: the ethics, responsibility, and sustainability disciplines. However, we are yet to integrate these disciplinary contributions into a comprehensive interdisciplinary RM competence framework that corresponds to the interdisciplinary nature of RM challenges. We address this priority in this paper and report on the findings of an integrative structured literature review of 224 management competence articles (...) across the ERS disciplines. Our thematic template analysis has produced an interdisciplinary RM competence framework of three layers of personal, behavioural, and intellectual competences and independent and interdependent competence dimensions. The resulting 3 × 2 competence matrix framework accommodates 33 interdisciplinary ERS competence themes and 90 subthemes in the six competence domains of _being_ and _becoming_, _acting_ and _interacting_, _knowing_ and _thinking_. To the RM discussion, we contribute an interdisciplinary competence framework that enables the development of responsible managers who tackle the inherently interdisciplinary issues of RM. To the competence discussion, we contribute the interdependent competence dimension and future research directions through the lens of response-ability. _JBE Section:_ Business Ethics Learning and Education. (shrink)

Leaders in today's world face the challenge of earning the trust and commitment of organizational members if they expect to guide their companies to success in a highly competitive global context. In this article, we present empirical results indicating that when leadership behaviors are perceived as trustworthy through the observer's mediating lens, trust increases and leaders are more likely to be viewed as ethical stewards who honor a higher level of duties. This article contributes to the growing body of literature (...) about the importance of ethical stewardship in the trust relationship. (shrink)

Although trustworthiness has been described as a source of competitive advantage, its value extends to organizational governance and wealth creation. We identify the importance of the commitment—compliance continuum in the decision to trust and note that trustworthiness is a subjective perception viewed through each person's mediating lens. That lens and each person's interpretation of the social contract impact one's commitment to cooperate. We suggest five propositions that integrate trustworthiness, governance, and wealth creation.

Trust within a secular or organizational context is much like the concept of faith within a religious framework. The purpose of this article is to identify parallels between trust and faith, particularly from the individual perspective of the person who perceives a duty owed to him or her. Betrayal is often a subjectively derived construct based upon each individual's subjective mediating lens. We analyze the nature of trust and betrayal and offer insights that a wise believer might use in understanding (...) his or her relationship with the divine. We suggest that the parallels between trust and faith involve a willingness to relinquish one's power or control in the expectant hope that our needs will be met. Betrayal, however, is often profoundly misunderstood. (shrink)

Organizational citizenship behaviors (OCBs) are essential for effective organizational functioning. Decisions by employees to engage in these important discretionary behaviors are based on how they make sense of the organizational context. Using fairness heuristic theory, we tested two important OCB predictors: manager trustworthiness and interactional justice. In the process, we control for the effects of dispositional factors (propensity to trust) and for system-based organizational fairness (procedural and distributive justice). Results, based on surveys collected from 120 employee–supervisor dyads, indicate that manager (...) trustworthiness explains variance in OCBs over and above the variance accounted for by interactional fairness. Implications for theory and practice are discussed. (shrink)

This study examines to what extent perceived corporate social responsibility reduces employee cynicism, and whether trust plays a mediating role in the relationship between CSR and employee cynicism. Three distinct contributions beyond the existing literature are offered. First, the relationship between perceived CSR and employee cynicism is explored in greater detail than has previously been the case. Second, trust in the company leaders is positioned as a mediator of the relationship between CSR and employee cynicism. Third, we disaggregate the measure (...) of CSR and explore the links between this and with employee cynicism. Our findings illustrate that the four distinct dimensions of CSR of Carroll are indirectly linked to employee cynicism via organizational trust. In general terms, our findings will help company leaders to understand employees’ counterproductive reactions to an organization, the importance of CSR for internal stakeholders, and the need to engage in trust recovery. (shrink)

The raging cynicism felt toward businesses and business leaders is a by-product of perceived violations in the social contracts owed to the public. Business schools have a unique opportunity to make a significant impact on present and future business leaders, but ‘practicing what we teach’ is a critical condition precedent. This paper presents frameworks for ethical practices for assessing the social contracts owed by business schools in their role as citizens in the larger community. We identify the ethical implications of (...) business school practices to guide the development of tools for self-assessment and to focus on delivering the implied duties owed to the stakeholders of business schools. (shrink)

Trust is a key ingredient of business activities. Scams are spectacular betrayals of trust. When the victim is a powerful organization that does not look vulnerable at first sight, we can suspect that this organization has developed an excessive trust, or over-trust. In this article, we take over-trust as the result of the intentional production of gullibility by the scammer. The analysis of a historically famous scam case, the Elf “Great Sniffer Hoax,” suggests that the victim is made gullible by (...) the scammer through a range of seduction and protection maneuvers that prevent the victim from developing doubts and suspicions. An integrated framework of the production of gullibility in organizations is proposed in order to further our understanding of over-trust. We discuss how these insights might be extended, beyond the case of scams, to more ordinary contexts of business activities. (shrink)

This paper presents conceptual arguments to suggest that trust within organizations and trustworthiness of organizations are built through ethical governance mechanisms. We ground our analysis of trust, trustworthiness, and stewardship in the business literature and provide the context of business school governance as the focus of our paper. We present a framework that highlights the importance of knowledge, resources, performance focus, transparency, authentic caring, social capital and citizenship expectations in creating a basis for the ethical governance of organizations.

While the coexistence of trust and distrust has been acknowledged in previous literature, the understanding of their connection with organisational culture is limited. This study examines how trust and distrust construct the unity and fragmentation of organisational culture. Productive working relationships can be characterised by high trust, but strong ties and high trust may also account for false organisational unity. This study shows that trust and distrust can co-exist and distrust may even increase trust in particular situations. Moreover, we describe (...) how the cognitive and affective components of trust and distrust relate to the unity and fragmentation of organisational culture. We present an empirical case study of a company where tension and distrust between top management, middle management and shop stewards affected the organisational culture. The study contributes to earlier research by discussing trust as a multidimensional and dynamic phenomenon. The study shows how the affective and cognitive components of trust and distrust constitute the unity and fragmentation of organisational culture. We propose that if an organisation is willing to improve its ethics, it should rely on fragmentation rather than unity. (shrink)

I argue for the role of trust and cooperation as part of the foundation of digital commerce by expanding the reach of the Integrative Social Contract Theory of Donaldson and Dunfee. I propose that a digital business community can be a community in the morally relevant ways that Donaldson and Dunfee describe, and that the basic framework of ISCT can apply to the digital business world similarly to its application in the offline business world. I then analyze the roles of (...) trust and cooperation in e-commerce, showing how they are important to the digital business community and explaining their moral relevance under a digital form of ISCT. I use the ISCT framework to show that trust and cooperation are an instantiation of the hypernorm of necessary social efficiency, and that authentic microsocial norms developed for the ends of trust and cooperation carry moral responsibility. (shrink)

Solidarity could be defined in the broad sense either as a means or as an end. Considered as an end, solidarity is the motive of any virtuous action based on altruistic reasons, such as helping others to rescue someone in order to prevent a harmful situation. E. g. contributing to lift and rescue a heavy person, lying unconscious in the street on the floor, who is being handled by rescuers, but who might be needing an additional person, could express the (...) value of solidarity as an end, since an answer to others request for help is given in the situation of emergency and risk, without having a particular obligation to help. Solidarity as a means (to an end, not an end), could be understood as a property of dependency of a set of parts to a whole (in solidum), as when in a family or a professional group, individual and collective roles and responsibilities are melt together to some extent.This idea of benefiting others could be understood either as a way of sharing together moral sentiments as love, social virtues as friendship and shared commitments and common economic and educational interests, in a limited community circle, that of the family. Even if the division of labour is not simply based on patriarchal authority, mutual consent of family members to rules and to a common circle of interests, those of the family, resemble to a egoism of the group, and not yet to truly social and altruistic values. Solidarity as cohesion of human beings, by the means of "interchangeability of ideas, services, goods, of workforce, virtues and vices", is solidarity limited to the constitution of a process of exchange that is a means that could be used to different ends. (shrink)

We study the impact of social capital and perceptions about corporate ethical behaviour on the use of collateral in corporate borrowing. Using a dataset of more than 17,500 firms operating in over 100 transition and developing countries, we find evidence that country-level social capital and better perceptions about corporate ethical behaviour are negatively associated with the likelihood to pledge collateral. In addition, these country-level characteristics influence the value of collateral relative to the loan value.

The issue of trust has increasingly attracted attention in the business ethics literature. Our aim is to contribute further to this literature by examining how the use of the carbon copy function in email communication influences felt trust. We develop the argument that the use of cc enhances transparency—representing an important characteristic of workplace ethics—and hence promotes trust. We further argue that a downside of the cc option may be that it can also be experienced as a control mechanism, which (...) may therefore negatively affect trust. The results of our first study showed that the use of cc indeed enhances perceived transparency, but at the same time also leads to the experience of increased control. Building upon this insight, the findings of five subsequent studies consistently revealed that the use of cc negatively influences felt trust. More precisely, employees felt trusted the least when the supervisor was always included in cc. This effect on felt trust also negatively influenced how trustworthy the organizational climate was perceived. We further replicated these results in two field surveys, which showed that the negative effect of cc on felt trust lowered perceptions of psychological safety and contributed to a culture of fear. Taken together, our findings suggest that when transparency in email communications is experienced as a control mechanism, its use is perceived as unethical, rather than as ethical. Implications and recommendations for future business ethics research are discussed. (shrink)

Online social networks (OSNs) have gained enormous popularity in recent years. Hundreds of millions of social network users reveal great amounts of personal information in the Web 2.0 environment that is largely devoid of security standards and practices. The central question in this article is why so many social network users are being so trusting. The focus is on theory-building on trust as a critical issue in OSNs. A theoretical framework is developed, which facilitates a multi-level and multi-dimensional analysis of (...) research problems related to trust in OSNs. First, the structural and relational underpinnings of trust in OSNs are investigated from a governance perspective that integrates concepts of social network theory, social capital and the role of value in relational exchanges. Subsequently, the focus moves to the individual's decision to trust and to processes through which trust actually emerges. Different types and sources of trust from the trust literature and their importance for trust-related decisions and behaviours in OSNs are discussed. Several research propositions are presented, which contribute to a better understanding of the role of trust and the relevance of facets of trust and social capital in OSNs. (shrink)

Ingratiation is an impression management strategy whereby actors try to curry favor with targets, and is one of the more pervasive social activities in a workplace. An assumption in the literature is that a target’s awareness of the tactical purposes behind ingratiation is an ethical concern which triggers suspicions of ulterior motives and casts the actor as distrustful. However, this assumption fails to consider alternative explanations in that ingratiation may also be perceived as occurring for authentic purposes. This alternative view (...) may cause targets to cast the actor differently, and thus presents an intriguing ethical paradox where actors could be recognized by targets as trustful, distrustful, or some level in-between. This research draws on behavioral ethics and attributional models to investigate supervisor trust of employees who engage in ingratiation. We report two studies that examine perceived tactical ingratiation, perceived authentic ingratiation, and their interaction as predictors of supervisor trust using multisource data from two field samples. Across the two studies, we find positive interactions between tactical and authentic ingratiation as predictors of trust and trustworthiness. Study 2 also shows that combined tactical and authentic ingratiation predicts the trustworthiness dimensions of benevolence and integrity, but not ability. The results suggest that ingratiation is portrayed somewhat bleaker than necessary in the literature, and that when actors engage in tactical ingratiation that is also deemed authentic, targets respond with less concern than the literature would suggest. (shrink)

In the context of a crisis of confidence in executive leadership in corporate America, this paper examines the role of integrity as a mediator within strategic leadership and its impact on credibility in reputational capital. A tension can occur within strategic leadership between the elements of strategic planning and leadership vision. This tension can destroy the credibility of reputational capital unless strategic leadership is managed effectively. Integrity can be used as the glue providing for credible leadership vision amid a strategic (...) perspective oriented to competitive pressures, thereby enabling strategic leadership to contribute to a sustainable competitive advantage. A strategic leadership audit is presented as a tool by which strategic leadership and reputational capital can be managed. (shrink)