Decisions to trust others are both personal and subjective

One of the more challenging aspects of addressing organizational trust (whether between individuals and organizations or between two or more organizations) is the inherent subjectivity involved in determining the trustworthiness of organizations and making decisions to act (or refrain from acting) on the trust one party has in another. Differences in the relative willingness of people to trust seem to derive from a variety of factors, particularly including influences on individuals from family, community, and culture, and from experiences built up over time from interactions with others. Encountering a situation in which someone else exhibits trusting behavior outside the norms we come to expect can bring these differences into sharper focus, as evidenced in a story recounted by my colleague Sara Peters from a recent visit to the island of Iona in western Scotland. It seems while attempting to make a credit card purchase at a local shop that doesn’t accept credit cards, the shop owner offered — absent sufficient cash at hand — to provide a self-addressed envelope to the shoppers so that they could mail the money to her later. This gesture is of course a business decision, but it also reflects a willingness on the part of the shop owner to place her trust in people who are essentially complete strangers to her. This scenario illustrates exactly one of the central characteristics of trusting relationships — whether interpersonal or otherwise — both in the asynchronous nature of the proposed transaction and in the explicit willingness for the truster to make herself vulnerable to the action of the trustee. Historically, there has been some debate about what characteristics of the exchange must be in place in order to invoke trust as opposed to, say, a purely economic or probabilistic calculation comparing potential loss with potential gain. Where the trusting party appears, as in the case of the Iona shop owner, to be chiefly concerned with something other than transaction cost economics, the trust involved goes beyond expectations about another’s intentions, and crosses over into the realm of character, both for the truster and potentially the trustee.

Morton Deutsch considered trust primarily for its role in cooperation and, specifically, the need for trust and trustworthiness between parties to cooperative exchanges, which in Deutsch’s view requires “mutual trust,” particularly because the benefits each party to cooperation receives are not realized at the same time (Deutsch, 1960). The key aspect of trust-based decisions as distinct from other types of decisions where risk or uncertainty exists regarding the outcome is the relative difference between the potential positive and negative outcomes. Deutsch posits that trust is only involved in situations where a party holds an expectation about an event in which the potential detriment if the expectation is not fulfilled is greater than the potential gain if the expectation is met (Deutsch, 1958). In situations where the calculus is reversed, and the upside outweighs the downside, Deutsch characterizes a choice to cooperate as “gambling” rather a decision based on trust, and extends the formulation generally to decisions in the face of risk, in that when a party trusts, the risk of what can be lost is relatively large compared to what can be gained (Deutsch, 1960). Deutsch places the idea of confidence firmly within his conceptions of trust and of risk-taking behavior, repeatedly characterizing for instance the willingness to participate in a given cooperative action as a function of the “confidence that his trust will be fulfilled” (Deutsch, 1958, p. 269). This formulation seems to co-mingle not only trust with confidence, but also trust with expectation.

Francis Fukuyama’s widely read work on trust (1995) focuses on the social and cultural underpinnings of trust, but stresses the importance of trust not only for the overall benefit and sustainment of society, but to enable economic success as well. Fukuyama squarely positions organizations and institutions as embedded in the societal contexts in which they operate, suggesting not only that social norms and cultural characteristics are significant factors influencing the economic performance of these organizations, but that prospects for economic success are predicated on the levels of trust and the factors contributing to its development present in a give society or cultural environment. This explains in part Fukuyama’s belief that declining levels of societal trust and corresponding failure to embrace individual cultural elements that help define a society represent a state of crisis for the United States and other “low-trust” countries (Fukuyama, 1995, pp. 310-311). For many of us, it requires little more than anecdotal evidence to support the idea that “doing the right thing” is more inherent in a given culture or country or community.


Deutsch, M. (1960). The effect of motivational orientation upon trust and suspicion. Human Relations, 13, 123-139.

Deutsch, M. (1958). Trust and suspicion. Journal of Conflict Resolution, 2(4), 265-279.

Fukuyama, F. (1995). Trust: The social virtues and the creation of prosperity. New York, NY: Free Press.