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Complexity and the Economy

Complexity and the Economy

Implications for Economic Policy

Edited by John Finch and Magali Orillard

The authors examine the causes and consequences of complexity among the broadly economic phenomena of firms, industries and socio-economic policy. The book makes a valuable contribution to the increasingly prominent subject of complexity, especially for those whose interests include evolutionary, behavioural, political and social approaches to understanding economics and economic phenomena.

Chapter 8: Trust in Post-Bureaucratic Organizations

Gráinne Collins

Subjects: economics and finance, evolutionary economics, institutional economics


Gráinne Collins INTRODUCTION In this chapter I look critically at the idea that trust can effectively and cheaply replace control in organizations. The argument, from disparate sources, is that trust and control are functional equivalents (Dasgupta 1988; Handy 1995). Both enable collective action (Nooteboom 2002) in the face of complexity, risk and uncertainty but trust is cheaper and additionally creates synergies in the production process.1 Indeed it is viewed as a precondition for superior performance and success in the new globalized environment (Fukuyama 1996; Deakin and Wilkinson 1998; Humphrey 1998; Lane 1998; Lane and Bachmann 1998). Trust pays. The firm need only pull down this ‘disembodied notion of trust floating around somewhere in the social ether’ (Kay 1996, quoted in Deakin and Wilkinson 1998, p. 168). What is it about ‘trust’ that makes it so effective yet relatively costless compared to control? A closer look at the literature reveals a very singular use of ‘trust’, that assumes a generalized societal trust that can be drawn upon or bundles up several meanings of trust, for instance trust between individuals is often assumed to be the same as trust between firms. Therefore I set out a more nuanced view of trust in organizations that discusses how different types of trust are interrelated and one that links trust and trust creation with organizational form and power relations. Trust relationships are urged upon firms as a way to deal with the increased complexity of the production process due to the fragmentation of both...

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