A West–East Perspective
Edited by Hans-Hermann Höhmann and Friederike Welter
Chapter 8: Establishing Trust in a Distrustful Society: The Case of Russian Business
1 Vadim Radaev INTRODUCTORY REMARKS Market relations are not confined to free competition and price-making mechanisms. The market is a part of the economy as an instituted process (Polanyi 1992). It is constituted by sets of rules, regulations and other institutional arrangements, including relations of trust. Broadly speaking, we would define trust as a belief that other agents act in a predictable way and fulfil their obligations without special sanctions (Coleman 1988). More specifically, we differentiate between two levels through which trust relationships have to develop. The first level of trust is achieved through the predictability of behaviour of the other actors. The second level of trust is reached through mutual commitment to accepted conventions, which are voluntarily accepted by market actors. We also accept a division between one-sided trust in institutions and reciprocal trust among business actors (Rose-Ackerman 2001a; 2001b). Today Russia demonstrates a prominent example of a distrustful society, with contradictory and unstable formal rules. Formal enforcement is lacking and market actors have to cope with an unpredictable governmental legislative and regulatory policy, both of which produce a high level of uncertainty. As a result, one-sided trust in institutions remains at a low level. One might expect that this deficiency of one-sided trust would be compensated for by reciprocal trust in business partners. However, reciprocal trust in business-to-business relationships is low as well, because honesty often does not pay, which makes the situation even more demanding. Although business actors put the highest value in honesty in business relations,...