Table of Contents

Handbook of Economics and Ethics

Handbook of Economics and Ethics

Elgar original reference

Edited by Jan Peil and Irene van Staveren

The Handbook of Economics and Ethics portrays an understanding of economic methodology in which facts and values, though distinct, are closely interconnected in a variety of ways. From theory building to data collection, and from modelling to policy evaluation, this encyclopaedic Handbook is at the intersection of economics and ethics.

Chapter 71: Trust

Bart Nooteboom

Subjects: economics and finance, behavioural and experimental economics, history of economic thought

Extract

Bart Nooteboom What is trust? We need trust when we are vulnerable to the behaviour of others (Deutsch 1962). Trust enables us to believe that despite such vulnerability ‘things will go well’. But we are vulnerable to many things, in many ways; and trust may emerge for different reasons. First there is the question of whom we can trust. We can trust people, but also organizations and institutions (such as the legal-judicial system, in ‘system trust’) (Luhmann 1979). For collaboration between firms, we must be able to trust the people we are dealing with, as well as the corresponding organization. If we trust people but they are not backed by their superiors and co-workers, our trust becomes less meaningful. Conversely, we may trust an organization, for example, on the basis of its reputation. But if its policy is not reliably implemented by its people, that trust too has little meaning. In small owner-managed firms, personal and organizational trust come together in one. In larger companies, we must be able to trust the people, the organization and between them the connections which arise in the positions and roles of people, organizational procedures and organizational culture (Ring and van de Ven 1994). Second is the question of what in people or organizations we can trust. We can trust competence, that is, the ability to act according to agreements and expectations. We can also trust intentions, meaning the will to act ‘properly’, with attention and commitment and ‘benevolence’ (lack of opportunism, absence of...

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