Chapter 54: Trust and Entrepreneurship
Friederike Welter INTRODUCING THE CONCEPT OF TRUST Trust has gained attention in entrepreneurship research over the past decade because of its influence on reducing transaction costs and risks involved with entrepreneurship. However, the concept has proved difficult to define. Most definitions build on the following elements: reciprocity, expectations and trustworthiness (Höhmann and Malieva, 2005). Reciprocity is required for trust as it signals to trustor and trustee that the trust they extend to each other will be given back. In this regard, trust is a result of expectations towards others. In other words, I expect an unknown person to act in my own interest or at least to take my interests into account although I cannot be sure about the final outcome of my decision; I just hope not to be disappointed, which can be based on my interpretation of signals sent by the other party. In this regard, trust involves a ‘leap of faith’ (Möllering, 2006) which is required to create familiarity between partners. It is here that trustworthiness comes in: individuals can signal that they are worthy of trust, thus reducing the initial ‘leap of faith’ and encouraging trusting behaviour. Trustworthiness is reflected in, for example, recommendations of other, trusted and known parties, reputations, previous behaviour and a general willingness not to cheat on others (Nooteboom, 2002). UNDERSTANDING TRUST IN ENTREPRENEURSHIP Trust can be differentiated into personal and institutional trust. Trust has been shown to play a role in networks and for network emergence (Anderson and Jack,...
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