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Institutional trust in organization: concept, structural dimension and measurement

QI Yujue;YANG Dongtao;HE Yumei

Business Management Journal,2018,Vol 40,No. 02

【Abstract】 The main purpose of this article is to develop a measurement scale of institutional trust. As the transaction scale and scope are concerned, institutional trust is far more important than interpersonal trust (Baek and Jung, 2015). However, little attention has been paid to institutional trust compared to interpersonal trust in the field of management research, with less research and findings on it. Furthermore, there exist some unsolved problems such as confusion of several similar concepts, vagueness of operational definition and structure dimension in theory, and lack of proper measurement scale in empirical research. Based on the relatively rich and mature research of institutional and trust theories, a deductive method is used in this article to generate the items of measurement. Firstly, institutional trust is defined operationally as trustworthiness of system, through the comparative analysis on several confusing concepts, namely, institutional trust, institution-based trust, organizational trust, system trust and impersonal trust. Secondly, institutional trust is divided into two dimensions from the perspective of functions of system, through the comparative analysis of the two different perspectives of content and function in previous research. The dimension of legitimacy refers to the definition and function of system, that is, whether the nature and objective of system can be recognized and accepted by members. The dimension of effectiveness refers to the demonstration of function, that is, whether an organizational system can be effectively implemented. The definition and dimensions are then used as a guide for the development of items, followed by experts’ guidance and revision, and doctoral candidates’ classification to evaluate the content validity. The scale development process is strictly followed by the stages and steps summarized by Hinkin (1995; 1997; 1998). After confirmation of the items, the structure, reliability and validity of the scale are examined by sample data from dozens of manufacturing enterprises. The results of exploratory factor analysis show that, all the items are correlated with each other significantly, and two common factors extracted can explain most of the variance. The dimensional division is supported by the factor structure, with respectively desirable factor loading of each item. The results of confirmatory factor analysis show that, the dimensional division is also supported by acceptable fit indexes between theoretical models and sample data, with relatively high factor loading value of each item on their respective dimensions. The results of reliability analysis and validity analysis indicate that there is high internal consistency between the items of the scale and those on both dimensions, and the measurement scale has good convergent, discriminant and criterion validities. The main theoretical contributions of this article include the following. (1) Through the differentiation and analysis of several confusing concepts, the definition and connotation of institutional trust are clarified, based on the institutional and trust theories. (2) Previous research is lack of consistent dimensional division of institutional trust. According to the perspective of Luhmann (2005) and Williamson (2001), the trustworthiness of system is judged by the evaluation about its function and the demonstration of the function. So this article divides institutional trust into two dimensions, the legitimacy dimension due to members’ acceptance and support, and the effectiveness dimension due to the performance of implementation. Thus, the structural dimension of institutional trust is divided more clearly and reasonably. (3) The existing methods of measurement universally deviate from the analysis foundation of institutional theory, while the study of system values theory more than measurement. This article provides a valid measurement tool for empirical research on institutional trust.

The impact of initiators’ characteristics on crowdfunding performance of agricultural projects: an analysis based on the trust theory

DU Junjuan;LI Yaokuang

Chinese Rural Economy,2018,No. 03

【Abstract】 This paper collected 1166 projects derived from China’s largest E-business platform of Taobao crowdfunding and investigated initiators’ characteristics that could affect the perceived trust of investors. Based on the trust theory, the study established a research model in two dimensions, namely, a trust source and a trust transfer mechanism. With a multivariate regression method, the paper conducts an empirical analysis on the impact of initiators’ characteristics on crowdfunding performance of agricultural projects. The results indicated that industrial consistency, top-seller certification, cash deposit, credit score, the favorable feedback rate and the rural per capita net income had significantly positive impacts on the funding performance. However, factors such as the type of Alipay certification and the number of crowdfunding platforms had no significant impact on the funding performance. The study concludes by presenting implications for practice from the perspectives of initiators, crowdfunding platforms and the government.

Is trust certain to be welcome? The two paths of feeling trusted and its sequels

WANG Hong-li

Business Management Journal,2018,Vol 40,No. 06

【Abstract】 Trust has been considered as a positive experience in the existing studies. The best respect for employees in organizations is trust in them, and the best strategy for organizations to make employees undertake responsibility is to let them feel trusted by organizations and managers. In theoretical research, it has been found that giving employees trust is the key to making employees aware of their own value, for trust can significantly stimulate employees’ self-evaluation, organizational citizenship behavior and individual performance. That is, gaining trust is a huge driving force for employees, and this is also consistent with the philosophy that “trust is a virtue and respect.” According to the Gallup survey in 2005, employees’ need to be trusted and respected in their organizations is stronger than work-related stress. Therefore, the variable “feeling trusted” is selected from previous studies emphasizing trust, becoming an important antecedent factor of behavior promotion. However, is “feeling trusted” must a happy thing? Although feeling trusted is regarded to be merely related to the individual perceptions of employees in general, it is actually the process in which the disadvantaged party interprets trust from a strong party (superior), which not only releases the signal of value, but also indicates the relationship between supervisors and subordinates. Tyler et al. (2003) pointed out that the most important value of trust was its symbol of identity and status, and it could meet the basic social needs of people. Based on the social exchange theory of Blau et al. (1964), because the resources people possess are unequal in social exchange, when social exchanges between the two sides with a larger social status gap are conducted, the disadvantaged party will choose to respect and obey the strong party or adopt other ways to repay the latter. In order to gain benefits, those who are in a disadvantaged position will be in a vassal status, leading to an involuntary social exchange. To conclude, in this asymmetric power relationship, trust creates a strong sense of subordinates to repay. Even such behavior is unintentional, it can maintain the image of being trusted by their supervisors. Meanwhile, employees’ repaying for being trusted is not only related to their understanding of feeling trusted, but also constrained by the reciprocal norm strength of organizational environment in which they are in. The former makes employees have different attitudes towards the sense of obligation to repay, while the latter strengthens the employees’ belief in the sense of such an obligation. When subordinates perceived trust from their supervisors, they will feel happy and appreciated. However, such trust will be considered unwelcome when it is delivered through delegation of important tasks. Accordingly, when subordinates feel happy, they will positively contribute to organizations, such as increasing organizational citizenship behavior. Meanwhile, when subordinates feel pressure when receiving the trust from supervisors, they will negatively contribute to organizations, such as having forced organization citizenship behavior, in particular, compulsory organizational citizenship behavior. Thus, we guess subordinates’ feeling trusted will incur two different results at the same time. In fact, giving trust to employees is the best way to help employees realize their value. In our study, 351 employees were investigated through three-round data collection. Our findings show that the following. (1) Organization-based self-esteem plays a mediating role between feeling trusted and organizational citizenship behavior. Job stress plays a mediating role in the relationship between feeling trusted and compulsory organizational citizenship behavior. (2) Norm strength has a moderating effect between the mediating and outcome variables. That is, the more an organization emphasizes reciprocal norms, the more the organization-based self-esteem is related to organizational citizenship behavior. Similarly, the more an organization emphasizes reciprocal norms, the more job stress is related to compulsory organizational citizenship behavior. The research results reveal the impact of feeling trusted on employees’ organizational citizenship behavior and compulsory organizational citizenship behavior, and its two different paths. Thus, people can truly understand “why social exchange will cover unwanted exchange behavior.” And the study further explains the reason why employees have the same perception of trust from supervisors but different ways of responding to such a perception.

From individual social capital to collective social capital: empirical evidence based on financing trust network

WU Bao

Sociological Studies,2017,Vol 32,No. 01

【Abstract】 This paper proposed two research hypotheses on how collective social capital was constructed based on the operation of individual social capital, namely, the logic of particularistic relation operation and social prestige recognition. It also tested the two hypotheses in the context of inter-firm networking for financial support. The former logic was strengthened in the context of strong characteristics of kinship, geogaraphy and work related relations. It made the firms form small-group trust networks. The latter logic was strengthened in the context of strong characteristics of categorical homogeneity. It made the firms form large-scale open trust networks. Trust mediated the influence of individual social capital and collective structure of inter-firm financing network.

Interregional trust and conglomerates’ remote development: empirical test based on enterprise boundary theory

CAO Chunfang ;XIA Changyuan ;QIAN Xianhang

Management World,2019,Vol 35,No. 01

【Abstract】 This paper studied the impact of interregional trust on conglomerates’ remote development and distinguished their influence mechanisms. Based on the enterprise boundary theory, this paper firstly points out that the remote transaction cost and conglomerates’ organizational cost, which can be reduced by interregional trust, have opposite effects on conglomerates’ remote development and the reduction degree can decide the degree of conglomerates’ remote development. This paper empirically tested the manually compiled geographical data of the parent enterprises and subsidiaries as well as the interregional trust data surveyed by the Chinese Entrepreneurs Survey System (CESS) from 2008 to 2013. The results show that (1) The higher the trust between the parent enterprise and the remote subsidiaries is, the more the subsidiaries established there are, which indicates that the interregional trust has largely reduced conglomerates’ organizational cost and promoted conglomerates’ remote development. This conclusion is still robust with endogeneity considered. (2) Further studies have shown that interregional trust has a stronger effect on remote subsidiaries in areas where market entry is less difficult, and this effect is mainly found in private conglomerates. (3) From the perspective of economic consequences, conglomerates’ organizational cost can be reduced by interregional trust, which is also reflected in reducing the overhead expense and improving the performance of remote subsidiaries. This paper integrates the important informal institutional perspective of interregional trust into the analytical framework of conglomerates’ remote development based on single-country data, and expands the research on conglomerates’ development from the perspectives and influence mechanisms.

Fraud, trust and efficiency in the expert service market: from the perspectives of social preferences and cheap talk games

TIAN Sen;LEI Zhen;WENG Zhiquan

Economic Research Journal,2017,Vol 52,No. 03

【Abstract】 In an expert service market, consumers know little about the level or quality of the services they need, so they rely on the advice of experts. We modelled a situation in which experts can freely send diagnostic signals to consumers, informing them of the level of their demands, and recommend verifiable treatments accordingly. The credence goods literature typically studies the effect of price menus as a signal of market equilibrium. Nevertheless, when prices are exogenously determined, the cheap talk signal from expert diagnosis becomes the only signal available, and few studies pay attention to this scenario. We analyzed equilibrium in the expert service market through a cheap talk game where expert diagnosis is the only available signal and two types of experts coexist, namely, honest and selfish experts. We assumed that honest experts always send truthful signals and provide the most desirable treatment of consumers. In a monopolistic expert service market, the cheap talk signals are partially informative. The perfect Bayesian equilibrium in this market has three important characteristics. (1) The equilibrium is pooling at the top and separating at the bottom. Selfish experts do not send signals lower than a certain threshold value of demand. Their signals are continuously distributed over the upper-end of the space above the threshold. (2) When the signal is lower than the threshold, consumers fully trust it. However, when the signal is above the threshold, consumers’ belief about their demands is not affected by cheap talk signals. (3) If the signaling strategy is monotonic (the expected value of the random signal rises as its true state increases), then selfish experts will randomly exaggerate the true state of the demand and are more likely to send higher signals. Consumers, however, trust less as the signal goes higher. As a result, those who have low demands are excessively treated, and those who have high demands are inadequately treated. Pooling at the top and separating at the bottom are caused by selfish experts trying to imitate the signals sent by honest experts, but only when the profits are sufficiently high. As a signal goes higher, the profit increases once a consumer accepts the treatment; however, the probability of a consumer believing the signal is real also falls. The tradeoff between profit and trust restrains the selfish experts’ signaling strategy to a probability distribution that gives an equal expected profit to each signal within its support. In addition, by imposing a condition that selfish experts send signals from the same distribution point regardless of the true state, the selfish experts’ signaling strategy has a tractable solution. Comparative statistics suggest that an increase in the proportion of honest experts hurts low-demand consumers more when they encounter selfish experts. Furthermore, price control such as lowering the service price ceiling results in selfish experts sending increasingly higher signals, which in turn lowers the consumers’ trust level. Policymakers should be wary of these adverse effects when they consider measures such as cultivating professional conduct and price regulations. We further discussed the effects of introducing a competitive market structure and lowering consumer search costs. Obtaining a second opinion should provide consumers with more information about their true type, and we found that the fraudulent behavior of experts diminishes when consumers can search for other advice more easily.

Trust construction, institutional change and the development of farmers’ cooperative organizations: the strategy and practice of one organization

ZHAO Xiaofeng

China Rural Survey,2018,No. 01

【Abstract】 Trust in Chinese society is a special one that is based on kinship, which has been regarded by some scholars as an important factor that impedes the development of rational economic organizations in Chinese society. This study questioned this view by examining a case study. It found that the case organization was embedded in a structural context that allocated resources with the participation of external forces. This made the organization’s leaders under the influence of the environment’s soft constraints, which enabled them to get rid of the “ renqing” (人情) predicament and cultivate a key group who could understand the organization’s ideas, and provide a power of change in the cooperative system. Besides, during the organizational development, an interest-relationship network was found to be constructed. This network helped to deepen ordinary farmers’ trust in the cooperative and its managers in repeated games with frequent deals. Thus, the characteristics of ordinary farmers’ trust were found to move from the instrumental and interpersonal dimensions to the value and institutional dimensions. This could drive a change in ordinary farmers’ status in the organization from peripheral members to core ones, and provide conditions for members’ expansion and the standardization of the cooperation system.

Factors affecting trust of enterprises in third-party open innovation platforms

ZHOU Rui;CHEN Jiali;WANG Yujie

Technology Economics,2019,Vol 38,No. 05

【Abstract】 This paper investigates the key factors affecting the trust of enterprises in the third-party open innovation platform, and the relationship between these factors. Through collecting the sample data of 180 Chinese enterprises by questionnaire, this paper uses the structural equation model based on the partial least squares method to conduct an empirical study. The results show that the reputation and the innovation intermediary ability of the third-party open innovation platform has a direct impact on trust; and the specific assets, website quality, communication and information sharing have an indirect impact on trust by affecting the innovation intermediary ability.

Research on the effects of the social co-governance of the internet rumors on consumer’s trust: taking food harm as an example

ZHANG Bei;WU Baoshu;WEN Xiaowei

Business Management Journal,2019,Vol 41,No. 05

【Abstract】 How to effectively reduce the negative effects of internet food harm rumors is a hot issue. The study on the formation mechanism of consumer trust repair under the background of internet food harm rumors is extremely significant to repair consumer trust and to promote the sustainable development of the food industry. Academia and governors have reached consensus on the social co-governance of food safety supervision. It is necessary to explore the factors affecting the consumer’s trust-repair willingness from the prospect of the precaution factors such as government regulation, media credibility and social honesty, and the post-event governance factors such as information repair, affection repair and external repair. Previous research results have provided few explanations for the formation mechanism of the consumer’s trust-repair willingness. Therefore, further theoretical analysis and empirical test were conducted in this paper from the comprehensive perspective of the participation of the government, media, enterprises, consumers and other parties. This paper introduced food safety literacy as the moderator and explored the mechanism of both the precaution factors and the post-event governance factors on consumer trust repair. This paper put forward the research hypotheses based on the literature review and theoretical analysis to explore the questions by collecting and analyzing the samples from 420 questionnaires. The results were as follows: (1) the social honesty of precaution factors has a significant positive impact on consumer trust repair; (2) the information repair, affection repair and external repair of post-event governance factors have a significant positive impact on consumer trust repair; (3) food safety literacy positively regulates the positive impact of the precaution factors including government regulation and social honesty on consumer trust repair, and regulates the positive impact of the post-event governance factors such as information repair, affection repair and external repair on consumer trust repair. The theoretical contributions of this study include three aspects. Firstly, it makes up for the deficiency of the governance under the background of internet food harm rumors from the perspective of multi-participation, providing theoretical and practical reference for the management. Secondly, it deepens the theoretical and quantitative research on consumer’s trust-repair willingness with the internet food harm rumors. And this study constructs a theoretical model of the social co-governance and the consumer’s trust-repair willingness on the internet food harm rumors, which means that it will advance the modeling study of consumer’s trust-repair willingness and promote the theoretical progress of the impact theory through the quantitative research from the perspective of precaution and post-event governance. Thirdly, this paper provides a theoretical basis for the social co-governance under the background of internet food harm rumors with the research conclusion that the strategy of external repair advances the theoretical research on the social co-governance and expands the practical path of the social co-governance. Meanwhile, this paper also has its limitations: first, the empirical research data come from the static survey sample of consumers in Guangzhou, and without the consideration of the different levels of food industrialization and online public opinion atmosphere among various regions of China, the dynamic evolution law of consumer trust repair is hard to explain; second, the combined influence of the factors of internet rumor on consumer’s trust-repair willingness has not been considered, including spreading time and damage degree. Therefore, the research model should be further refined in future research to discuss the mechanism of internet rumors and the game equilibrium of the main body of co-governance deeply, and to improve the theory framework and the empirical analysis methods. Overall, the results not only refine the empirical research on the factors affecting consumer’s trust-repair willingness, but also provide theoretical basis and management enlightenment for the multi-agents such as government departments, food companies, media, third-party institutions, media and consumers to participate in social co-governance on internet food harm rumors.

Asset allocation of only children: expectations and tests based on trust and risk attitudes

CHEN Gang

Journal of Finance and Economics,2019,Vol 45,No. 03

【Abstract】 China once implemented the one-child policy for more than 30 years. Therefore, it is of great practical significance to study the behavior of only children after they grew up. Against the social background of China’s “one-child generation” becoming adults, entering the labor market and becoming the backbone of all sectors of society, the long-term economic impact of the one-child policy may be the key to China’s economic development. Using the data of the 2010 China Family Panel Studies and the 2011 China Household Finance Survey, the paper empirically assessed the asset allocation behavior of only children to reveal the far-reaching impact of China’s one-child policy on China’s financial market. The study found the following. (1) Compared with non-only children, only children are more risk-averse in asset allocation activities: the households whose heads grew up as an only child have a significantly lower probability of investing in stocks than those whose heads grew up with siblings and the market value of stocks by them is also smaller. (2) The reason why only children are more risk-averse than non-only children may be due to the lack of social interaction with and resource dilution of siblings, making only children less trusting and more risk-averse than non-only children. (3) The mechanism test confirms that the trust and risk preferences of household heads significantly increase the probability of the households investing in stocks and the market value of the stocks held by such households, and only children are more distrustful than non-only children. However, there is no evidence showing that there are significant differences in the risk attitudes between only children and non-only children. The above conclusions mean that the behavioral characteristics of only children being averse to risk assets will have a significant impact on the market structure of financial products. Therefore, relevant government departments need to pay close attention to the potential risks and economic impacts that may be hidden.

A study on the formation mechanism and spillover effects of tourist destination trust

LIU Weimei;LIN Derong

Business Management Journal,2019,Vol 41,No. 07

【Abstract】 Tourism destination is the spatial carrier where tourists undertake their activities during the process of tourism, and the needs of tourists are basically met and realized through tourist destinations. Thus, it can be seen that tourism destination plays an important role in the tourist’s experience. At the same time, it will also affect the tourist’s attitude and emotion to the tourist destination, and it is embodied in the tourist-destination relation finally. As we all known, the relation between the tourist and the destination has a direct impact on the number of visitors to the destination and tourism income. As a result, the tourist-destination relation has become an important tool for marketing and its sustainable and healthy development depends on the sense of trust and security brought by the destination. As a matter of fact, all kinds of negative news exposed about tourism destinations, such as television and other media, has a strong impact on the destination trust of tourists, and then affects the destination choice of potential tourists and the quality of experience of real tourists. For example, the seafood events that happen frequently in the destination make tourists almost lose confidence in the destination and result in the decrease of destination attraction at last. The rebuilding of confidence in the destination among tourists relates to the building of harmony between destinations and tourists’ visits. Therefore, it is necessary to explore the factors that influence the formation of trust, and also the spillover effect. Hence, this study tried to analyze the effects of self-congruity and functional congruity on destination trust and the relationships among destination trust, personal reciprocity, and place attachment as well as destination loyalty based on the Howard-Sheth model. Data collection can be conducted through online channels and on-site questionnaire distribution, and a total of 810 copies of effective data were collected by the two methods. Then, we made analysis of the data through SEM with AMOS 21. 0. The results show that self-congruity and functional congruity both have significant positive effects on destination trust. To some extent, in addition to the traditional functional attributes, the symbolic meaning of one tourist destination is also attractive to the projection of tourists’ emotion. In addition, the effect of self-congruity on destination trust is also generated from functional congruity, which indicates that destination symbolism is slightly superior than functional attributes for tourists projecting their trust into destinations. As for the results of destination trust, it manifests that destination trust has significant positive effects on tourist-destination reciprocity, place attachment and destination loyalty. Tourist-destination reciprocity plays an intermediary role in the relationship among destination trust, destination loyalty, and place attachment. More importantly, as a new and important construct of tourist-destination relation, reciprocity not only mediates the relationships between destination trust and loyalty partially but also affects destination loyalty indirectly through place attachment. The regulatory role of tourist-destination reciprocity is slightly greater than place attachment in the relationship between destination trust and destination loyalty. As shown, tourist-destination reciprocity and place attachment play a chain dual intermediary role in the relationship between the tourist-destination trust and loyalty, which is the new discovery and contribution of this study, and is different from the existing research results. This study discusses the formation mechanism of destination trust from the perspective of consistency, which is the expansion of the theory of destination trust formation. It also studies the effect transmission mechanism of destination trust, in particular, the evolution of the relationship between destination trust and loyalty, which is the improvement of loyalty theory. Finally, this study provides managers with the corresponding marketing means from the practical point of view to construct the destination trust system. In view of the importance of self-congruity and personal reciprocity, this study puts forward some suggestions for destination marketing and management through the enhancement of destination symbolism and the increase of reciprocity between tourists and destinations with experience products.

Social trust and the efficiency in the implementation of public policies: evidence from China’s new rural pension scheme

DING Congming;WU Yujia;QIN Shuyuan;LIANG Zhenqiao

Chinese Rural Economy,2019,No. 05

【Abstract】 Based on the new type of the rural social endowment insurance policy that was tried out in 2009, this paper used CFPS 2016 data and examined the impact of the level of social trust on rural residents’ participation in China’s new rural pension scheme. The results showed that the level of social trust played a significant role in promoting rural residents’ participation in the new rural pension scheme. The probability of residents who had a high level of social trust and participated in this scheme was 13.9% higher than that of residents with a low level of social trust. In order to avoid the estimation errors caused by omitted variables, the study constructed a quasi-natural experiment of “cross-reference treatment” between the husband and the wife to check the effect of the difference in the trust level on the participation behavior of the husband and the wife. The conclusion again supported that the difference in the level of social trust, rather than other possible omitted variables, led to the difference in the behaviors of rural residents. Finally, this study used the altruistic evaluation of the respondents as an instrument variable of social trust, and the results were still robust. The conclusion of the study showed that the level of social trust was an important soft environment for the implementation of public policies in rural areas. A high level of social trust was conducive to increasing the probability of public participation in public affairs, thus improving the efficiency in the implementation of public policies.

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