EVALUATE THE CLASSIC TRUST LITERATURE.

Thursday, 18 March 2010

EVALUATE THE CLASSIC TRUST LITERATURE.

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The concept of trust is the main base in any business environment today. Man cannot live in isolation and at one point in time will need to engage in one form of transaction or the other with people or the business environment at various levels.
In order to carry out any transaction effectively there is the need for trust especially in reference to online transaction where the customer cannot see or feel what is been purchased.

The Trust literature is a growing one, with its roots in the works of Mayer et el (1995) titled An Integrative Model of Organization Trust and Morgan & Hunt (1994.) Commitment – Trust Theory of Relationship Marketing. It is imperative to define the word trust prior to it’s evaluation of the trust literature so as to give us a background to understanding.

(Yamagishi 1998) defines trust as a person’s expectation of the others cooperative behavior in situations where it is possible to suffer some damage if the other behaves selfishly.

Liberman (1981) further states that trust in fiduciary relationships is based on a belief in the professional competence and integrity.

Mayer et el (year) maintains that trust is “the willingness of a party to be vulnerable to the actions of another party based on expectations that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party”

The word trust can be effectively understood when associated with certain characteristics, although these they are not trust per se, the characteristics help build the foundation for the development of trust Mayer et al (year). These characteristics are

Ability: - which are those groups of skills, competencies and characteristics that enable a party to have influence within some specific domain. Giffin (1967) suggested expertness as a factor that leads to trust.

Benevolence: - is the extent to which a trustee is believed to want to do good to the trustor, aside from an egocentric profit motive. Benevolence suggests that the trustee has some specific attachment to the trustor.

Integrity:-the relationship between integrity and trust involves the trustors perception that the trustee adheres to a set of principles that the trustors finds acceptable.

Morgan and Hunt (1994) laid a lot of emphasis on the fact that relationship commitment and trust are vital to any successful relationship marketing. Not power and its ability to “condition others”. Trust and commitment go hand in hand; they are key factors because they encourage marketers to work at preserving relationship investment. No business can be successful without its dedicated consumers therefore it is of great importance to work in an atmosphere of trust and commitment so as to thrive. Commitment can be explained as the belief that relationship is worth working on to ensure that it continues indefinitely The Commitment Trust theory explains that shared values positively influence both relationship commitment and trust, and relationship benefit and termination costs also positively influence commitment. This theory explains how shared values influence relationship, commitment and trust it explains how commitment influences trust.

In the business environment, it should be noted that trust is dynamic and there is constant need to strengthen it as often as possible as it remains an extremely vital factor for business survival. For trust to be build and commitment there are antecedents that are required or needed. These are the things that help to build up trust and commitment in any firm to their consumers. Researchers like MacMillan et al (2005) and Wick, A. C and Bernard, S.L (2004) have also gone further by identifying these antecedents

Reputation:-.The image of an organization is very important and this includes the images of its staff at all times.An organizations previous attitude usually is a major determinant of the future. Good image builds trust and bad image destroys trust. For trust to be established therefore, a consumer will usually refer to the past records of the organization and determine whether or not to transact with them. When any organization is known for bad publicity due to bad images then it will be automatic that there won’t be trust for that company. When dealing with trust and commitment image is everything.

Integrity: - this is equally important in any business environment, as it is paramount that the organization is upright in its dealings and prompt in all transactions as this enhances trust.

Reliability: - there has to be the assurance that a customer is in safe hands and will not be exploited in any form.

Shared values: - are the values of the business shared by ones relational partner. Shared values are very important to build trust. Because the consumer sees that this person has the same characteristics as mine, like having the same background and because of that then trust is build automatically. These ethical values are like bonds between which develop not only trust but also commitment.

Trust cannot be achieved without efficient and Communication. There is a positive relationship between communication and trust. If there are communication difficulties between any two parties then trust or commitment can’t be built. Once you communicate then you transfer the message of what services you are going to offer the other party and the other party sees if it can get it and begins to trust the organization.

Figure 1.0 below by Finch, O’Reilly, Varella and Wolf illustrates dimensions of trust.

Figure 1.0 illustrating the four dimensions of trust.

The concept of trust is rather broad and dynamic. The online segment of the market is a growing one. But in many situations it is noticed that consumers have their fears about transacting online as they are apprehensive in regards online shopping and do not trust online transactions. Therefore it is paramount that there is no room for bridge of trust for it is cheaper to retain an old customer and more expensive to keep a new one. In the survey by Hanai,T., and Oguchi . T. (2009) about how consumers perceive the reliability of online shops, they investigated what kind of information contributes to trust formation in online shopping that dealt with branded products. They observed that consumers will only buy from shops they believe do not provide counterfeits in other words they must trust a shop before they can buy online.

In line with this Riegelsberger, Sasse and McCarthy (2007) point out the importance of trust formation in mediated transactions such as online shopping. In mediated transactions it is necessary to match the consumer’s intention of buying to the shops intention of selling. If a consumer feels they are unable to trust the shops, they stop their transaction. Looking at trust in relationship to online shopping, it will be vital to consider what factors enhance trust. Since an online transaction prevents the consumer from physically seeing the product they intend to purchase; it is very essential that shops gain trust of their customers by ensuring that they provide their customers with adequate information about their products so as not to give room for mistrust in the minds of the clients. The quality of information provide to consumers should always be updated frequently as trends change.

There are a lot of positive impact of online business some of which include the reduction of over head cost and the expansion of consumer cliental. Consumers also can take their time to assess the websites before they purchase their products. As trust declines people are increasingly unwilling to take risk and demand greater protections against the probability of betrayal. In e commerce security and reliability refer to positive trust that is shown in the consistency and assurance between what a trading partner says and actually does. (Hart and Saunders, 1997)

Reference:

Journal of marketing volume 58 (1994) 24-28, Morgan and Hunt.

The Commitment – Trust Theory of Relationship Marketing

How do consumers perceive the reliability of online shops?. Cyberpsychology: Journal of Psychosocial Research on Cyberspace, 3(2),

article 6.

Hanai, T., & Oguchi, T. (2009).

The Effects of Relationship Commitment

and Trust on Business to Consumer Electronic Commerce - The Case of Taiwan

Communications of the International Information Management

Association, Volume 3 Issue 1

Houn-Gee Chen ,Edward T. Chen Ayi Yeh

An integration model of organizational trust