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Formation of Stakeholder Trust in Business and the Role of Personal Values

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Abstract

Declining levels of stakeholder trust in business are of concern to business executives and scholars for legitimacy- and performance-related effects. Research in the area of stakeholder trust in business is nascent; therefore, the trust formation process has been rarely examined at the stakeholder level. Furthermore, the role of personal values as one significant influence in trust formation has been under-researched. In this paper, we develop a contingency model for stakeholder trust formation based on the effects of stakeholder-specific vulnerability and personal values of the trustor. Using a factorial vignette methodology, we find that Schwartz’s (J Soc Issues 50:19–45, 1994) value set interacts with stakeholder roles so that trustworthiness signals of competence and character play differing roles during trust formation. These results inform stakeholder trust research, organizational trust research, and research in personal values. The research also informs managers tasked with rebuilding stakeholder trust in business.

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Notes

  1. In comparison, in experiments, factors are designed orthogonal to each other but manipulated one at a time; however, in a traditional survey, many factors are examined but are not necessarily orthogonal to each other (Appelbaum et al. 2006).

  2. Amazon Mechanical Turk is an online labor market where requestors, such as academics, post jobs and the workers, such as the respondents, choose jobs to complete. For a full description, see Mason and Suri (2012), for how MTurk samples are more representative of the U.S. population than in-person convenience samples, see Berinsky ey al. (2012), and for the external and internal validity of MTurk, see Horton et al. (2011). In sum, respondent samples on MTurk are found to be representative of the general population with high internal and external validity. Horton, Rand, and Zeckhauser illustrate how behavioral economics experiments are successfully replicated on MTurk.

  3. Several indicators suggest that there was a strong similarity in the types of participants from the first sample and the MTurk sample. The average age on MTurk was 33.97 years (v. 36.12 in the email sample), the average experience was 10.6 years (v. 12.3 years), and the percent male was 41.6 % (v. 44.2 %). The respondent level R2 was 0.689 for MTurk versus 0.656 for the email sample. Examining the data revealed comparable equations with identically prioritized trust factors.

  4. Self-Orientation related Values = 0.4019* Ambition−.3943* Social_Justice-.4733* Equality + .5896* Self_Discipline−.4602* Protect_Enviro −.3338* Honesty.

  5. Openness related Values = −.4894*Responsibility + 0.3915*Independence + 0.5979*Curiosity.

  6. The firm control variables are not included in the results for space considerations and because the hypotheses center on the role of competence and character on trust judgments. The results are consistent with another study reported in a chapter on public trust: the vignette firm’s size and mission statement are not statistically significant in any of the regression models (all respondents, conservative prototype respondents, liberal prototype respondents). As to the industry, the results are mixed with only the oil & gas industry having a statistically significant negative impact on trust judgments.

  7. Respondent fatigue was checked by controlling for later vignettes in the respondents’ sequence (the sequence number of the vignette was captured and ranged from 1 to 40). While respondent fatigue was not a factor, we found a respondent learning curve to be important: the respondents take 1–2 vignettes to get acclimated to the methodology. The analysis was run minus the first 2 vignettes for each respondent and the results remained the same.

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Authors and Affiliations

  1. Department of Strategic Management and Public Policy, Fordham University, 1790 Broadway, Suite 1147, New York, NY, 10019, USA

    Michael Pirson

  2. Department of Business Administration, George Washington University, 2201 G Street, NW, Duquès Hall, Washington, DC, 20052, USA

    Kirsten Martin

  3. The Darden School of Business, University of Virginia, 100 Darden Blvd, Charlottesville, VA, 22903, USA

    Bidhan Parmar

Authors
  1. Michael Pirson
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  2. Kirsten Martin
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Corresponding author

Correspondence to Bidhan Parmar.

Appendix

Appendix

Vignette Factors

 

Factors

Dimensions

Variable Name

1

Size

0

Small

SmallCo

1

Regional

ReginalCo

2

National

NationalCo

3

Global

[NULL]

2

Industry

1

Financial services

FinancialSvc

2

Oil and gas

OilGas

3

Pharmaceutical

Pharma

4

Solar

[NULL]

3

Objective function

1

Maximize profits for shareholders

[NULL]

2

Maximize value for all stakeholders

ValueFcn

3

Being the best place to work for our employees

WorkFcn

4

Create general well-being to society

SocietyFcn

4

Values:

 

Two values from the list below were randomly assigned to the firm.

StrongAgree

Leadership

Ambition

Creativity

Independence

Curiosity

Wisdom

Social justice

Equality

Protecting the environment

Honesty

Loyalty

Responsibility

Self-discipline

Spirituality

 

5

Ability

1–11

Continuous variable: Grade A+ through F

AbilityId

6

Benevolence

1–11

Continuous variable: Grade A+ through F

BenevolenceId

7

Integrity

1–11

Continuous variable: Grade A+ through F

IntegrityId

8

Transparency

1–11

Continuous variable: Grade A+ through F

TransparencyId

9

Profitability

1–11

Continuous variable: Grade A+ through F

ProfitabilityId

Sample Vignette

A regional company in the oil and gas industry has stated goal to create value for investors, society, and the environment. Its core values, as stated in the mission statement, are leadership and ambition.

In addition, the oil and gas company received the following scores by an established business magazine.

Ability

Integrity

Benevolence

Transparency

Profitability

Technically and managerially competent

Honest with stakeholders

Cares for stakeholders

Communicates openly with stakeholders

Able to make money consistently.

C+

B

D

A+

B

Tell us how much you agree with the statements below.

Question 1: I trust this company

Strongly Disagree

Strongly agree

Sliding Scale

Question 2: Given the opportunity, I would be willing to work with this company.

Strongly disagree

Strongly agree

Sliding Scale

Vignette Template

A [SIZE] company in the [INDUSTRY] industry has stated goal to [FUNCTION]. Its core values, as stated in the mission statement, are [VALUE1] and [VALUE2].

In addition, the [INDUSTRY] company received the following scores by an established business magazine.

Ability

Integrity

Benevolence

Transparency

Profitability

Technically and managerially competent

Honest with stakeholders

Cares for stakeholders

Communicates openly with stakeholders

Able to make money consistently.

[ABILITY]

[INTEGRITY]

[BENEVOL]

[TRANSP]

[PROFIT]

Factor Analysis

Factor

Eigenvalue

Difference

Proportion

Cumulative

Factor1

1.470

0.537

0.612

0.612

Factor2

0.933

0.246

0.388

1.000

Factor3

0.687

0.314

0.286

1.286

Factor4

0.373

0.090

0.155

1.441

Factor5

0.284

0.011

0.118

1.559

Factor6

0.273

0.200

0.114

1.673

Factor7

0.072

0.023

0.030

1.703

Factor8

0.049

0.076

0.020

1.724

Factor9

−0.027

0.038

−0.011

1.712

Factor10

−0.066

0.124

−0.027

1.685

Factor11

−0.190

0.066

−0.079

1.606

Factor12

−0.256

0.095

−0.106

1.499

Factor13

−0.351

0.498

−0.146

1.353

Factor14

−0.849

0.000

−0.353

1.000

Variable

Factor1

Factor2

Uniqueness

Leadership

0.177

−0.343

0.852

Wisdom

0.291

0.020

0.915

Loyalty

−0.047

0.046

0.996

Ambition

0.397

−0.076

0.837

Social_Justics

−0.377

0.114

0.845

Responsibi ~ y

−0.154

−0.465

0.760

Creativity

0.129

0.237

0.927

Equality

−0.472

0.072

0.772

Self_Discipline

0.567

−0.163

0.652

Independence

0.218

0.344

0.834

Protect_Enviro

−0.454

0.086

0.786

Spirit

0.177

−0.186

0.934

Curiosity

0.199

0.565

0.642

Honesty

−0.379

−0.104

0.846

Relationship Between Factors

Indiv. factors

Factor values

Free spirit

Driven

β

p

β

p

Male

0.074

0.00

0.161

0.00

AgeOver23

−0.009

0.52

0.015

0.60

Trust Business

0.003

0.00

0.005

0.00

Experience Yrs

−0.001

0.07

−0.006

0.00

HighMistrust

0.197

0.00

0.399

0.00

HighTrust

−0.129

0.00

−0.339

0.00

_cons

−0.354

0.00

−0.097

0.00

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Pirson, M., Martin, K. & Parmar, B. Formation of Stakeholder Trust in Business and the Role of Personal Values. J Bus Ethics 145, 1–20 (2017). https://doi.org/10.1007/s10551-015-2839-2

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