Many people believe trust will become obsolete with the advancement of technology. Fabrice Lumineau, Oliver Schilke, and Wenqian Wang disagree. For them, trust will continue to play an important role. They write that the concept of trust needs to be viewed in three ways: in terms of what form organisational trust takes, how it is produced, and who needs to be trusted.
We all live in a digital world now
Disruptive technological developments are affecting every corner of our lives, from the way we shop to how we access information and communicate. These path-breaking technological advancements are at the heart of the so-called “Fourth Industrial Revolution” (Schwab, 2017). Blockchain, the internet of things (IoT), cloud computing, and machine learning differ significantly from earlier generations of technologies in their enhanced capacity to make decisions autonomously and act “smartly,” while also enabling unprecedented interconnections between humans and machines and interoperability among a wide range of different technologies (Murray, Rhymer, and Sirmon, 2021). There is no doubt that the current wave of digitisation will fundamentally impact many facets of our personal and professional interactions. One such central facet is trust.
Trust as a lubricant for collaborations
Trust facilitates collaboration whenever people face uncertainty about their counterparts’ behaviour (Mayer, Davis, and Schoorman, 1995). A high level of trust between collaborators lessens the need for excessive control and monitoring while smoothing coordination and communication. However, trust is highly contextual and fundamentally affected by broad technological changes and societal trends. Many journalists and pundits argue that the current wave of technology advancement will make trust obsolete (e.g., Columbus, 2019). We take issue with this view. Rather than becoming irrelevant, we argue that trust will continue to play an important role, albeit in different ways. Hence, we need to rethink the very concept of trust.
How digital technologies change trust
Specifically, we need to rethink trust in three important ways—in terms of what form organisational trust takes, how it is produced, and who needs to be trusted (Lumineau, Schilke, and Wang, 2022).
Form of trust. First, trust is becoming much more impersonal. We are witnessing a radical shift away from conventional interpersonal collaboration in which the identity of the other party provides a focal point for initiating or sustaining a trusting relationship. Traditionally, you trust someone because you know them, either directly via shared history or at least indirectly through a common acquaintance. In contrast, with the advent of digital technologies, it is often no longer possible to rely on such connections when gauging trust. An increasing number of transactions occur with individuals we never meet in person or have only an indirect tie to.
Instead of trusting a known counterpart, people thus have to place trust in broader systems. A case in point is the blockchain, where no party can unilaterally change information (Werbach, 2018). The participants may thus not need to trust the integrity of their partner, but they do need to believe in the reliability of the blockchain system (Wang, Lumineau, and Schilke, 2022). The primary locus of trust therefore shifts from the other party in the transaction to the blockchain system itself.
Mode of trust production. Second, the way trust develops is changing. While, traditionally, trust has mainly emerged from past and expected future interactions between collaborating parties, it is now more closely tied to the characteristics of the entity being trusted. Consider machine learning algorithms, which have been widely employed in such industries as insurance to ascribe trust scores to people based on their social categories.
At the same time, trust also becomes more institution-based, now being created through technological systems. Protocols and code-based algorithms establish unambiguous rules and create specific expectations for transactions.
Target of trust. Third, there is a shift in who needs to be trusted. Despite trust being more impersonal, we still need to trust certain human actors in the age of digitisation; however, the targets of such personal trust shift from the other party in the transaction to three sets of entities. First, we need to trust the entities who designed the system (e.g., developers) not to introduce loopholes or personal biases, whether intentionally or unintentionally. Second, we need to trust individuals and organisations who provide information to the algorithms. Finally, we also need to trust data holders—those who aggregate, analyse, and profit from the information they control—to not abuse the data or violate privacy agreements.
How managers should cope with the changes
While trust will remain a central lubricant for almost all business interactions, managers need to understand how increasing digitisation will affect the dynamics surrounding trust. Misunderstanding these trends could lead to trust being misplaced, efforts to develop trust being wasted, and its enduring importance possibly being underestimated. Managers increasingly need to trust others they have never met, thus requiring a new skill set for making accurate trust decisions that relies on different types of trustworthiness cues. Individuals may also relinquish some of their control in making trust decisions to computer algorithms that automate trustworthiness assessments, and managers must understand the logic behind these algorithms. Finally, organisations wanting to be perceived as trustworthy (and to enjoy the reputation effects and competitive advantages associated with such perceptions) may need to alter their approach to cater to these new dynamics.
- This blog post is based on Organizational Trust in the Age of the Fourth Industrial Revolution: Shifts in the Form, Production, and Targets of Trust, in the Journal of Management Inquiry.
- The post represents the views of its author(s), not the position of LSE Business Review or the London School of Economics.
- Featured image by Cytonn Photography on Unsplash
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Trust is a commodity – both on the part of the individual and the organisation. This can only be established by way of repeated interactions. All others things being equal, organisations and individuals that have stablished such trust, due to the lower transaction costs that true, enjoy a competitive advantage over those that have not. In this age of constant PR, however trust in our organisations and institutions is being ever so slowly eroded.
To me there is no rethinking needed. Trust is something only between humans that if created and kept over time can create flow and subsequently innovative collaboration & real pardigmshifting transformative development. Blockchain and other distributed ledgers etc is to me only yet another technology keeping us safe and transactions secured. This is of course very good to make things like corruption almost impossible and also for creating transparency and clarity within ecosystems and stuctures. But there i no way to replace the comforting feeling of real mutual trust to enable new ideas, creativitiy & co-creation.
I am bot sure the nature of trust changes. Maybe we personify the algorithm?