Generalized Trust and Why It Matters for Generalized Trust and Why It Matters for BusinessBusiness

in the Age of Globalizationin the Age of Globalization

Eric M. UslanerEric M. Uslaner

Professor of Government and PoliticsProfessor of Government and Politics

University of MarylandUniversity of Maryland

College Park, MD 20742 USACollege Park, MD 20742 USA

http://www.bsos.umd.edu/gvpt/uslanerhttp://www.bsos.umd.edu/gvpt/uslaner

Trust has many different Trust has many different meanings:meanings:

Strategic trust: trust we gain from daily Strategic trust: trust we gain from daily experience.experience.

Particularized trust: trust in people like Particularized trust: trust in people like ourselves. May stem from direct experience ourselves. May stem from direct experience or from stereotypes.or from stereotypes.

Generalized (moralistic) trust: Trust in Generalized (moralistic) trust: Trust in strangers, especially people who are strangers, especially people who are different from ourselves. Cannot come from different from ourselves. Cannot come from interaction with people we know.interaction with people we know.

Globalization offers great Globalization offers great opportunities and great risks for opportunities and great risks for business and society.business and society.

Biggest challenge to globalization is Biggest challenge to globalization is how business can adapt in different how business can adapt in different cultural environments.cultural environments.

Generalized trust is the sense of a Generalized trust is the sense of a shared fate with others. It is more shared fate with others. It is more than trust based upon experience.than trust based upon experience.

Generalized trust rests upon Generalized trust rests upon optimism and a sense of control of optimism and a sense of control of your environment.your environment.

Trust promotes diversity and Trust promotes diversity and tolerance.tolerance.

Trust makes it easier for companies Trust makes it easier for companies to work in a globalized economy.to work in a globalized economy.

Trust is based upon Trust is based upon a presumption of a presumption of good will. It is good will. It is business on a business on a handshake.handshake.

Relying on courts Relying on courts to solve problems to solve problems shows a lack of shows a lack of trust.trust.

Trusting people:Trusting people:See a common vision for societySee a common vision for societyAre more willing to take risks in Are more willing to take risks in

business and in life. They business and in life. They underestimate the amount of risk in underestimate the amount of risk in life and mistrusters overestimate the life and mistrusters overestimate the amount of risk.amount of risk.

Are more open to new technologies Are more open to new technologies and to taking new initiatives.and to taking new initiatives.

Trusters do good Trusters do good deeds: deeds:

Give to charityGive to charity

Volunteer timeVolunteer time

Trusting societies have:Trusting societies have:

More open marketsMore open markets Greater economic Greater economic

growthgrowth Lower crime ratesLower crime rates Stronger legal Stronger legal

institutionsinstitutions More spending on More spending on

educationeducation

As trust has declined in the United StatesAs trust has declined in the United States

Fewer people Fewer people volunteervolunteer

People give less of People give less of their income to their income to charitycharity

Political and social Political and social life becomes more life becomes more polarized.polarized.

Trust and Economic Trust and Economic InequalityInequality

Why do some countries have Why do some countries have more trusting people than more trusting people than others? Their distribution of others? Their distribution of income is more equal!income is more equal!

ARG

AUS

ASTBEL

BRZ

UK

CAN

CHL

COL

CYP

DEN

DOM

FIN

FRA

GHA

GRE

IND

IRE

ISR

ITA

JPN

LUXMEX

HOL

NZ

NIG

NOR

PRU

PHL

POR

SAF

SKRSPN

SWE

SWZ

TAI

TUR

USA

URU

VNZ

WGR

0.2

.4.6

Mos

t Peo

ple

Can

Be

Tru

sted

.2 .3 .4 .5 .6Gini index economic inequality

r2 = .391

Former and Current Communist Nations ExcludedTrust in People and Economic Inequality

Trust and Inequality in the United StatesTrust and Inequality in the United States

As inequality has risen, As inequality has risen, trust has declined:trust has declined:

60 64

66 6871

7273 7475

76

777879

80

81

8283 848586

87

8889

90

9192

9394 95 96

98

99

0001

02

.3.3

5.4

.45

Gin

i Ind

ex o

f Ecn

omic

Ineq

ualit

y

1960 1970 1980 1990 2000Year

r2 = .873

Trend in Economic Inequality 1960-2002

Common foundations of trust and globalizationCommon foundations of trust and globalization

Reaching across cultural Reaching across cultural boundariesboundaries

Cooperation across diverse Cooperation across diverse groupsgroups

Promotion of open marketsPromotion of open markets Trust promotes innovation, Trust promotes innovation,

globalization depends upon globalization depends upon it.it.

Globalization needs strong Globalization needs strong legal institutions, trust legal institutions, trust provides foundation for provides foundation for them.them.

Trust and Globalization Go TogetherTrust and Globalization Go Together

ARG

AUS

AST

BRZ

UKCAN

CHL

COL

DEN

FIN

FRA

GRE

IND

IRE

ITA

JPN

MEX

HOL

NIG

NOR

PRU

PHL

POR

SAFSKR

SPN

SWE

SWZ

TUR

USA

VNZ

WGR

02

46

For

eign

Pol

icy

Glo

baliz

atio

n In

dex

0 .2 .4 .6Most People Can Be Trusted, World Values Surveys and Intl Social Survey Program

Source: Foreign Policy index of globalization r2 =.531

Former and Current Communist Nations ExcludedGlobalization and Trust in People

Businesses Building TrustBusinesses Building Trust

Examples:Examples: Swiss ReSwiss Re

Ben and Jerry’sBen and Jerry’s

BirkenstockBirkenstock

What Businesses Can DoWhat Businesses Can Do

Since trust stems Since trust stems from your parents from your parents early in life, early in life, businesses that businesses that give more free give more free time for family life time for family life help create trust.help create trust.

Education also Education also leads to greater leads to greater trust. Companies trust. Companies that provide that provide greater educational greater educational opportunities for opportunities for employees build employees build trust.trust.

Promoting community service Promoting community service builds trustbuilds trust

Provide opportunities for Provide opportunities for charitable contributions and charitable contributions and voluntary “volunteering.” voluntary “volunteering.” Involuntary “volunteering” Involuntary “volunteering” may lead to workers’ may lead to workers’ resentment by the resentment by the workforce.workforce.

Showing the way by being a Showing the way by being a good corporate citizen—good corporate citizen—giving to charity and giving to charity and providing time off for providing time off for volunteering. Every little bit volunteering. Every little bit a business can do to reduce a business can do to reduce inequality helps.inequality helps.