The Importance of Trust In Business

This content is inspired by The Price Of Everything by Eduardo Porter chapter seven: The Price of Culture, and Harvard Business Review.

We think of trust as a special trait, and yet it’s the basis for almost everything we do as civilized people. Trust is the reason we’re willing to exchange our hard-earned money for goods and services, commit to a marriage, cast a presidential ballot for someone who will represent our best interests.

We rely on contracts and laws as safety nets, but even they are built on trust in the institutions that enforce them. We aren’t certain that justice will be served if something goes wrong, but we have enough faith in the system that we are willing to make high-stakes deals with relative strangers.

Trust is one of the most essential forms of capital a leader has. Leadership isn’t really about you, but rather it’s about empowering other people and about making sure that the impact of your leadership continues into your absence.

Mark zuckerberg Litigation

According to Harvard Business Review, trust has three core drivers: authenticity, logic, and empathy. People tend to trust you when they believe they’re interacting with the real you (authenticity), when they have faith in your judgment and competence (logic), and when they feel that you care about them (empathy). When trust is lost, it can almost always be traced back to a breakdown in one of these three drivers.

“To earn trust, money and power aren’t enough; you have to show some concern for others. You can’t buy trust in the supermarket.”

Dalai Lama

In the macro, trust is essential to economic transactions. Trust encourages trade and affects investment in physical as well as human capital.

Researchers have found that people who are more trusting are generally more optimistic and can bear greater and more frequent risks. Although they are cheated more often, trusting people are essential to economic growth. Untrusting people, on the other hand, take fewer risks and miss opportunities for profit.

On a larger scale, trusting societies tend to be more prosperous and stable. 68% of Swedes and 59% of Finns say that most people can be trusted, while on the other side only 5% of people in Rwanda and Turkey agree.

Paradoxically, trust couldn’t have developed in a world exclusively populated by the selfish. It can only emerge within a society where norms are self-interest in favor of the common good, and the boundaries needed to be clear to all.

Trust is vital on all levels of economic activity, from the dynamics of a business organization to the health of an entire country’s economy. It is the glue that holds society together and could not function in its absence.