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Trust; the essential ingredient for international business … any business Bob Carpenter Director, School of Business Nipissing University. Rotterdam, March 2011. Agenda … Introductions Who do we trust What is trust Trust in business relationships Trust in international business
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Trust; the essential ingredient for international business … any business Bob Carpenter Director, School of Business Nipissing University Rotterdam, March 2011
Agenda … Introductions Who do we trust What is trust Trust in business relationships Trust in international business Betrayal and rebuilding trust Rotterdam, March 2011
A little about me …. Bob Carpenter Lifetime in international contract management, program management and general management Rotterdam, March 2011
Communication cables in copper & fiber Rotterdam, March 2011
A little about me …. Bob Carpenter Lifetime in international contract management, program management and general management Joined Nipissing University about 5 years ago, now Director of School of Business. Lecture in international marketing and business decision making Rotterdam, March 2011
Who do we trust? Politicians? Teachers? Businessmen and women? Family? Corporations? Rotterdam, March 2011
In corporations we trust! Rotterdam, March 2011
Only 21% of Canadians surveyed thought CEOs were trustworthy or extremely trustworthy. Only 16% of Canadians surveyed thought that information conveyed by CEOs and CFOs was credible. 83% of Canadians surveyed thought corporate executives were somewhat or very likely to lie when making statements to the news media. 91% of Canadians surveyed thought politicians were somewhat or very likely to lie when making statements the news media. 80% of Canadians surveyed “agree distrust is growing,” while 87% “agree people are less trusting than in the past.” Perception of Trust in Canadian Organizations Rotterdam, March 2011 Rotterdam, March 2011
Trust is a positive expectation (or belief) that another will not—through words, actions, or decisions—act opportunistically. Reliance on the integrity, strength, ability of a person or thing. A person on whom or a thing on which, one relies What Is Trust? (Discussion of definition and dimensions) Rotterdam, March 2011
Dimensions of Trust Rotterdam, March 2011
Integrity Honesty and truthfulness. Competence Technical and interpersonal knowledge and skills. Consistency Reliability, predictability, and good judgment in handling situations. Loyalty Willingness to protect and save face for a person. Openness Willingness to share ideas and information freely. What Determines Trust Rotterdam, March 2011
Mistrust drives out trust. Trust begets trust. Growth often masks mistrust. Declining or downsizing tests the highest levels of trust. Trust increases cohesion. Mistrusting groups self-destruct. Mistrust generally reduces productivity. Basic Principles of Trust Rotterdam, March 2011
Lend us your time, energy, skills and expertise. Do an outstanding job, be engaged in the business, offer ideas for new products and processes. We will listen. We will invest your effort and be successful . You will share in the success. Trust us! Easier for employees to trust immediate managers due to proximity and level of interaction Employees relationship with Organization Rotterdam, March 2011
When employees trust leaders: They are more likely to engage in: Altruism, civic virtue, conscientiousness, courtesy, and sportsmanship. They also show: Greater job performance, job satisfaction and organizational commitment. Less desire to quit their job. What are the benefits of trust at work? Rotterdam, March 2011
Information sharing Collaboration When there is trust that credit will be given then will share: Creative ideas Personal goals Concerns Conflict resolution What are the benefits of trust at work? Rotterdam, March 2011
Trust is fundamental to leadership: Able to direct followers with less resistance Less risky to follow trusted leaders Followers will go above and beyond Trust and Leadership Rotterdam, March 2011
Engaging in procedural justice. Ensuring fair procedures and outcomes. Engaging in interactional justice. Treating people fairly when procedures are carried out. Encouraging participative decision making. Open, straightforward communications Using a transformational leadership style. Leadership Styles that Encourage Trust Rotterdam, March 2011
Only make commitments you can keep ….. keep all commitments that you make. Let’s think about what this means Delivering on promises .. builds trust Rotterdam, March 2011
Invest in employees Promote open communication Behave in an ethical and socially responsible manner Provide job security Maximize predictability Organizations Can Build Trust Rotterdam, March 2011
In business relationship trust reduces complexity by increasing certainty Three dimension to trust Contractual trust Competence trust Goodwill trust Trust between organizations Rotterdam, March 2011
Contractual trust provides assurance that the terms of the existing transactions will be completed Competence trust provides assurance that the organizations have the ability to perform their responsibilities under existing transactions Goodwill trust is when someone …. is dependable and can be endowed beyond existing relations and can be entrusted to take initiatives while refraining from unfair advantage taking. Trust between organizations Rotterdam, March 2011
Cultural differences most effecting trust Individualism vs collectivism Low context vs high context Strong vs weak uncertainty avoidance Differences in ethical behaviour Bluffing Misrepresenting info Competitive bargaining Manipulation of networks Inappropriate info: collection Trust in International Business Rotterdam, March 2011
Need to build trust : To transact and negotiate business To work with agent To work with distribution and fulfillment channels To manage ongoing operations Trust in International Business Rotterdam, March 2011
Trust must be established quickly http://www.youtube.com/watch?v=2qsa66AqXTo&feature=related http://www.youtube.com/watch?v=0vofVQQwaJg 5:15 Negotiations Rotterdam, March 2011
Must be trusted for contacts, language and advice on customs This is the business’s avenue to trade and should reflect values Difficult to build trust when you are not there ex: HK agent for F/O In-country agent Rotterdam, March 2011
Must be trusted is the face of the company in country Financially interdependent Must have clear communication and definition of roles/tasks Real trust will grow relationship and business Ex: innotime Distributor and Fulfillment channels Rotterdam, March 2011
Complex due to differing values and expectations Different customs may make it difficult to detect symbols of trust Ethics vary from culture to culture Can still build trust ex: Venezuela Manage ongoing Operations Rotterdam, March 2011
Trust in International Business Negotiations Think about people and te culture they work in …. Example of Venezuela In-country partners … agents and distributors …. China and King agency in Hong Kong .. . Distributor in europe … National stereo types versus individual Differences versus similarities … there aremorethings the same To what extent should we makeourselves acceptable and adopt local customs …. Wrong to pray, where is the line … should we pay for business if that is the custom Rotterdam, March 2011
Trust in International Business Rotterdam, March 2011
Trust in International Business Cross cultural negotiations Insead : http://www.youtube.com/watch?v=-4GjC0ipJIA Rotterdam, March 2011
Failure to keep commitments Competing stakeholders receive different messages Shift in policy between an old and new manager Changing business fashion. “The latest craze” Unclear priorities Blind spots e.g. lack of consistency between actions and words Betrayal of Trust Rotterdam, March 2011
Trust can be damaged quickly and is slow to rebuild. Not all relationships can survive a violation of trust Rebuilding Trust Rotterdam, March 2011
Violator must acknowledge violation Determine nature and cause from victim’s standpoint Admit that the event destroyed trust Accept responsibility for the violation Offer to make reparations To rebuild trust Rotterdam, March 2011
A form of constructive suspicion regarding the intentions and actions of people and organizations. Important to pay attention to one’s environment and be a healthy skeptic. Does Distrust Ever Pay Off? Prudent Paranoia Rotterdam, March 2011
Trust me ... There are weapons of mass destruction! Rotterdam, March 2011
Gather data relentlessly. Question your interpretations. Embrace your enemies. Trust the shuffler, but cut the deck anyway. Be unpredictable. Disregard all the rules. Making Your Paranoia More Prudent Source: Based on information in R. M. Kramer, “When Paranoia Makes Sense,” Harvard Business Review, July 2002, p. 68. Rotterdam, March 2011
Contractual and competence trust are specified within existing technical and contractual relationships. Good will trust extends beyond existing transactions and includes the transfer of new ideas and technology. Trust between organizations Rotterdam, March 2011
Trust is built through integrity, competence, consistency, loyalty, openess, fairness. When violated trust is difficult to rebuild. Trust in an organization improves productivity and job satisfaction. Trust between organizations improves transactional efficiency and long term relationships. Summary of Trust Rotterdam, March 2011
Our campus Canada Geese gather in the Autumn Rotterdam, March 2011
International Students can all stay in Residences. Rotterdam, March 2011
Main cafeteria Rotterdam, March 2011
North Bay , Ontario Rotterdam, March 2011
North Bay , Ontario Rotterdam, March 2011