Generalized Trust and Why It Matters for Business in the Age of Globalization

1. Generalized Trust and Why It Matters for Businessin the Age of Globalization Eric M. Uslaner Professor of Government and Politics University of Maryland College Park, MD 20742 USA http://www.bsos.umd.edu/gvpt/uslaner

2. Trust has many different meanings: • Strategic trust: trust we gain from daily experience. • Particularized trust: trust in people like ourselves. May stem from direct experience or from stereotypes. • Generalized (moralistic) trust: Trust in strangers, especially people who are different from ourselves. Cannot come from interaction with people we know.

3. Globalization offers great opportunities and great risks for business and society. • Biggest challenge to globalization is how business can adapt in different cultural environments.

4. Generalized trust is the sense of a shared fate with others. It is more than trust based upon experience. • Generalized trust rests upon optimism and a sense of control of your environment.

5. Trust promotes diversity and tolerance. • Trust makes it easier for companies to work in a globalized economy.

6. Trust is based upon a presumption of good will. It is business on a handshake. • Relying on courts to solve problems shows a lack of trust.

7. Trusting people: • See a common vision for society • Are more willing to take risks in business and in life. They underestimate the amount of risk in life and mistrusters overestimate the amount of risk. • Are more open to new technologies and to taking new initiatives.

8. Trusters do good deeds: • Give to charity • Volunteer time

9. Trusting societies have: • More open markets • Greater economic growth • Lower crime rates • Stronger legal institutions • More spending on education

10. As trust has declined in the United States • Fewer people volunteer • People give less of their income to charity • Political and social life becomes more polarized.

11. Trust and Economic Inequality Why do some countries have more trusting people than others? Their distribution of income is more equal!

12. Trust and Inequality in the United States • As inequality has risen, trust has declined:

13. Common foundations of trust and globalization • Reaching across cultural boundaries • Cooperation across diverse groups • Promotion of open markets • Trust promotes innovation, globalization depends upon it. • Globalization needs strong legal institutions, trust provides foundation for them.

14. Trust and Globalization Go Together

15. Businesses Building Trust • Examples: • Swiss Re • Ben and Jerry’s • Birkenstock

16. What Businesses Can Do • Since trust stems from your parents early in life, businesses that give more free time for family life help create trust.

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

18. Promoting community service builds trust • Provide opportunities for charitable contributions and voluntary “volunteering.” Involuntary “volunteering” may lead to workers’ resentment by the workforce. • Showing the way by being a good corporate citizen—giving to charity and providing time off for volunteering. Every little bit a business can do to reduce inequality helps.