Organizational trust is a fundamental building block of organizations. However, as the recent corporate governance crises demonstrate, trust is often very difficult to restore once broken (Kramer & Lewicki, 2009). Understanding how organizational trust can be repaired has become an important topic for researchers in organization studies, as well as for practitioners (Bachmann, Gillespie & Priem, 2015; Kramer & Lewicki, 2010). A recent example that high lights the practical focus of this work is the emissions scandal at Volkswagen. The Volkswagen Group built their reputation on manufacturing environmentally friendly cars pledging that by 2018 the company would be the world’s most environmentally friendly car manufacturer. Yet in May 2015, it was revealed that Volkswagen vehicles were producing emissions up to 40 times higher than the US legal limit. The report prompted regulatory investigations and, in September 2015, Volkswagen admitted to installing ‘defeat devices’ in their vehicles that sensed test situations and put the vehicle into a ‘test mode’ running the engine below normal power and performance. On the road, however, the test mode was switched off, and the car emitted much higher pollutants. The revelation sent a shockwave across Volkswagen’s stakeholders, undermining trust, casting a crippling blow to the company’s reputation and exposing the company to billions in recall costs, fines and potential criminal charges.
In this chapter, we review the emerging literature on organizational trust repair and the insights it offers on the challenging process of restoring trust, such as that faced by Volkswagen. Our focus is squarely on trust repair in the referent of the organization and institution (for a review of the literature on trust repair in interpersonal contexts, see Kim, this volume). We start by outlining the problem domain, defining trust failures and trust repair as it pertains to organizations and how the nature and processes of trust repair are different at the organizational and inter personal levels. We then review conceptual frameworks and models on organizational trust repair, and examine select relevant empirical work. From this review, we identify and discuss the ontological and epistemological approaches that dominate the literature. We argue that while these paradigms have provided a solid foundation to the field, there is benefit in complementing this work with critical and radical perspectives to deepen and extend understanding. We conclude the chapter by identifying promising opportunities for future research.
Most definitions of trust repair are concerned with what Dirks and colleagues (2011: 88) describe as a process in which a trustee is ‘attempting to increase trust following a situation in which a transgression (i.e. untrustworthy behaviour) is perceived to have occurred’. In other words the ‘relationship repair occurs when a transgression causes the positive state(s) that constitute(s) the relationship to disappear and/or negative states to arise, as perceived by one or both parties, and activities by one or both parties to substantively return the relationship to a positive state’ (Dirks et al., 2009: 69). In essence, trust repair is predominantly concerned with restoring cooperation and more specifically with re-establishing the trustor’s positive expectations of the other party and in turn the ‘willingness to be vulnerable’ (see also Desmet, De Cremer & Van Dijk, 2011a, 2011b; Kramer & Lewicki, 2010).
Our focus is on the repair of trust in the referent of an organization. This may include trust in a particular corporation, hospital, university, association or union (e.g. Volkswagen, the Royal Bank of Scotland, FIFA), an industry (e.g. banking, mining, football) or an institution (e.g. the UK Parliament, the Catholic Church, the Police). Studies into organizational and institutional trust have historically been embedded in the sociological literature on trust (e.g. Barber, 1983; Fox, 1974; Luhmann, 1979; Misztal, 1996; Shapiro, 1987; Sitkin & Roth, 1993; Sztompka, 1999; Zucker, 1986). However, most studies directly examining trust repair have been conducted at the interpersonal level. Organizational and institutional trust repair has some parallels with interpersonal trust repair, but also several significant differences that limit the ability to translate research findings across levels (Gillespie & Dietz, 2009: 128; see also Fulmer & Gelfand, 2012).
Unlike interpersonal trust, in which the focus is on an individual person or leader, trust in organizational and institutional referents is considerably more complex. This is partly because a range of organizational actors and components operating at multiple levels can influence and inform the judgements of potential trustors (Gillespie & Dietz, 2009). When one trusts an organization (e.g. a university), does one trust in the interpersonal relationships one has with organizational agents and groups (e.g. departmental colleagues, university management)? Or does one trust more in the impersonal set of systems, structures and processes that typically govern the behaviour of organizational actors (e.g. systems of accountability, control and HRM practices, etc; Bachmann, 2001; Bachmann, this volume; Luhmann, 1979; Möllering, 2001, 2006; Weibel et al., 2016)? Or perhaps one gives more precedence to the dominant cultural values and principles to which organization members and its leaders (appear to) adhere? Or the reputation of the organization (e.g. university rankings) and the quality of its goods and services (e.g. quality of research and teaching)? Or the external regulation and controls that constrains the organization’s conduct? We come from the perspective that stakeholders’ trust in an organization is informed by, and can be based on, a combination of all of these elements (Barber, 1983; Gillespie & Dietz, 2009). As Bachmann and Inkpen (2011: 284) point out, institutionalbased trust ‘is constitutively embedded in the institutional environment in which a relationship is placed’.
The complexity of organizational trust repair also reflects that the ‘trustors’ of organizations and institutions represent a diversity of stakeholders, including employees, suppliers, customers, shareholders, regulators, governments and the general public. These stakeholders have different interests, vulnerabilities, power and expectations in relation to organizations and institutions (see Pfarrer et al., 2008), and may develop trust in different ways due to varying levels of access, exposure and hence insight into the organization’s conduct and institutional arrange ment’s functionality. Indeed, repairing trust at the macro level is much more complex than at the interpersonal level because stakeholders may differ in their interpretations of the nature and causes of the breach, and therefore what constitutes credible ways to restore the relationship (see Bachmann et al., 2015; Lamin & Zaheer, 2012).
Trust failures can take on many forms. However, there are several generic, defining features that need to be present for a trust failure to be attributed to the organizational level. An organizational trust failure has been defined as ‘a single major incident, or cumulative series of incidents, resulting from the action (or inaction) of organizational agents that threatens the legitimacy of the organization and has the potential to harm the well-being of one or more of the organization’s stakeholders’ (Gillespie & Dietz, 2009: 128).
For a trust breach to be at the organizational or institutional rather than the individual or group level, it needs to call into question the organization’s or institution’s legitimacy i.e. its capacity to fulfil its essential responsibilities or adhere to commonly endorsed values and standards. The trustor must attribute at least some responsibility for the breach to the organization or institution, perceiving it as having occurred (at least partially) as a consequence of actions, or negligent inaction, by actors authorized or otherwise facilitated by the organization or the relevant institutional arrangements. Put simply, the ‘confident positive expectations’ about an organization or an institution’s capacity to meet reasonable standards of ability, benevolence and/or integrity in its conduct towards stakeholders, are replaced with negative expectations. Trust failures in organizations take many forms including accounting frauds, managerial deceit and incompetence, fatal avoidable incidents, exploitation of vulnerable people, large-scale compulsory job losses, bankruptcies and catastrophic collapses in organizational finance. Furthermore, for a trust failure to manifest at the broader institutional level, trustors need to perceive that the failure is occurring across multiple organizations within the institutional field (e.g. a large number of banks failing during the global financial crisis; child abuse identified in multiple religious organizations) or, alternatively, that the failure is occurring in institutional bodies themselves (e.g. trade associations or financial industry regulators).
At one extreme, a breakdown of trust may result from a single catastrophic incident (e.g. the Deepwater Horizon oil spill) or scandal (e.g. Volkswagen). At the other extreme, breakdown may occur based on an accumulation of trust breaches that erode trust over time (e.g. the Greek government’s financial policies within the EU). In this latter case a ‘tipping point’ ultimately is reached where the trustor loses confidence in the organization’s or institution’s trustworthiness (Bachmann et al., 2015; Kramer, 2010).
It is against this background that our central question arises: ‘What does it mean to repair trust in an organization or institution?’ Fundamentally, repair at these macro levels requires restoring the positive expectations of the organization’s or institution’s trustworthiness that were damaged by the trust violation, so that trustors are again willing to make themselves vulnerable (Kramer & Lewicki, 2010; Lewicki & Bunker, 1996). Dirks and colleagues (2009: 69) further suggest relationship repair involves ‘activities by one or both parties that substantively return the relationship to a positive state’, highlighting that trust repair can be enacted and influenced not only by the trust violator (e.g. the organization) but also the trustor (e.g. organizational stakeholders, see also Kim, Dirks & Cooper, 2009). However, as highlighted later in this review, third parties (e.g. investigative and regulatory bodies, media, etc.) can also play an influential role in the repair of organizational trust.
Various scholars have advanced conceptual models that propose and/or integrate approaches to organizational trust repair. Here we outline and evaluate prominent contributions in the organization and management literatures. We first review the conceptual frameworks that identify the underlying theoretical mechanisms by which trust is repaired. We discuss each of these theoretical mechanisms in turn, together with recent empirical investigations of their role in organizational trust repair. We then turn to a review of the stage-based models of trust repair that identify the various stages of actions required to restore organizational trust. We describe and compare these models and review empirical studies that have examined their key propositions.
We first examine the theoretical mechanisms underlying trust repair. Dirks et al. (2009) identify three theoretical processes for understanding trust repair – attributional, social equilibrium and structural. Recently, Bachmann, Gillespie and Priem (2015) proposed an integrative model of six complementary mechanisms for organizational trust repair that incorporates the three mechanisms proposed by Dirks and colleagues. We use this latter framework to organize our review of the theorized mechanisms of organizational trust repair, informed with insights from select recent empirical work on trust repair at the organizational and institutional level.1
This approach focuses on cognitive and social influence processes and is based on the premise that a shared understanding or accepted account of the trust violation, including an explanation of what went wrong and why, is required for effective trust repair (Bachmann et al., 2015: 1126). This mechanism incorporates (but is broader than) attributional processes that involve ‘targets shaping “perceivers” attributions about whether they committed a transgression, whether it reflects on their true nature, or whether they experienced redemption’ (see Dirks et al., 2009: 72). Strategies include investigations and inquiries to establish an ‘official’ account of ‘what happened and why’, as well as explanations, denials, apologies, substantive actions and offers of penance aimed at shifting attributions (Elsbach, 1994; Kim, Dirks, Cooper & Ferrin 2006; Rhee & Valdez, 2009).
Kim and colleagues’ (2009) bilateral model of trust repair, while focused on interpersonal relationships, also illuminates some aspects of organizational trust repair. Their model presumes that trustors’ and trustees’ disagreement about whether the trustees should be trusted following a violation can be resolved through a logically derived sequence of questions: (1) ‘Is the trustee innocent or guilty of committing the transgression? (2) If the trustee is guilty of the trans gression, should this be attributed to the situation or to the person (in our case, the transgressing organization)? (3) If the transgression is attributed at least in part to the person (i.e. organization), is the shortcoming fix-able or is it an enduring characteristic of the trustee?’ (Kim et al, 2009: 405–406). By examining the processes through which people make attributions about others, these scholars help explain why certain repair efforts may work in some contexts but not others. This work also highlights that both the trustor and the ‘transgressing party’ play active roles in the recovery of trust.
Relatedly, Tomlinson and Mayer (2009) developed an influential attribution theory of trust repair. This theory is based on causal ascription – whether trustors ascribe the cause of negative outcomes to a lack of trustee’s integrity, competence and/or benevolence, and causal attribution – whether the negative outcome is perceived to be due to factors which are external vs. internal, controllable vs. uncontrollable and temporary/unstable vs. enduring/unchanging characteristics of the trustee. Tomlinson and Mayer (2009) propose that social accounts, such as denials, excuses, apologies and justifications, can each repair damaged perceptions of trustworthiness through attributional processes. Thus, for example, trustors’ perceptions of a lack of competence or ability among senior managers can be repaired by senior managers showing that the cause of the negative outcome was due to an external factor (such as the international ‘credit crunch’ of 2007–8 or the sovereign debt crisis of 2011–12), an uncontrollable ability (such as an inability by non-mathematically trained bankers to predict the failure of models), and/or a more unstable form of ability (for example, lack of knowledge by bankers of the risks associated with complex mortgage-backed securities). A review of prominent cases of trust failures reveals that this type of framing of accounts is clearly used by organizations in an attempt to influence the attributions and sense-making of stakeholders (Dietz & Gillespie, 2012; see also Elsbach, 1994).
A prominent example of the sense-making approach in action is the 2010 UK Parliamentary Select Committee’s inquiry into the ‘Big Four’ accounting firms’ failures in relation to the global financial crisis. Mueller and colleagues (2015) recently analysed this case to examine the role of inquiries for restoring the public’s trust in institutions. Their analysis of testimony revealed stark differences in the way the firm’s managing partners and the inquiry committee interpreted and made sense of the organizational failings, and highlighted the notable avoidance of apologies and admissions of responsibility by the Big Four firms in an attempt to avoid attributions of ‘fault, liability and blame’. They found that these testimonial accounts were largely discredited and dismissed by the committee who concluded that the audit market could not be trusted and required reform. Importantly, they found that the inquiry served as an important ‘field-configuring event’ that helped to re-legitimize the institution of auditing in Great Britain.
The relational approach focuses on the role of emotions and social rituals during the repair process. This approach is based on work suggesting that social rituals and symbolic acts are needed to resolve negative emotions caused by the violation and re-establish the social order and norms in the relationship (e.g. Ohbouchi, Kameda & Agarie, 1989; Ren & Gray, 2009; see also Knippernberg, this volume, for a review of affect and trust). This approach builds on and incorporates social equilibrium processes of trust repair (see Dirks et al., 2009). Strategies include apologies, penance (e.g. punishment, compensation, ‘paying a price’), redistribution of power and resetting expectations that collectively ‘settle the accounts’, ‘rebalance the scales’ and reestablish the expectations in the damaged relationship (Dirks et al., 2009; Lewicki & Polin, 2012; Shapiro, 1991).
Most research on the relational approach has been experimental and interpersonally focused. This research suggests that after a significant trust breach, using a combination of relational repair tactics (e.g. apologies and compensation) is likely to be more effective than relying solely on one (Bottom, Gibson, Daniels & Murnighan, 2002). Other experimental research suggests that apologies and compensation work by signalling repentance (Dirks, Kim, Ferrin & Cooper, 2011), that the size of the compensation can influence repair (Desmet et al., 2011a) and that the perceived intentions behind the use of repair tactics are crucial (Schweitzer et al., 2006). Such research also suggests that the nature of the violation can influence the effectiveness of various trust repair strategies (e.g. Kim et al., 2004, 2006; Dirks et al., 2011; Reb, Goldman, Kray & Cropanzano, 2006). At the organizational level, case study research suggests that relational repair tactics are an important component of restoring stakeholder trust in an organization (e.g. Eberl, Geiger & Aßländer, 2015; Dietz & Gillespie, 2011, 2012; Gillespie et al., 2014).
Drawing on both the relational and sense-making mechanisms of trust repair, Stevens, MacDuffie and Helper (2015) take a process perspective to argue that organizations must strive to keep trust close to an optimal level within a ‘control band’ i.e. neither too low nor too high. Through the analysis of longitudinal case study data from supplier-buyer trust at Honda and Nissan, the authors introduce two concepts – recalibration and reorientation of trust – and discuss how these can be used to manage the dynamics of trust maintenance and repair in inter-organizational relationships. An organization, for example, can take smaller-scale, more cost effective recalibration actions when trust is moving towards either the high or low limit of the control band, and thereby anticipate and prevent trust failures. However, if trust is allowed to move out of the acceptable band, more expensive and time consuming reorientation actions aimed at full-blown trust repair are necessary.
Regulation, formal rules and controls are theorized to facilitate trust repair after a breach by constraining untrustworthy behaviour and thereby preventing future organizational trust violations (i.e. ‘distrust regulation’, see Gillespie & Dietz, 2009). This involves organizations implementing structures ‘to provide credible assurance of positive exchange and prevent future transgressions’ (Dirks et al., 2009: 72) and relies on rules, structures, laws, policies, codes of conduct, sanctions and incentives to repair trust. These regulatory systems have been shown to repair organizational trust, particularly when introduced voluntarily rather than externally imposed (Dirks et al., 2011; Nakayachi & Watabe, 2005).
The inter-relationship between trust and control has a long history in the sociological literature. Institutional arrangements like contracts, role and authority structures have been referred to by Granovetter (1985: 491) as the under-socialized approaches. Drawing on these under-socialized approaches, Shapiro (1987) argues that ‘impersonal trust’ – founded in norms, rules and structures that procedural constrain agency, as well as selection and policing mechanisms (e.g. licensing, certification, accreditation, compliance checks), and insurance like arrangements – may provide an alternative to personalized or embedded trust relationships, particularly when trustors do not have viable means to monitor or control agents (e.g. due to lack of expertise or power). In line with Zucker (1986), Shapiro (1987) argues that these ‘guardians of impersonal trust’ represent institutional mechanisms that produce trust (rather than being a functional substitute for trust). However, paradoxically, these sources of impersonal trust also provide the opportunity and means for its abuse (‘who guards the guardians of trust?’; see Shapiro, 1987: 645; see also Barber, 1983). Other sociological work drawing on neo-institutional theory, for example by Zucker (1986) and Lane and Bachmann (1996), emphasizes the role of the broader institutional context, including institutional norms and safeguards for the creation, maintenance and repair of trust. This focus on societal structures and norms also resonates with Luhmann’s (1979) concept of system trust, which supports trust relations in organizations (Child and Möllering, 2003).
In their important theoretical and empirical contribution, Sitkin and Roth (1993) explain why legalistic remedies to damaged trust might have limited effectiveness. Their explanation draws on two aspects of trust: first, trust as expectations about an employee’s ability to complete task assignments reliably (task reliability), and second, distrust which happens when the compatibility of an employee’s values with the organization’s cultural values is called into question (generalized value incongruence). They conclude that formal controls are effective only for restoring breaches of task reliability, not value incongruence.
A recent case study of the Siemens bribery scandal by Eberl and colleagues (2015) found that although the imposition of more rigourous internal rules restored trust with external stakeholders, at the same time it reduced flexibility in dealing with customers and suppliers, thereby demotivating employees. Their study points to the value of structural mechanisms for trust repair while also highlighting the limitations of an overly rule-based approach. Similarly, the role and limitations of structural mechanisms for trust repair are evident in Spicer and Okhmatovskiy’s (2015) recent study of trust repair in the Russian bank deposit market. The authors distinguished between trust recovery due to increased regulation by the state from trust recovery due to the state’s full ownership of a particular bank. They conclude that state ownership is an important independent predictor of trust repair, to a much greater degree than any other efforts by the state to regulate banks. The authors claim that regulations and their implementation are perceived by potential customers as more ephemeral than is ownership. Finally, in their meta-analysis of trust in the financial services sector, Nienaber, Hofeditz & Searle (2014) conclude that regulation is an important, but by itself insufficient, strategy for restoring trust in financial services firms.
Organizational culture and informal controls represents another mechanism for constraining untrustworthy behaviour and promoting trustworthy behaviour in organizations (McKendall & Wagner, 1997). A corrupt, unethical or lax organizational culture is frequently implicated in trust betrayals (e.g. Seimens, FIFA, Enron, etc). Repair tactics involve implementing cultural reforms that identify and challenge the values, norms and beliefs that enabled the trust breach, as well as HR processes (e.g. induction, socialization, training, mentoring and per formance management), symbolic messaging and principled leadership that reinforce desired values and behaviour, and make unethical behaviour salient and counter-cultural.
This is an important mechanism for trust repair, given work suggesting that, through identity compartmentalization, unethical organizational cultures can thrive even in the context of and in defiance of ethical norms held by employees and society (Ashforth & Mael, 1989). Sztompka (1999) identifies a breakdown in professionalism as a major contributor to organizational trust problems, as trust in the way professionals conduct their roles is a foundation to presumptive forms of trust (i.e. role-based trust, see Kramer, 1999).
Valuable insights into the role of organizational culture in trust repair can also be found in case study and practitioner reports that document case studies of successful trust preservation and repair. One such example is the CIPD report by Hope-Hailey, Searle and Dietz (2012) that draws on empirical data from UK organizations such as John Lewis Partnership, Sunderland City Council, Royal Mail and Day Lewis Pharmacy to examine the role of HR in rebuilding trust. The report demonstrates that re-establishing and preserving a culture of trust within an organization is closely tied to HR policies and practices, and how they are implemented by managers, as each area of HR policy signals the organization’s competence, but also its integrity and genuine interest in the well-being of its employees.
Gillespie, Dietz and Lockey (2014) recently proposed that, in the context of an organizational integrity violation, reforms to the organizational culture will be required to robustly restore stakeholders’ trust: structural and procedural reforms alone will not be sufficient. This aligns with the work of Michael (2006) who laments that the dominant response to corporate scandals is to address the problem through rule-based mechanisms, and points out that rules cannot substitute for an ethical culture and decision-making. The need to complement formal controls with informal cultural controls for trust repair is also a theme in Eberl et al.’s (2015) case study analysis of the Seimens case (see also Sitkin & George, 2005). Gillespie et al. (2014) also offer two other culturally related propositions, namely that in the context of an integrity violation: (a) the replacement of senior managers implicated in the trust failure (i.e. ‘changing of the guard’) and (b) (re-)establishing a positive organizational identity among employees (i.e. honouring and holding onto what is ‘good’), will speed up and increase the likelihood that the organization will restore stakeholders’ trust. In their case study analysis, they describe the cultural reforms and identity work that the organizational underwent as part of the trust repair process.
Other empirical work reinforces the central relevance and importance of the last of these strategies – identity work – for trust repair with employees. Maguire and Phillips (2008) demonstrate empirically that institutional trust, like interpersonal trust, can be identity-based. Based on a case study of Citibank in a post-merger context, the authors propose an identity-based framework for understanding employee trust in an organization, demonstrating how institutional trust is initially undermined by the ambiguity of the new organization’s identity, and how, later, institutional trust can continue to be undermined by a lack of employees’ identification with the new organization.
More recently, in a case study of BP during the 2010 Gulf of Mexico oil rig explosion and spill, Petriglieri (2015) found that the incident destabilized executives’ organizational identification, leading to doubts about their alignment with the organization and their role within it. As a result of the trust breach, executives either re-identified and repaired their relation ship with the organization, or severed the relationship. Re-identification occurred when BP executives were directly involved in the organization’s response to the incident, highlighting the importance of co-creation in trust repair. In contrast, being excluded from the organization’s trust repair efforts further alienated executives and hindered their re-identification.
The focus here is on organizational reporting and monitoring based on the view that ‘transparently sharing relevant information about organizational decision processes and functioning with stakeholders helps restore trust’ (Bachmann et al., 2015: 1126). This mechanism is prevalent in the literature on corporate governance and public management, which suggests that principles of accountability, transparency and disclosure lay the foundation for trust (see also Child & Rodrigues, 2004).
In support of this mechanism, recent research using an experimental paradigm found that self-disclosure of negative information lessens the damaging impact of this information on consumer trust and judgements towards the company, compared to third party disclosure of the same information (Fennis & Stroebe, 2014). This relationship was found to hold for companies that had a poor reputation at the outset, whereas for companies that enjoyed a positive reputation, type of disclosure (self vs. third party) did not affect consumer trust.
Although there is much emphasis on the importance of transparent government for citizen trust, empirical evidence of a relationship between transparency and trust in government is equivocal and qualified. For example, Grimmelikhuijsen and colleagues (2013) found that transparency has a subdued and sometimes negative effect on trust in government. Furthermore, Grimmelikhuijsen and colleagues (2014) find that a positive relationship between transparency and citizens’ perceptions of trust in government only occurs for the minority of citizens who have low prior knowledge of the policy topic and a low predisposition to trust the government. These experimental findings suggest that the relationship between transparency and trust in institutional and organizational contexts is far from simple or evident, and requires further empirical evaluation, as well as how these effects translate to the unique setting of trust repair.
This mechanism draws on the role of third parties in trust repair, based on the premise that trust can be transferred from a credible party to a discredited party through the use of certifications, memberships, affiliations and endorsements. Third parties have been found to act as the ‘go-betweens’ in new relationships that enable new parties to ‘roll over’ their expectations from the well-established relationship to the newly formed relationship where there is little knowledge or history (Shapiro, 1987; Uzzi, 1997). They do this by transferring expectations and opportunities in existing relationships to newly formed ones. In interpersonal contexts, the influence of third-party endorsements has even been shown to be equivalent to that of direct experience with the other party (Ferrin, Dirks & Shah, 2006). McEvily, Perrone & Zaheer (2003) identify that transferability is one important mechanism through which trust acts as an organizing mechanism, creating density and closure of a network.
An organizational example of trust transference comes from the previously described case study of the UK inquiry into the ‘Big Four’ accounting failures. In this study, Mueller and colleagues (2015) identify that a key component of the trust repair was the transfer of trust worthiness from the impartial parliamentary committee leading the inquiry to the damaged audit firms. Compared to the other trust repair mechanisms, limited work has directly examined the potentially influential role of the transference of trust for organizational trust repair; however, there is a healthy related literature on legitimacy spill-over effects in the institutional literature (e.g. see Haack, Pfarrer & Scherer, 2014; Zavyalova, Pfarrer, Reger & Shapiro, 2012).
Notable in the organizational trust repair literature are ‘stage’ models of trust repair that identify the steps and strategies that can be undertaken by a transgressor organization to restore trust. In so doing, these models typically incorporate several of the underlying trust repair mechanisms reviewed above. These include models by Lewicki and Bunker (1996), Gillespie and Dietz (2009) and Pfarrer and colleagues (2008).
The first stage model was proposed by Lewicki and Bunker (1996) and involved: (1) recognizing and acknowledging that a violation has occurred, (2) determining the nature of the violation (establishing what/who caused the violation), (3) admitting the destructive impact of the event on trust, and finally (4) willingness to accept responsibility for the violation. Hence, this model incorporates both the sense-making and relational mechanisms of trust repair.
Gillespie and Dietz (2009) proposed a model of restoring trust following an organization-level failure. They drew on the literature on trust, crisis management, strategic change, and systems and multilevel theory to propose that perceptions of an organization’s trustworthiness are influenced by signals sent from four internal organizational components (leadership and management practice, structure and processes, culture and climate, and strategy) and two external components (external governance and public reputation). Based on this foundation, they propose a four-stage process of repairing trust, which integrates most of the trust repair mechanisms previously reviewed. The four stages are outlined below, together with the under lying repair mechanisms focused on at each stage:
Pfarrer and colleagues (2008) offer a different conceptualization of reintegration post crisis. The authors outline a process of ‘reintegration’ with stakeholders after a corporate transgression (i.e. a corrupt or unethical act). Drawing on the literature on stakeholder theory, image management, organizational justice and crisis management, they define reintegration as the process of rebuilding legitimacy in stakeholder relationships damaged by the organization’s wrongdoing. The authors propose the following stages that are designed to address changing stakeholder questions and concerns across the reintegration process: (1) discovery ‘What happened?’ incorporating voluntary disclosure, internal investigation and public cooperation; (2) explanation ‘How did it happen?’ involving acknowledging wrongdoing, expressing regret, accepting responsibility and apologies; (3) penance ‘How will the organization be punished?’ including accepting the verdict, accepting punishment without resistance; and (4) rehabilitation ‘What changes have been made?’ including introducing internal or external changes. A key proposition underlying the model is that reintegration is more likely if the organization responds to the demands of the most salient stakeholder groups (i.e. those that have the ‘most power, legitimacy and urgency of claims’, noting that stakeholder salience can change over time) and achieves ‘concurrence’ at each stage of reintegration, that is ‘a generally shared opinion among stakeholders regarding the transgression and appropriateness of the organization’s actions’, (Pfarrer et al., 2008: 733)
There are some parallels between these latter two frameworks: they both focus on the closely linked concepts of legitimacy and organizational trustworthiness, are deliberately normative, outlining a staged process with complementary actions, and imply that by making appropriate internal organizational reforms coupled with external governance, trust can be restored in organizations (for a summary table comparing these models, see Gillespie et al., 2014). However, these models each emphasize different aspects of the process and make unique propositions.
What is striking about all three models is that they are underpinned by an emphasis on rational action that needs to be ‘timely’ and ‘accurate’. If a transgression has occurred, the organization’s leaders (and/or those with a governance responsibility) are expected to determine the nature of the transgression, find the cause, apologize, offer reparations, launch investigations, and introduce internal and external changes. Thus, one of the core assumptions is a belief in managerial agency to address the trust breach: that is, managers are credited with the ability and authority to influence stakeholders’ perceptions of the organization’s trustworthiness and the legitimacy of its actions, post-violation. Hence when faced with damaged trust, managers are normally expected to take the initiative of rebuilding trust and are attributed with the power and authority to do so (Mayer & Gavin, 2005).
Two research reports published by the Institute of Business Ethics (Dietz & Gillespie, 2011; 2012) use case studies of organizations that have attempted to repair trust in practice (e.g. Mattel, Toyota, BP, Siemens, BAE Systems and the BBC), to illustrate, support and extend the stage models of trust repair and the propositions that underlie them. In doing so, these reports explicitly highlighted a central tension often apparent in organizational trust repair: the choice between a legalistic versus relationship-based approach. The legalistic route aims to minimize financial risk to the company and avoids media exposure by closely containing information about the failure, for example, through reticence, denial, a lack of transparency, super-injunctions or disciplinary action against allegations. Poppo and Schepker (2010) suggest this approach is the most appropriate when organizations are embroiled in a scandal. The relationship approach, on the other hand, is based on the alternative premise that the best way to protect the organization’s reputation is by effective management of the organization’s relationships with its stakeholders, for example through transparency, candid communication, demonstrating concern for the impact of the failure on stakeholders and making reparations. In most cases these two approaches are incompatible, and yield very different long-term results.
More recently, Gillespie and colleagues (2014) conducted a longitudinal, case study examining how a UK water utility repaired trust with its stakeholders after a major integrity violation. Their results generally supported the view that thorough responses in each of the four stages proposed by Pfarrer et al. (2008) and Gillespie and Dietz (2009) facilitate effective organizational reintegration and trust repair. Their analysis of the two diametrically opposed approaches succes sively taken by the company’s senior management team support the view that open, cooperative and conciliatory responses akin to the relational approach (e.g. transparency, acknowledging wrongdoing, accepting responsibility, expressing remorse) facilitate effective trust repair, whereas defensive approaches akin to the legalistic approach (e.g. denial, obfuscation) can under mine repair and create further distrust. Hence, these findings challenge the view proposed by some scholars (e.g. Kim et al., 2004; Poppo & Schepker, 2010; Mueller et al., 2015) that denying an integrity violation is more effective than apologizing. The case further supported the proposition by Pfarrer and colleagues (2008) that stakeholder salience and status shift across the reintegration process, and underlined the importance of attending to the most salient stakeholder at each stage.
Much (but not all) of the foundational trust repair literature is based on functionalist assumptions of trust in organizations, i.e. a belief that trust can be managed through a set of relatively simple prescriptions (Möllering, 2006). These studies have adopted the language of variance theory (Langley, 1999; Van de Ven, 2007), which involves identification of antecedents and out comes of trust repair and explanations of causal relationships between dependent and independent variables. The focus of these studies is on evaluations of trust repair interventions and on delineating those independent variables (i.e. trust repair responses) that shape recovery. The independent variables most commonly used in this research are apology and denial (e.g. Tomlinson, Dineen & Lewicki, 2004; Ferrin et al., 2007; Kim & colleagues, 2004, 2006, 2009), reticence (e.g. Ferrin et al., 2007), excuse, penance, financial compensation and justification (e.g. Bottom et al., 2002; Desmet et al. 2011a, b; Dirks & colleagues, 2006, 2011).
These normative studies of trust repair are based on a mechanical metaphor – when trust is broken, it needs to be rebuilt. Though such studies are very insightful and practically useful (particularly for interpersonal trust repair), they fail to reflect the complex reality of organizational trust repair. Some studies on trust critique the underpinning assumptions behind the majority of research that trust can be achieved in all types of relationships in an organization and that managers have the ability to shape trust relations in the interests of all. It is these two core assumptions – the extent of common goals and managerial agency – that most disturb radical theorists as they ignore the conflicting agendas that are at the heart of managing industrial relations. Some notable exceptions include Child and Rodrigues (2004) who argued that employees have too much trust in organizations that have progressively failed them, Thompson (2011) and Delbridge and Keenoy (2011) who rejected the notion of managerial agency in favour of an argument that supports the effects of strong institutional forces on employee engagement and trust, and Bijlsma-Frankema, Sitkin and Weibel (2015) who question the idea that trust can be repaired once distrust is engendered.
Our review of the extant literature indicates that there is little interpretive research on organizational trust repair. Moreover, what little exists is underpinned by interpretive thinking rather than being truly interpretive in nature. Radical perspectives are under-represented in intra-organizational trust research (Siebert, Martin, Bozic & Docherty, 2015), and this under-representation is also noticeable in organizational trust repair research. The study by Child and Rodrigues (2004) mentioned earlier suggested that breach of trust in many contemporary organizations was caused by an increase of hostile takeovers resulting in job losses, as well as by hierarchical structures in the workplace that promoted distinction and introduced divides through vast pay differentials and unequal levels of reward for performance. The authors also argued that neo-liberal thinking encouraged free allocation of resources and justified less favourable treatment of people under the guise of flexible employment practices. Despite an increasing awareness of the importance of employee trust to organizational performance, evident in the functionalist literature, there appeared to be an increase of employee fear, organizational cynicism and disengagement.
The work of Alan Fox is relevant and influential on this point. Fox (1966, 1974) is credited with making two major contributions to sociological accounts of trust within organizations. The first is a macro-sociological account of unitarist, pluralist and radical frames of reference in British industrial relations during the 1960s and 1970s. The second is a micro-sociological account of how trust dynamics in the workplace are shaped by social relations, specifically relations involving power and the division of labour in bureaucratic organizations in capitalist societies. Fox’s conception of trust is often used to explain the relationship between work organization, contract and power relations between managers and employees (Starkey, 1989; Provis, 1996). Fox’s (1974) analysis points to an institutionalized withholding of trust by employees made evident by suspicion, jealousy, misreading of people’s motives and a lack of cooperation. Such approaches are beginning to emerge in contemporary studies of organizational trust repair (for example, Mueller et al.’s 2015 paper), but more work is needed to explore these issues further.
Siebert et al. (2015) argue that one of the limitations of trust and trust repair research is that it is often limited to what happens inside organizations while ignoring the external influences. Arguably, by focusing on the organization as the unit of analysis, researchers fail to deal with problems such as recessions, global trends in employment, civil unrests, decline of trust in institutions, politics and ideology. Many important contextual variables such as the impact of power, regimes of governance and the influence of the wider political economy should be taken into consideration while investigating how organizations can secure organizational trust among employees. A more critical perspective on trust repair may enable us to challenge or problematize underlying assumptions and ask more interesting questions that break existing paradigmatic boundaries, as well as generating novel theoretical and practical insights.
Such critical perspectives on trust repair are not the only way forward, and we conclude this chapter by suggesting other alternative theoretical perspectives on trust repair: structure agency debates, process theory and institutional theory. We also point the reader to recent reviews by Bachmann et al. (2015), Dirks et al. (2009) and Kramer and Lewicki (2010) for further suggestions on the future of trust repair research.
The majority of trust repair studies place undue faith in managers’ ability to manage trust relations, and ignore the role of external factors that might affect organizational reintegration (Möllering, 2006). Shifting emphasis away from an organization as a unit of analysis to a broader focus on trust in institutions and social structures might throw some light on why some organizations cannot repair trust despite their genuine efforts to do so (Child & Rodrigues, 2004). Hence considering both the ‘structure’ (i.e. the broader institutional context for organizations) and ‘agency’ (i.e. management actions inside the organization) might enrich theoretical insights on trust repair and have practical implications for organizations. Such a rebalancing that acknowledges the structure-agency debate (Giddens, 1984), and takes cognizance of unintended consequences of managerial action (MacKay and Chia, 2013) in trust repair, may allow trust researchers to recognize the limitations of the current prescriptions and avoid raising unrealistic expectations of repair. For example, Gillespie, Hurley, Dietz and Bachmann (2012) apply this dual perspective in their analysis of strategies for repairing trust in banks following the global financial crisis: focusing trust repair efforts only internally within banks might not yield any results if we fail to acknowledge that more fundamental or radical changes are required in the institution of banking in general – its governance and state regulation (see also Nienaber, Hofeditz & Searle, 2014).
Given the a-contextual and a-historical nature of much of the trust repair literature, a focus on how organizations are embedded in and conditioned by higher levels of institutions would seem relevant in providing a more nuanced explanation of how trust is restored.
Early institutionalists argued that by their ‘embeddedness’ in a broader institutional context organizations ensured structural isomorphism and ended up pursuing similar courses of action. In contrast to the early institutionalism, which predicts that organizations do not possess the necessary degree of agency because they are firmly embedded in the institutional fields, more recent institutional theory has begun to question the determinism of neo-institutionalism by promoting the role of agency among organizational actors (Lawrence & Suddaby, 2006). One such aspect of institutional theorizing is institutional work, defined as ‘intelligent, situated institutional action’ (Lawrence & Suddaby, 2006: 219). Institutional work provides a nuanced view of the relationship between actors and institutions (Dacin, Munir & Tracey, 2010; Lok & De Rond, 2013) and broadly identifies three institutional processes: creating, maintaining and disrupting institutions. However, in recent years, scholars have begun to discuss another aspect of institutional work – institutional repair in the face of practice breakdowns. These studies usually focus on institutions in moments of vulnerability and in situations in which the institution is being challenged (because of new entrants, practice breakdowns, breaches or external jolts) and thus the effortful work of maintaining the institution can be clearly seen (Lok & De Rond, 2013; Micelotta & Washington, 2013; Heapy, 2013). There are some parallels between investigations into trust breaches and practice breakdowns, and institutional literature might illuminate new ways of theorizing trust repair. An institutional perspective on trust repair may also open doors to the consideration of wider institutions such as the legal system, religion or political systems in shaping trust relations in organizations and institutions.
Although there is some recognition in the literature that trust in itself is a process (Khodyakov 2007; Möllering, 2006), the processual nature of trust repair remains underdeveloped. There have been recent calls for adopting a process theory approach to produce more complex accounts of trust repair and its attendant problems (Bachmann et al., 2015; Nooteboom, 1996; Möllering, 2013). Such approaches, which incorporate process rather than variance theorizing, have much to commend them because they deal explicitly with the longitudinal nature of trust repair. Recently, Bjilsma-Frankema and colleagues (2015) proposed a dynamic process model of distrust development that explains how and why distrust becomes entrenched in a ‘self-amplifying cycle’. As organizational trust failures not only diminish trust, but typically trigger active distrust, this work provides important insights for trust repair. In particular, it highlights the central need to overcome perceptions of value incongruence for distrust to be overcome, and trust to be rebuilt.
Some trust repair research can be characterized by imputing a relatively unconstrained agency to senior managers’ capabilities to restore trust through a set of relatively simple prescriptions, such as the symbolic and material trust repair strategies and practices discussed previously. Challenging the notion of inflated managerial agency, Siebert and Martin (2014) have suggested that ‘leaving things alone’ might in some cases be an effective strategy. This counter-intuitive strategy of inaction represents a threat to managerial identities and is inconsistent with the current dominant association between leadership and change. This approach, however, might suggest that leaving the process of trust repair, for example, to the influence of fading memory connected with the passage of time or distracting the attention of organizational stakeholders might work equally well in some circumstances, but empirical investigations are needed.
In this chapter we have provided a selective review of the extant conceptual and empirical work on repairing trust in organizations and institutions. In so doing, we identified the dominant epistemological and ontological paradigms taken in the literature to date, which largely takes a normative functionalist perspective based on variance language. We argue that while these dominant paradigms have provided a necessary and helpful foundation to this nascent field, there is a need to complement this work with critical and radical perspectives to deepen understanding of the constraints to, and macro-level influences on, organizational trust repair. To this end, we encourage future scholarship to integrate structure-agency and institutional perspectives, as well as focus on the processual and dynamic nature of organizational trust repair.
1. We point the reader to the original article for a discussion of the limitations and paradoxes of each trust repair mechanism.
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