The Reproduction of Trust Violations: An Exploration of Gaps in Theory and Practice in Universal Banks

This paper examines gaps in our research on multi-stakeholder trust in organizations and uses the loss of trust in large banks as an illustration of how our theories need to evolve to properly understand trust at the... [ view full abstract ]

This paper examines gaps in our research on multi-stakeholder trust in organizations and uses the loss of trust in large banks as an illustration of how our theories need to evolve to properly understand trust at the organizational system level. While trust repair has been studied as a process at the interpersonal (Lewicki and Bunker, 1995) and at the organizational (Gillespie and Dietz, 2009) the gradual erosion of trust before the crisis or event has not been studied. What’s more, we know very little about the antecedent patterns whereby the organizational manifestations of the dimensions of trustworthiness are weakened before the major violation occurs.The argument presented here is that trust researchers need to go deeper than looking at the specific violations of ABI to examine the underlying dynamics that seem to cause these breaches. Perhaps it is the powerful pull of underlying organizational dynamics that not only creates a deviance from trustworthy behavior over time, but also inhibits reforms that demand fundamental change in companies that have become addicted to bad habits and cosmetic fixes. The next section explores this deeper perspective by examining not the trust violations themselves but rather the factors that may have caused banks to change and adapt over time in ways that led to those breaches. To extend trust research, three theoretical frames (strain theory, dysfunctional innovation and organizational learning and risk management) are offered along with case study evidence concerning the way in which each helps to explain how bank trust violations were produced.