Self-Reference as a Basic Component in Trust Building


Self-reference was labeled as one of the four components of trust on the basis of interviews. The concept is well suited to combine the various aspects of trust that the interviewees brought up spontaneously.

Luhmann (1979) has introduced the concept of self-referential systems (e.g., human beings or organizations) that are able to both communicate with and adapt to their environment, and at the same time be autonomous and independent. This means that the system creates its identity and self-continuity both by communicating with other systems and referring to itself. It is influenced by the environment, but has a high capacity to regulate itself and decide how it is affected. In other words, the system can be both open and closed at the same time through self-regulation. The core of this function is to have the ability to create and regulate the boundaries of the system (Luhmann, 1995).

Why is self-reference important when dealing with technology partnerships and trust? First, technology partnerships often concern innovations or other kinds of knowledge intensive cooperation, where both parties have areas where they cooperate and — nowadays more and more often — also areas where they compete with each other. In this kind of situation, the boundaries between openness and closure must be absolutely clear. Too much openness may result in losing the potential value of the company's intellectual property, and too little openness may result in unsuccessful partnerships. The competitive companies in today's business environment must have high capacity for both autonomy and cooperation. Thus, the concept of self-reference helps us to understand the new requirements that businesses face today (St hle, 2002). Second, trust is a crucial element in self-referential systems. By understanding how self-referential systems function, we also understand better the role and importance of trust in the business context.

Self-referential systems are created primarily on the basis of three vital criteria (St hle, 1988, pp. 77–92). The first is double contingency. The core of the concept is that not only a relationship or connection between the parties is enough, but the quality of social relationships is also essential. Double contingency means mutual interdependence, which must be acknowledged and accepted by the parties. If there is no balance in the dependency, one party can dominate and the possibilities for trust building will diminish. Double contingency does not necessitate a mutual set of values, symbolism or consensus (Luhmann, 1995a, pp. 172–173; see also p. 126). Instead, the indispensable grounds for interaction are mutual trust and interdependence.

The second criterion pertains to the quality of information. Exchange of information — communication — is a prerequisite for an organization's operation, because only communication can create functioning. It is not only a question of dealing with explicit knowledge, documents, procedures or facts. Instead, Luhmann emphasizes information becoming a "process element," meaning that the exchanged information influences the people who are involved. This refers both to the experiential quality of information and to the manner by which the information is processed, e.g., to dialogue. Dialogue means a process where all the parties have the right to influence and the responsibility to become affected. The kind of information, which does not change the condition of the system is meaningless information — mere data (Luhmann, 1986c, p. 174). This kind of communication between the partners needs a solid ground of trust. Without trust the actors will not be willing to take the risks (to be wrong, not accepted, betrayed, etc.) that this kind of process always includes.

The third criterion of self-reference concerns the creation of meanings. Luhmann indicates that meanings are created collectively within the system through mutually produced occurrences. These are never fully developed and, as such, cannot be transmitted to others. Jointly created meanings gradually form a common language for the parties, as well as an opportunity for quick joint understanding. Thus, meanings are the basic elements of systems, on which the operations are based and guided. The more double contingency there is in the relationships, the more there is also trust. The more there is trust, the easier it is to exchange information and end up with jointly understood meanings. Finally, the more there exists jointly created language, the more efficiency and speed the organization can gain. This characterization of self-referential systems is summarized in Table 1.

Table 1: Characterization of Self-Referential Systems (Based on St hle, 1988)

BASIC FUNCTION

RELATIONSHIPS

COMMUNICATION

DECISION MAKING

MAIN CONCEPT

Self-reference

Double contingency

Information

Meaning

CHARACTERISTIC

Self-reproduction

Inter-dependency

Experienced - (not enacted) "Event" (not a "fact")

Basic element for the functioning and structure of the system

DEMONSTRATION

Self-definition and self-regulation of boundaries. Action based on recognition and value of self. Contact with other systems

Equality Trust Risk-taking

Exchange of information Reactions and response

Collective processing (in double contingent connections)

INFLUENCE ON THE ORGANIZATION

Internal control of complexity

Accelerator of system construction

Renewing power

Actualizes the system's potential

Altogether, the three criteria — double contingency, quality of information, and creation of meanings — are based on the self-referential function of the system (St hle, 1998, p. 90):

  1. Connection with other systems, using them as a reference for oneself

  2. Double contingency: symmetrical dependency (power balance), giving trust voluntarily

  3. Experiential information: communication as an event, information produced in dialogue, has the power to change the state of the system

  4. Processing collectively created meanings

These criteria actualize the mode by which the system refers to itself, and the same criteria are valid both for individuals and organizations.

Understanding the meaning of self-reference forms a valuable context for trust in business partnerships. Trust is a basic element in the formation of self-reference both for organizations and individuals. Self-reference as such can be seen as an antecedent for any competitive organization or partnership in a dynamic business environment. The last row in the Table 1 shows the effects which self-reference has on any organization in a dynamic, turbulent business environment:

  1. It creates possibility for internal control of complexity in the system, e.g., helps to make choices and prioritize.

  2. It is an accelerator of system construction, e.g., makes the organization function as a coherent system.

  3. It functions as a renewing power, e.g., creates an antecedent for innovation.

  4. It actualizes the system's potential, e.g., helps it use its competence and resources in a maximal way.

In dynamic business environment that is non-linear and turbulent, organizations and individuals can never be controlled (managed) externally. This means that hierarchical and authoritarian management systems are not able to create proper conditions for fast and innovative business. The control and regulation must occur basically from within the organization, which means high capacity for self-regulation, self-directedness and self-organization (St hle, 2002). The interviews of large and small firm managers produced empirical evidence about the role of self-reference in asymmetric technology partnership formation. A self-referential actor has an ability build relationships and is more willing to accept interdependency (double contingency). Some of the interviewed managers discussed self-reference as follows:

"We have built this all on strong relationships and we have earned them not on school merits but on successful cases and doingsthat is we never leave a employee or customer or partner in trouble. Whatever they need, if it is important for themI could do that. That is our philosophy." (Managing director, Small Software Company Zeta)

"The ability to build trust comes from the ability to be humble. If you have been able to dictate what will be doneIt will be a long drop and major change in the mental mode to actually listen to what the other person is after and what they want and to think of them as equals." (Partner director, Large ICT Company)

The ability to participate in the knowledge creation process (dialogue, collective processing of meanings) is essential for self-referential actors. This was highlighted, for example, as follows:

"Communication is very criticaltrust is created between individuals, not organizations. Individuals act like representatives of their organizationsYou cannot trust a large firm's organization more than the small firm's organization." (Technological expert, Internet Technology Net)

Clear self-reference enables the individual or organization to connect to other actors and to cooperate. At the corporate level, self-reference is the basis for strategy and business plans. Also, a clear strategic intent and subsequent integrity in action form parts of self-reference. Without clear self-reference, recognizing the right partners (strategic and cultural compatibility) and establishing partnerships is difficult.

"I evaluate a potential partner with feelings anyway. It is the first couple of minutes ... The first impression is important... how they present themselves, whether they are really interested and, whether they have a vision. I also look whether they are able to communicate their vision and have self-respect. It is the feelingYes, I don't know if I should have, but I don't have any systematic way of evaluating them. You listen to their story and evaluate whether it is credible or not." (Partner director, Large ICT Company B)

Self-reference enables the actor to trust, to be trusted and to cooperate. It is proposed that an individual or organization with a strong self-reference is able to recognize, maintain and develop the heterogeneous strength in its identity, yet connect and cooperate at an equal level with diverse and complementary actors.




L., Iivonen M. Trust in Knowledge Management Systems in Organizations2004
WarDriving: Drive, Detect, Defend, A Guide to Wireless Security
ISBN: N/A
EAN: 2147483647
Year: 2004
Pages: 143

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