Chapter 3: Trust as Capital: The Foundation of Management

Risto Harisalo
University of Tampere, Finland

Jari Stenvall
University of Lapland, Finland

Copyright 2004, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

Abstract

Trust is an old idea and it has come back again. We believed that proper management and information systems, a correctly designed organizational structure, and well-oiled processes will solve our problems and facilitate us to attain our objectives. We were wrong because we forgot people's deep psychological needs for trust and fear of mistrust. This chapter argues that trust as capital is more important for people and organizations than financial capital as money and human capital as knowledge. Strong trust helps people to make better use of small amount of money and knowledge than mistrust can of great amount of money and knowledge. If human interaction is based on strong mistrust no amount of money or knowledge help people to settle down their differences. The message of this chapter is that the stronger people trust each other the easier it is for management to lead, practitioners to develop, and employees to work efficiently and creatively. With trust conflicts can be solved without troubles or bad aftertaste. Customers are likely to favor companies in which they trust. Trust opens possibilities, mistrust closes them. It is the greatest challenge for management and people dealing with information systems.