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Part - II

Trust could be an organization's biggest competitive advantage, in markets that are getting increasingly consolidated. More so, it can become a distinctive advantage. Trust is intangible, difficult to imitate and time consuming to build. The best thing an organization could do is to leverage and build on trust.

Trust has always been an USP in many industries, like gold and diamonds. Generations of buyers used to buy from the same jeweler, till Tanishq built trust into its brand by demonstrating quality by establishing standards and benchmarks. Now after most jewelers levitated to standard establishment and duplication, Tanishq is still the leader, because it was the first mover.

Trust - The Social Perspective

Trust is the rubric that decides the efficacy, nature and size of transactions in a society. Trust not only affects the transactions, but also the very foundations of economic prosperity and resource creation.

Trust among people comes from family values and the strength of the family as a unit, and its precedence over other the State, institutions and other social groups, both economic and non-economic. These in turn arise from the culture that has evolved in a region or a country.

A society characterized by high trust can create economic prosperity without the intervention of the State. It can create large organizations, due to social cohesion and compliance to group interests over personal priorities. Spontaneous trust, when coexisting with legal entitlements, reduces transaction costs. This makes business more viable and stable. Family is a priority that co-exists with other social groups.

In low trust societies, the orientation towards family cohesion is high, leading to development of small family owned businesses, which cannot grow. In such situations, as in China, the State has to intervene to encourage large corporations through subsidies or through outright ownership and control. In such societies, legal entailments can be high, leading to lack of innovation and growth. Transaction costs rise and industrial relations are strictly State policy controlled. Managerial reforms take longer to penetrate the traditional way of business, as a result of nepotism and cronyism.

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* Contributed by: -
Vinod Sriramulu,
PGP - 2,
BIM, Trichy.