Trust Payoffs in Distrust Dominated Environments

Abstract

Stoked by corporate failures from Enron to Lehman Brothers, consumers are increasingly skeptical of the motivations of industry sectors ranging from banking to health care. Do organizations dare build trust in times of distrust? Does it pay? Using institutional perspectives of trust production, we examine consumer perceptions of firm-level trust under varying institutional contexts, and the influence of firm-level trust on consumer loyalty in distrust- versus trust-dominated environments. We find that although firms produce less trust in distrust-dominated environments, firms that successfully build trust in distrust environments show a 50% increase in consumer loyalty relative to trust environments.

Keywords: Trust, Distrust, Institutional Theory, Consumer Loyalty