Antecedents of Stakeholder Trust in Business Development in Latin America

Antecedents of Stakeholder Trust in Business Development in Latin America

Harish C. Chandan (Argosy University, USA)
DOI: 10.4018/978-1-4666-8820-9.ch005
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Abstract

Trust is the expectation of honest and co-operative future behavior based on commonly shared norms (Fukuyama, 1995). In Latin American region, people who believe that most people can be trusted ranges from 4 to 19% as compared with 34% for USA and 60% for China and Sweden (World Values Survey, 2010-2014; Jamison, 2011; Cardenas et al., 2009). Trust consists of a mix of inter-personal trust and institutional trust. An understanding of business culture, national culture and religion is essential for developing trust in business relationships (Hurtado, 2010; Searing, 2013; Weck, 2013, Ransi and Kobti, 2014). Trust among various business stakeholders within a firm or between firms in a local, national or international setting is an essential component of business development activities that are rooted in the relationships between exchange partners (Barron, 2014; Taylor, 2013; Friman et al., 2002;). The monitoring mechanisms on trust, i.e., “trust but verify” are conductive to maintaining trust in a business relationship (Kusari, et al. 2014).
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Low Trust Levels In Latin America

The low inter-personal trust in LA region reflects the colonial history and the lack of trust at the institutional and government level (Lagos, 2001). The LA citizens do not trust their public institutions, financial and legal institutions, government, police and the media (Power and Jamison, 2005). The expression viveza criolla (native cunning) is an example of LA mistrust. It expresses a belief that a person who does something shady and gets away with it, is successful while others who act in good faith are naïve, miss out on the opportunities and end up failing. Trickery and deceit inspire admiration than admonition in this frame of reference. There is a popular Spanish saying, “el que no tranza no avanza” (one that does not act unethically does not succeed). In a trust study conducted in Bogota, Buenos Aires, Caracas, Montevideo, Lima and San Jose, the most robust explanatory variables of trust and group formation across cities were related to pre-determined expectations about the outcomes. Trust and group participation are predictors of economic transactions and other social interactions (Cárdenas et al., 2009).

Based on World Values Survey (2010-2014), the mean trust level for the world is 24.5%. Table 1 lists the individual values for the LA region countries along with USA, China and Sweden. The value for Brazil was not reported in this publication. In the LA region, Argentina (19.2) has the highest trust level followed by Uruguay (13.8). Mexico and Chile have the same value of 12.4. The USA (34.8) represents a trust level higher than the world average (24.5). Both China (60.3) and Sweden (60.1) represent a very high trust level. Trust is crucial to business performance and the development of new business. The reasons for low trust can be intrinsic or cultural and a legacy from the past. Low trust can also be caused by the performance of political institutions and economic policies for the citizens. The intrinsic or structural (cultural, socio-economic) and extrinsic factors (citizen’s evaluations of performance) contribute to the low levels of interpersonal trust. (Uslaner, 2003).

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