Entrepreneurship Marketing by Sonny Nwankwo

Author:Sonny Nwankwo
Language: eng
Format: epub
Publisher: Taylor and Francis
Published: 2020-02-24T00:00:00+00:00

Figure 14.3 Responses to uncertainty according to perceptions of risk.

In the face of uncertainty, all writers on the topic of trust wrestle with where to place trust on a continuum with regulation at one end and opportunism at the other (see Figure 14.3). Opportunism calculates that it is not worth calculating further, and it may also involve an understanding that advantage can be taken of another’s vulnerability or lack of knowledge. Regulation ensures that optimal calculations are made, according to criteria of risk aversion, that information is fully shared and that vulnerability cannot be exploited. An option to reduce uncertainty between these two extremes is to trust, either initially (‘placed trust’) or increasingly during a process of relationship building (‘trust as response’); another option is to take a risk (Halliday, 2004). Attitudes to risk vary, from risk aversion, through risk neutrality to risk seeking, and the entrepreneur’s attitude to risk is a hotly contested issue. Are they risk takers? Or do they seek to reduce risk and to gain control by skills and knowledge which act to mitigate what might be risks if taken by others?

This is part of the broader realm of business life and is also part of social relationship building.

Trust is the reliance by one person, group or firm upon a voluntarily accepted duty on the part of another person, group or firm to recognize and protect the rights and interests of all others engaged in a joint endeavour or economic exchange.

(See Hosmer, 1995 p. 392)

This definition embraces obligations and interests. In this way, trust is deeper than reliance on either promise or competence. Trust implies the personal characteristic of trustworthiness on the part of the trusted. Blanket trust rarely exists – rather we trust someone in a constrained context and/or for a particular purpose (Blois, 1999).

How does trust work?

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