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Organizational Trust Repair
Nicole Gillespie
UQ Business School, University of Queensland
Sabina Siebert
Adam Smith Business School, University of Glasgow
Citation: Gillespie, N. & Siebert, S. (2018). Organizational Trust Repair. In Searle, R.,
Nienenbar, A., & Sitkin, S. The Routledge Companion to Trust. London: Routledge. pp 284-
301. ISBN 1138817597
1. INTRODUCTION
Organizational trust is a fundamental building block of organizations. However, as the
recent corporate governance crises demonstrate, trust is often very difficult to restore once
broken (Kramer & Lewicki, 2010). Understanding how organizational trust can be repaired
has become an important topic for researchers in organization studies, as well as for
practitioners (Bachmann, Gillespie & Priem, 2014; Kramer & Lewicki, 2010). A recent
example that highlights the practical focus of this work is the emissions scandal at
Volkswagen. The Volkswagen Group built their reputation on manufacturing environmentally
friendly cars pledging that by 2018 the company would be the world’s most environmentally
friendly car manufacturer. Yet in May 2015, it was revealed that Volkswagen vehicles were
producing emissions up to 40 times higher than the US legal limit. The report prompted
regulatory investigations and, in September 2015, Volkswagen admitted to installing ‘defeat
devices’ in their vehicles that sensed test situations and put the vehicle into a “test mode”
running the engine below normal power and performance. On the road, however, the test
mode was switched off, and the car emitted much higher pollutants. The revelation sent a
shockwave across Volkswagen’s stakeholders, undermining trust, casting a crippling blow to
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the company’s reputation and exposing the company to billions in recall costs, fines and
potential criminal charges.
In this chapter, we review the emerging literature on organizational trust repair and
the insights it offers on the challenging process of restoring trust, such as that faced by
Volkswagen. Our focus is squarely on trust repair in the referent of the organization and
institution (for a review of the literature on trust repair in interpersonal contexts, see Kim et
al., this volume; see also Hope-Hailey, this volume). We start by outlining the problem
domain, defining trust failures and trust repair as it pertains to organizations, and how the
nature and processes of trust repair are different at the organizational and interpersonal levels.
We then review conceptual frameworks and models on organizational trust repair, and
examine select relevant empirical work. From this review, we identify and discuss the
ontological and epistemological approaches that dominate the literature. We argue that while
these paradigms have provided a solid foundation to the field, there is benefit in
complementing this work with critical and radical perspectives to deepen and extend
understanding. We conclude the chapter by identifying promising opportunities for future
research.
2. THE PROBLEM DOMAIN
Defining Trust Repair
Most definitions of trust repair are concerned with what Dirks and colleagues (2011:
88) describe as a process in which a trustee is ‘attempting to increase trust following a
situation in which a transgression (i.e., untrustworthy behaviour) is perceived to have
occurred’. In other words the ‘relationship repair occurs when a transgression causes the
positive state(s) that constitute(s) the relationship to disappear and/or negative states to arise,
as perceived by one or both parties, and activities by one or both parties to substantively
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return the relationship to a positive state’ (Dirks et al., 2009: 69). In essence, trust repair is
predominantly concerned with restoring cooperation and more specifically with re-
establishing the trustor’s positive expectations of the other party and in turn the ‘willingness
to be vulnerable’ (see also Desmet, De Cremer & Van Dijk, 2011a, 2011b; Kramer and
Lewicki, 2010).
Understanding Trust Repair at the Organizational Level
Our focus is on the repair of trust in the referent of an organisation. This may include
trust in a particular corporation, hospital, university, association or union (e.g. Volkswagen,
the Royal Bank of Scotland, FIFA), an industry (e.g. banking, mining, football) or an
institution (e.g. the UK Parliament, the Catholic Church, the Police). Studies into
organizational and institutional trust have historically been embedded in the sociological
literature on trust (e.g. Barber, 1983; Fox, 1974; Luhmann, 1979; Misztal, 1996; Shapiro,
1987; Sitkin & Roth, 1993; Sztompka, 1999; Zucker, 1986). However most studies directly
examining trust repair have been conducted at the interpersonal level. Organizational and
institutional trust repair has some parallels with interpersonal trust repair, but also several
significant differences that limit the ability to translate research findings across levels
(Gillespie & Dietz, 2009:128; see also Fulmer & Gelfand, 2012).
Unlike interpersonal trust, in which the focus is on an individual person or leader,
trust in organizational and institutional referents is considerably more complex. This is partly
because a range of organizational actors and components operating at multiple levels can
influence and inform the judgements of potential trustors (Gillespie & Dietz, 2009). When
one trusts an organization (e.g. a university), does one trust in the interpersonal relationships
one has with organizational agents and groups (e.g. departmental colleagues, university
management)? Or does one trust more in the impersonal set of systems, structures and
processes that typically govern the behaviour of organizational actors (e.g. systems of
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accountability, control and HRM practices etc; Bachmann, 2001; Bachmann, this volume;
Luhmann, 1979; Möllering, 2001, 2006; Weibel et al., 2016)? Or perhaps one gives more
precedence to the dominant cultural values and principles to which organization members and
its leaders (appear to) adhere? Or the reputation of the organisation (e.g. university rankings)
and the quality of its goods and services (e.g. quality of research and teaching)? Or the
external regulation and controls that constrains the organization’s conduct? We come from the
perspective that stakeholders’ trust in an organization is informed by, and can be based on, a
combination of all of these elements (Barber, 1983; Gillespie and Dietz, 2009). As Bachmann
and Inkpen (2011: 284) point out, institutional-based trust “is constitutively embedded in the
institutional environment in which a relationship is placed.”
The complexity of organizational trust repair also reflects that the ‘trustors’ of
organizations and institutions represent a diversity of stakeholders, including employees,
suppliers, customers, shareholders, regulators, governments and the general public. These
stakeholders have different interests, vulnerabilities, power and expectations in relation to
organizations and institutions (see Pfarrer et al., 2008), and may develop trust in different
ways due to varying levels of access, exposure and hence insight into the organization’s
conduct and institutional arrangement’s functionality. Indeed, repairing trust at the macro
level is much more complex than at the interpersonal level because stakeholders may differ in
their interpretations of the nature and causes of the breach, and therefore what constitutes
credible ways to restore the relationship (see Bachmann et al., 2015; Lamin & Zaheer, 2012).
Organizational Trust Failures
Trust failures can take on many forms. However, there are several generic, defining
features that need to be present for a trust failure to be attributed to the organizational level.
An organizational trust failure has been defined as “a single major incident, or cumulative
series of incidents, resulting from the action (or inaction) of organizational agents that
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threatens the legitimacy of the organization and has the potential to harm the well-being of
one or more of the organization’s stakeholders” (Gillespie & Dietz, 2009: 128).
For a trust breach to be at the organizational or institutional rather than the individual
or group level, it needs to call into question the organization’s or institution’s legitimacy i.e.
its capacity to fulfil its essential responsibilities or adhere to commonly endorsed values and
standards. The trustor must attribute at least some responsibility for the breach to the
organization or institution, perceiving it as having occurred (at least partially) as a
consequence of actions, or negligent inaction, by actors authorized or otherwise facilitated by
the organization or the relevant institutional arrangements. Put simply, the ‘confident positive
expectations’ about an organization or an institution’s capacity to meet reasonable standards
of ability, benevolence and/or integrity in its conduct towards stakeholders, are replaced with
negative expectations. Trust failures in organizations take many forms including accounting
frauds, managerial deceit and incompetence, fatal avoidable incidents, exploitation of
vulnerable people, large scale compulsory job losses, bankruptcies and catastrophic collapses
in organizational finance. Furthermore, for a trust failure to manifest at the broader
institutional level, trustors need to perceive that the failure is occurring across multiple
organizations within the institutional field (e.g. a large number of banks failing during the
global financial crisis; child abuse identified in multiple religious organizations), or
alternatively, that the failure is occurring in institutional bodies themselves (e.g., trade
associations or financial industry regulators).
At one extreme, a breakdown of trust may result from a single catastrophic incident
(e.g., the Deepwater Horizon oil spill) or scandal (e.g., Volkswagen). At the other extreme,
breakdown may occur based on an accumulation of trust breaches that erode trust over time
(e.g., the Greek governments’ financial policies within the EU). In this latter case a ‘tipping
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point’ ultimately is reached where the trustor loses confidence in the organization’s or
institution’s trustworthiness (Bachmann et al., 2015; Kramer, 2010).
It is against this background that our central question arises: “What does it mean to
repair trust in an organization or institution?” Fundamentally, repair at these macro levels
requires restoring the positive expectations of the organization’s or institution’s
trustworthiness that were damaged by the trust violation, so that trustors are again willing to
make themselves vulnerable (Kramer & Lewicki, 2010; Lewicki & Bunker, 1996). Dirks and
colleagues (2009: 69) further suggest relationship repair involves “activities by one or both
parties that substantively return the relationship to a positive state”, highlighting that trust
repair can be enacted and influenced not only by the trust violator (e.g. the organization) but
also the trustor (e.g. organizational stakeholders, see also Kim, Dirks & Cooper, 2009).
However, as highlighted later in this review, third parties (e.g. investigative and regulatory
bodies, media etc.) can also play an influential role in the repair of organizational trust.
3. CONCEPTUAL MODELS OF ORGANIZATIONAL TRUST REPAIR
Various scholars have advanced conceptual models that propose and/or integrate
approaches to organizational trust repair. Here we outline and evaluate prominent
contributions in the organization and management literatures. We first review the conceptual
frameworks that identify the underlying theoretical mechanisms by which trust is repaired.
We discuss each of these theoretical mechanisms in turn, together with recent empirical
investigations of their role in organizational trust repair. We then turn to a review of the stage
based models of trust repair that identify the various stages of actions required to restore
organizational trust. We describe and compare these models and review empirical studies that
have examined their key propositions.
Theoretical Mechanisms Underlying Trust Repair
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We first examine the theoretical mechanisms underlying trust repair. Dirks et al. (2009)
identify three theoretical processes for understanding trust repair – attributional, social
equilibrium and structural. Recently, Bachmann, Gillespie and Priem (2015) proposed an
integrative model of six complementary mechanisms for organizational trust repair that
incorporates the three mechanisms proposed by Dirks and colleagues. We use this latter
framework to organise our review of the theorized mechanisms of organizational trust repair,
informed with insights from select recent empirical work on trust repair at the organizational
and institutional level1.
1. The Sense-making Approach
This approach focuses on cognitive and social influence processes and is based on the
premise that a shared understanding or accepted account of the trust violation, including an
explanation of what went wrong and why, is required for effective trust repair (Bachmann et
al., 2015: 1126). This mechanism incorporates (but is broader than) attributional processes
that involve “targets shaping ‘perceivers’ attributions about whether they committed a
transgression, whether it reflects on their true nature, or whether they experienced
redemption” (see Dirks et al., 2009: 72). Strategies include investigations and inquiries to
establish an ‘official’ account of ‘what happened and why’, as well as explanations, denials,
apologies, substantive actions and offers of penance aimed at shifting attributions (Elsbach,
1994; Kim, Dirks, Cooper and Ferrin 2006; Rhee and Valdez, 2009).
Kim and colleagues (2009) bilateral model of trust repair, while focused on interpersonal
relationships, also illuminates some aspects of organizational trust repair. Their model
presumes that trustors’ and trustees’ disagreement about whether the trustees should be
trusted following a violation can be resolved through a logically derived sequence of
questions: ‘Is the trustee innocent or guilty of committing the transgression? (2) If the trustee
1 We point the reader to the original article for a discussion of the limitations and paradoxes of each trust repair
mechanism.
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is guilty of the transgression, should this be attributed to the situation or to the person (in our
case, the transgressing organization)? (3) If the transgression is attributed at least in part to
the person (i.e. organization), is the shortcoming fix-able or is it an enduring characteristic of
the trustee?’ (Kim et al, 2009: 405-406). By examining the processes through which people
make attributions about others, these scholars help explain why certain repair efforts may
work in some contexts but not others. This work also highlights that both the trustor and the
‘transgressing party’ play active roles in the recovery of trust.
Relatedly, Tomlinson and Mayer (2009) developed an influential attribution theory of
trust repair. This theory is based on causal ascription - whether trustors ascribe the cause of
negative outcomes to a lack of trustee’s integrity, competence and/or benevolence, and causal
attribution – whether the negative outcome is perceived to be due to factors which are
external vs. internal, controllable vs. uncontrollable, and temporary/unstable vs
enduring/unchanging characteristics of the trustee. Tomlinson and Mayer (2009) propose that
social accounts, such as denials, excuses, apologies and justifications, can each repair
damaged perceptions of trustworthiness through attributional processes. Thus, for example,
trustors’ perceptions of a lack of competence or ability among senior managers can be
repaired by senior managers showing that the cause of the negative outcome was due to an
external factor (such as the international ‘credit crunch’ of 2007-8 or the sovereign debt crisis
of 2011-12), an uncontrollable ability (such as an inability by non-mathematically trained
bankers to predict the failure of models), and/or a more unstable form of ability (for example,
lack of knowledge by bankers of the risks associated with complex mortgage-backed
securities). A review of prominent cases of trust failures reveals that this type of framing of
accounts is clearly used by organizations in an attempt to influence the attributions and sense-
making of stakeholders (Dietz & Gillespie, 2012; see also Elsbach, 1994).
A prominent example of the sense-making approach in action is the 2010 UK
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Parliamentary Select Committee’s inquiry into the ‘Big Four’ accounting firms’ failures in
relation to the global financial crisis. Mueller and colleagues (2015) recently analyzed this
case to examine the role of inquiries for restoring the public’s trust in institutions. Their
analysis of testimony revealed stark differences in the way the firm’s managing partners and
the inquiry committee interpreted and made sense of the organizational failings, and
highlighted the notable avoidance of apologies and admissions of responsibility by the Big
Four firms in an attempt to avoid attributions of “fault, liability and blame”. They found that
these testimonial accounts were largely discredited and dismissed by the Committee who
concluded that the audit market could not be trusted and required reform. Importantly, they
found that the inquiry served as an important ‘field-configuring event’ that helped to re-
legitimize the institution of auditing in Great Britain.
2. The Relational Approach
The relational approach focuses on the role of emotions and social rituals during the
repair process. This approach is based on work suggesting that social rituals and symbolic
acts are needed to resolve negative emotions caused by the violation and re-establish the
social order and norms in the relationship (e.g. Ohbouchi, Kameda & Agarie, 1989; Ren &
Gray, 2009; see also Knipperberg et al., this volume for a review of affect and trust). This
approach builds on and incorporates social equilibrium processes of trust repair (see Dirks et
al., 2009). Strategies include apologies, penance (e.g. punishment, compensation, ‘paying a
price’), redistribution of power and resetting expectations that collectively ‘settle the
accounts’, ‘rebalance the scales’ and re-establish the expectations in the damaged relationship
(Dirks et al 2009; Lewicki & Polin, 2012; Shapiro, 1991).
Most research on the relational approach has been experimental and interpersonally
focused. This research suggests that after a significant trust breach, using a combination of
relational repair tactics (e.g. apologies and compensation) is likely to be more effective than
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relying solely on one (Bottom, Gibson, Daniels & Murnighan, 2002). Other experimental
research suggests that apologies and compensation work by signalling repentance (Dirks,
Kim, Ferrin & Cooper, 2011), that the size of the compensation can influence repair (Desmet
et al., 2011a) and that the perceived intentions behind the use of repair tactics is crucial
(Schweitzer et al., 2006). Such research also suggests that the nature of the violation can
influence the effectiveness of various trust repair strategies (e.g. Kim et al., 2004, 2006; Dirks
et al., 2011; Reb, Goldman, Kray & Cropanzano, 2006). At the organizational level, case
study research suggests that relational repair tactics are an important component of restoring
stakeholder trust in an organization (e.g. Eberl, Geiger & Aßländer, 2015; Dietz & Gillespie,
2011; 2012; Gillespie et al., 2014).
Drawing on both the relational and sense making mechanisms of trust repair, Stevens,
MacDuffie & Helper (2015) take a process perspective to argue that organizations must strive
to keep trust close to an optimal level within a “control band” i.e., neither too low nor too
high. Through the analysis of longitudinal case study data from supplier-buyer trust at Honda
and Nissan, the authors introduce two concepts - recalibration and reorientation of trust - and
discuss how these can be used to manage the dynamics of trust maintenance and repair in
inter-organizational relationships. An organization, for example, can take smaller-scale, more
cost effective recalibration actions when trust is moving toward either the high or low limit of
the control band, and thereby anticipate and prevent trust failures. However, if trust is
allowed to move out of the acceptable band, more expensive and time consuming
reorientation actions aimed at full-blown trust repair are necessary.
3. Regulation and Formal Control
Regulation, formal rules and controls are theorised to facilitate trust repair after a breach
by constraining untrustworthy behaviour and thereby preventing future organizational trust
violations (i.e. ‘distrust regulation’, see Gillespie & Dietz, 2009). This involves organizations
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implementing structures ‘to provide credible assurance of positive exchange and prevent
future transgressions’ (Dirks et al., 2009: 72) and relies on rules, structures, laws, policies,
codes of conduct, sanctions and incentives to repair trust. These regulatory systems have been
shown to repair organizational trust, particularly when introduced voluntarily rather than
externally imposed (Dirks et al., 2011; Nakayachi & Watabe, 2005).
The inter-relationship between trust and control has a long history in the sociological
literature. Institutional arrangements like contracts, role and authority structures have been
referred to by Granovetter (1985: 491) as the under-socialized approaches. Drawing on these
under-socialized approaches, Shapiro (1987) argues that ‘impersonal trust’ - founded in
norms, rules and structures that procedural constrain agency, as well as selection and policing
mechanisms (e.g. licensing, certification, accreditation, compliance checks), and insurance
like arrangements - may provide an alternative to personalised or embedded trust
relationships, particularly when trustors do not have viable means to monitor or control
agents (e.g. due to lack of expertise or power). In line with Zucker (1986), Shapiro (1987)
argues that these ‘guardians of impersonal trust’ represent institutional mechanisms that
produce trust (rather than being a functional substitute for trust). However, paradoxically
these sources of impersonal trust also provide the opportunity and means for its abuse (‘who
guards the guardians of trust?’; see Shapiro, 1987:645; see also Barber, 1983). Other
sociological work drawing on neo-institutional theory, for example by Zucker (1986) and
Lane and Bachmann (1996), emphasize the role of the broader institutional context, including
institutional norms and safeguards for the creation, maintenance and repair of trust. This
focus on societal structures and norms also resonates with Luhmann’s (1979) concept of
system trust, which supports trust relations in organizations (Child and Möllering, 2003).
In their important theoretical and empirical contribution, Sitkin and Roth (1993)
explain why legalistic remedies to damaged trust might have limited effectiveness. Their
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explanation draws on two aspects of trust, firstly, trust as expectations about an employee's
ability to complete task assignments reliably (task reliability), and secondly, distrust which
happens when the compatibility of an employee's values with the organization's cultural
values are called into question (generalized value incongruence). They conclude that formal
controls are effective only for restoring breaches of task reliability, not value incongruence.
A recent case study of the Siemens bribery scandal by Eberl and colleagues (2015)
found that although the imposition of more rigorous internal rules restored trust with external
stakeholders, at the same time it reduced flexibility in dealing with customers and suppliers,
thereby demotivating employees. Their study points to the value of structural mechanisms for
trust repair while also highlighting the limitations of an overly rule-based approach.
Similarly, the role and limitations of structural mechanisms for trust repair are evident in
Spicer & Okhmatovskiy’s (2015) recent study of trust repair in the Russian bank deposit
market. The authors distinguished between trust recovery due to increased regulation by the
state from trust recovery due to the state’s full ownership of a particular bank. They conclude
that state ownership is an important independent predictor of trust repair, to a much greater
degree than any other efforts by the state to regulate banks. The authors claim that regulations
and their implementation are perceived by potential customers as more ephemeral than is
ownership. Finally, in their meta-analysis of trust in the financial services sector, Nienaber,
Hofeditz & Searle (2014) conclude that regulation is an important, but by itself insufficient,
strategy for restoring trust in financial services firms.
4. Informal Cultural Controls
Organizational culture and informal controls represents another mechanism for
constraining untrustworthy behaviour and promoting trustworthy behaviour in organizations
(McKendall & Wagner, 1987). A corrupt, unethical or lax organizational culture is frequently
implicated in trust betrayals (e.g. Seimens, FIFA, Enron etc). Repair tactics involve
implementing cultural reforms that identify and challenge the values, norms and beliefs that
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enabled the trust breach, as well as HR processes (e.g. induction, socialization, training,
mentoring and performance management), symbolic messaging, and principled leadership
that reinforce desired values and behaviour, and make unethical behaviour salient and
counter-cultural.
This is an important mechanism for trust repair given work suggesting
that, through identity compartmentalization, unethical organizational
cultures can thrive even in the context of and in deance of ethical norms
held by employees and society (Ashforth & Mael, 1989). Sztompka (1999)
identies a breakdown in professionalism as a major contributor to
organizational trust problems, as trust in the way professionals conduct
their roles is a foundation to presumptive forms of trust (i.e. role-based
trust, see Kramer, 1999).
Valuable insights into the role of organizational culture in trust repair can also be found in
case study and practitioner reports that document case studies of successful trust preservation
and repair. One such example is the CIPD report by Hope-Hailey, Searle and Dietz (2012)
that draws on empirical data from UK organizations such as John Lewis Partnership,
Sunderland City Council, Royal Mail and Day Lewis Pharmacy to examine the role of HR in
rebuilding trust. The report demonstrates that re-establishing and preserving a culture of trust
within an organization is closely tied to HR policies and practices, and how they are
implemented by managers, as each area of HR policy signals the organization’s competence,
but also its integrity and genuine interest in the well-being of its employees.
Gillespie, Dietz & Lockey (2014) recently proposed that, in the context of an
organizational integrity violation, reforms to the organizational culture will be required to
robustly restore stakeholders’ trust: structural and procedural reforms alone will not be
sufficient. This aligns with the work of Michael (2006) who laments that the dominant
response to corporate scandals is to address the problem through rule-based mechanisms, and
points out that rules cannot substitute for an ethical culture and decision-making. The need to
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complement formal controls with informal cultural controls for trust repair is also a theme in
Eberl et al., (2015) case study analysis of the Seimens case (see also Sitkin & George, 2005).
Gillespie et al., (2014) also offer two other culturally-related propositions, namely that in the
context of an integrity violation: a) the replacement of senior managers implicated in the trust
failure (i.e. “changing of the guard") and b) (re-)establishing a positive organizational identity
amongst employees (i.e. honouring and holding onto what is ‘good’), will speed up and
increase the likelihood that the organization will restore stakeholders’ trust. In their case
study analysis, they describe the cultural reforms and identity work that the organizational
underwent as part of the trust repair process.
Other empirical work reinforces the central relevance and importance of the last of these
strategies – identity work – for trust repair with employees. Maguire and Phillips (2008)
demonstrate empirically that institutional trust, like interpersonal trust, can be identity-based.
Based on a case study of Citibank in a post-merger context, the authors propose an identity-
based framework for understanding employee trust in an organization, demonstrating how
institutional trust is initially undermined by the ambiguity of the new organization’s identity;
and how later, institutional trust can continue to be undermined by a lack of employees’
identification with the new organization.
More recently, in a case study of BP during the 2010 Gulf of Mexico oil rig explosion
and spill, Petriglieri (2015) found that the incident destabilized executives’ organizational
identification leading to doubts about their alignment with the organization and their role
within it. As a result of the trust breach, executives either re-identified and repaired their
relationship with the organization, or severed the relationship. Re-identification occurred
when BP executives were directly involved in the organization’s response to the incident,
highlighting the importance of co-creation in trust repair. In contrast, being excluded from the
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organization’s trust repair efforts further alienated executives and hindered their re-
identification.
5. Transparency and Accountability
The focus here is on organizational reporting and monitoring based on the view that
“transparently sharing relevant information about organizational decision processes and
functioning with stakeholders helps restore trust” (Bachmann et al., 2015: 1126). This
mechanism is prevalent in the literatures on corporate governance and public management,
which suggests that principles of accountability, transparency and disclosure lay the
foundation for trust (see also Child & Rodrigues, 2004).
In support of this mechanism, recent research using an experimental paradigm found that
self-disclosure of negative information lessens the damaging impact of this information on
consumer trust and judgements towards the company, compared to third party disclosure of
the same information (Fennis & Stroebe, 2014). This relationship was found to hold for
companies that had a poor reputation at the outset, whereas for companies that enjoyed a
positive reputation, type of disclosure (self vs. third party) did not affect consumer trust.
Although there is much emphasis on the importance of transparent government for citizen
trust, empirical evidence of a relationship between transparency and trust in government is
equivocal and qualified. For example, Grimmelikhuijsen and colleagues, (2013) found that
transparency has a subdued and sometimes negative effective on trust in government.
Furthermore, Grimmelikhuijsen and colleagues (2014) find that a positive relationship
between transparency and citizens perceptions of trust in government only occurs for the
minority of citizens who have low prior knowledge of the policy topic and a low
predisposition to trust the government. These experimental findings suggest that the
relationship between transparency and trust in institutional and organizational contexts is far
from simple or evident, and requires further empirical evaluation, as well as how these effects
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translate to the unique setting of trust repair.
6. Trust Transference
This mechanism draws on the role of third parties in trust repair, based on the premise
that trust can be transferred from a credible party to a discredited party through the use of
certifications, memberships, affiliations and endorsements. Third parties have been found to
act as the “go-betweens” in new relationships that enable new parties to “roll over” their
expectations from the well-established relationship to the newly formed relationship where
there is little knowledge or history (Shapiro, 1987; Uzzi, 1997). They do this by transferring
expectations and opportunities in existing relationships to newly formed ones. In
interpersonal contexts, the influence of third-party endorsements has even been shown to be
equivalent to that of direct experience with the other party (Ferrin, Dirks & Shah, 2006).
McEvily, Perrone & Zaheer (2003) identify that transferability is one important mechanism
through which trust acts as an organizing mechanism, creating density and closure of a
network.
An organizational example of trust transference comes from the previously described case
study of the UK inquiry into the ‘Big Four’ accounting failures. In this study, Mueller and
colleagues (2015) identify that a key component of the trust repair was the transfer of
trustworthiness from the impartial Parliamentary committee leading the inquiry to the
damaged audit firms. Compared to the other trust repair mechanisms, limited work has
directly examined the potentially influential role of the transference of trust for organizational
trust repair, however there is a healthy related literature on legitimacy spill-over effects in the
institutional literature (e.g. see Haack, Pfarrer & Scherer, 2014; Zavyalova, Pfarrer, Reger &
Shapiro, 2012).
Stage-Models of Trust Repair
Notable in the organizational trust repair literature are ‘stage’ models of trust repair
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that identify the steps and strategies that can be undertaken by a transgressor organization to
restore trust. In so doing, these models typically incorporate several of the underlying trust
repair mechanisms reviewed above. These include models by Lewicki and Bunker (1996),
Gillespie and Dietz (2009) and Pfarrer and colleagues (2008).
The first stage model was proposed by Lewicki and Bunker (1996) and involved: (1)
recognizing and acknowledging that a violation has occurred, (2) determining the nature of
the violation (establishing what/who caused the violation); (3) admitting the destructive
impact of the event on trust, and finally (4) willingness to accept responsibility for the
violation. Hence, this model incorporates both the sense-making and relational mechanisms
of trust repair.
Gillespie and Dietz (2009) proposed a model of restoring trust following an organization-
level failure. They drew on the literatures on trust, crisis management, strategic change, and
systems and multilevel theory to propose that perceptions of an organization’s trustworthiness
are influenced by signals sent from four internal organizational components (leadership and
management practice, structure and processes; culture and climate, and strategy) and two
external components (external governance and public reputation). Based on this foundation,
they propose a four stage process of repairing trust, which integrates most of the trust repair
mechanisms previously reviewed. The four stages are outlined below, together with the
underlying repair mechanisms focused on at each stage:
(1) Immediate response (within the first few days of the scandal) such as verbal
acknowledgement, announcement of internal investigation, and early intervention against
known causes. (sense-making and relational mechanisms)
(2) Diagnosis of the causes of the failure, in a timely, accurate and transparent manner.
(sense-making and transparency mechanisms)
(3) Reforming interventions to the organizational system to prevent future transgressions and
demonstrate renewed trustworthiness. This includes achieving integrated structural and
17
procedural, cultural, strategic and leadership practice reforms (as derived from the
diagnosis), coupled with apologies, reparations and penance, where appropriate.
(structural, cultural and relational mechanisms).
(4) Evaluation of the effectiveness of repair actions, to monitor and inform the need for
ongoing interventions and reforms. (structural, cultural and sense-making mechanisms)
Pfarrer and colleagues (2008) offer a different conceptualization of reintegration post
crisis. The authors outline a process of “reintegration” with stakeholders after a corporate
transgression (i.e., a corrupt or unethical act). Drawing on the literature on stakeholder theory,
image management, organizational justice and crisis management, they define reintegration
as the process of rebuilding legitimacy in stakeholder relationships damaged by the
organizations’ wrongdoing. The authors propose the following stages that are designed to
address changing stakeholder questions and concerns across the reintegration process: (1)
Discovery ‘What happened?’ incorporating voluntary disclosure, internal investigation and
public cooperation (2) Explanation ‘How did it happen?’ involving acknowledging
wrongdoing, expressing regret, accepting responsibility and apologies; (3) Penance ‘How will
the organisation be punished?’ including accepting the verdict, accepting punishment without
resistance; and (4) Rehabilitation ‘What changes have been made?’ including introducing
internal or external changes. A key proposition underlying the model is that reintegration is
more likely if the organisation responds to the demands of the most salient stakeholder
groups (i.e. those that have the “most power, legitimacy and urgency of claims”, noting that
stakeholder salience can change over time), and achieves “concurrence” at each stage of
reintegration, that is “a generally shared opinion amongst stakeholders regarding the
transgression and appropriateness of the organization’s actions”, p. 733)
There are some parallels between these latter two frameworks: they both focus on the
closely linked concepts of legitimacy and organizational trustworthiness, are deliberately
normative, outlining a staged process with complementary actions, and imply that by making
18
appropriate internal organizational reforms coupled with external governance, trust can be
restored in organizations (for a summary table comparing these models, see Gillespie et al.,
2014). However, these models each emphasize different aspects of the process and makes
unique propositions.
What is striking about all three models is that they are underpinned by an emphasis on
rational action that needs to be ‘timely’ and ‘accurate’. If a transgression has occurred, the
organization’s leaders (and/or those with a governance responsibility) are expected to
determine the nature of the transgression, find the cause, apologise, offer reparations, launch
investigations, and introduce internal and external changes. Thus, one of the core
assumptions is a belief in managerial agency to address the trust breach: that is, managers are
credited with the ability and authority to influence stakeholders’ perceptions of the
organization’s trustworthiness and the legitimacy of its actions, post-violation. Hence when
faced with damaged trust, managers are normally expected to take the initiative of rebuilding
trust and are attributed with the power and authority to do (Mayer & Gavin, 2005).
Two research reports published by the Institute of Business Ethics (Dietz & Gillespie,
2011; 2012) use case studies of organisations that have attempted to repair trust in practice
(e.g. Mattel, Toyota, BP, Siemens, BAE Systems, and the BBC), to illustrate, support and
extend the stage models of trust repair and the propositions that underlie them. In doing so,
these reports explicitly highlighted a central tension often apparent in organizational trust
repair: the choice between a legalistic versus relationship-based approach. The legalistic
route aims to minimize financial risk to the company, and avoids media exposure by closely
containing information about the failure for example through reticence, denial, a lack of
transparency, super-injunctions or disciplinary action against allegations. Poppo and Schepker
(2010) suggest this approach is the most appropriate when organizations are embroiled in a
scandal. The relationship approach, on the other hand, is based on the alternative premise
19
that the best way to protect the organization’s reputation is by effective management of the
organization’s relationships with its stakeholders, for example through transparency, candid
communication, demonstrating concern for the impact of the failure on stakeholders, and
making reparations. In most cases these two approaches are incompatible, and yield very
different long-term results.
More recently, Gillespie and colleagues (2014) conducted a longitudinal, case study
examining how a UK water utility repaired trust with its stakeholders after a major integrity
violation. Their results generally supported the view that thorough responses in each of the
four stages proposed by Pfarrer et al. (2008) and Gillespie and Dietz (2009) facilitates
effective organizational reintegration and trust repair. Their analysis of the two diametrically-
opposed approaches successively taken by the company’s senior management team support
the view that open, cooperative and conciliatory responses akin to the relational approach
(e.g. transparency, acknowledging wrongdoing, accepting responsibility, expressing remorse)
facilitate effective trust repair, whereas defensive approaches akin to the legalistic approach
(e.g. denial, obfuscation) can undermine repair and create further distrust. Hence, these
findings challenge the view proposed by some scholars (e.g. Kim et al., 2004; Poppo &
Schepker, 2010; Mueller et al., 2015) that denying an integrity violation is more effective
than apologizing. The case further supported the proposition by Pfarrer and colleagues’
(2008) that stakeholder salience and status shift across the reintegration process, and the
importance of attending to the most salient stakeholder at each stage.
4. THE ONTOLOGY AND EPISTEMOLOGY OF TRUST REPAIR
Much of the foundational trust repair literature is based on functionalist assumptions
of trust in organizations, i.e. a belief that trust can be managed through a set of relatively
simple prescriptions (Möllering, 2006). These studies have adopted the language of variance
20
theory (Langley, 1999; Van de Ven, 2007), which involves identification of antecedents and
outcomes of trust repair and explanations of causal relationships between dependent and
independent variables. The focus of these studies is on evaluations of trust repair
interventions and on delineating those independent variables (i.e. trust repair responses) that
shape recovery. The independent variables most commonly used this research are apology
and denial (e.g. Tomlinson, Dineen & Lewicki, 2004; Ferrin et al. 2007, Kim and colleagues,
2004, 2006, 2009), reticence (e.g. Ferrin et al. 2007), excuse, penance, financial
compensation and justification (e.g. Bottom et al., 2002; Desmet et al. 2011ab; Dirks and
colleagues, 2006, 2011).
5. FUTURE RESEARCH INTO ORGANIZATIONAL TRUST REPAIR
The normative studies of trust repair are based on a mechanical metaphor – when trust
is broken, it needs to be rebuilt. Though such studies are very insightful and practically
useful, they sometimes fail to reflect the complex reality of organizational trust repair. Some
studies on trust critique the underpinning assumptions behind the majority of research that
trust can be achieved in all types of relationships in an organization and that managers have
the ability to shape trust relations in the interests of all. It is these two core assumptions - the
extent of common goals and managerial agency – that most disturb radical theorists as they
ignore the conflicting agendas that are at the heart of managing industrial relations. Some
notable exceptions include Child and Rodrigues (2004) who argued that employees have too
much trust in organizations that have progressively failed them, Thompson (2011) and
Delbridge and Keenoy (2011) who rejected the notion of managerial agency in favour of an
argument that supports the effects of strong institutional forces on employee engagement and
trust, and Bijlsma-Frankema, Sitkin & Weibel (2015) who question the idea that trust can be
repaired once distrust is engendered.
21
Our review of the extant literature indicates that there is little interpretive research on
organizational trust repair. Moreover, what little exists is underpinned by interpretive
thinking rather than being truly interpretive in nature. Radical perspectives are under-
represented in intra-organizational trust research (Siebert, Martin, Bozic & Docherty, 2015),
and this underrepresentation is also noticeable in organizational trust repair research. The
study by Child and Rodrigues (2004) mentioned earlier suggested that breach of trust in many
contemporary organizations was caused by an increase of hostile takeovers resulting in job
losses as well as by hierarchical structures in the workplace that promoted distinction and
introduced divides through vast pay differentials and unequal levels of reward for
performance. The authors also argued that neo-liberal thinking encouraged free allocation of
resources and justified less favourable treatment of people under the guise of flexible
employment practices. Despite an increasing awareness of the importance of employee trust
to organizational performance, evident in the functionalist literature, there appeared to be an
increase of employee fear, organizational cynicism and disengagement.
The work of Alan Fox is relevant and influential on this point. Fox (1969, 1974) is credited
with making two major contributions to sociological accounts of trust within organizations.
The first is a macro-sociological account of unitarist, pluralist and radical frames of reference
in British industrial relations during the 1960s and 1970s. The second is a micro-sociological
account of how trust dynamics at the workplace are shaped by social relations, specifically
relations involving power and the division of labour in bureaucratic organizations in capitalist
societies. Fox’s conception of trust is often used to explain the relationship between work
organization, contract and power relations between managers and employees (Starkey, 1989;
Provis, 1996). Fox’s (1974) analysis points to an institutionalized withholding of trust by
employees evident by suspicion, jealousy, misreading of people’s motives and a lack of
cooperation. Such approaches are beginning to emerge in contemporary studies of
22
organizational trust repair (for example, Mueller et al.’s 2015 paper), but more work is
needed to explore these issues further.
Siebert et al (2015) argue that one of the limitations of trust and trust repair research is
that it is often limited to what happens inside organizations while ignoring the external
influences. Arguably, by focusing on the organization as the unit of analysis researchers fail
to deal with problems such as recessions, global trends in employment, civil unrests, decline
of trust in institutions, politics and ideology. Many important contextual variables such as the
impact of power, regimes of governance and the influence of the wider political economy
should be taken into consideration while investigating how organizations can secure
organizational trust among employees. A more critical perspective on trust repair may enable
us to challenge or problematize underlying assumptions and ask more interesting questions
that break existing paradigmatic boundaries, as well as generating novel theoretical and
practical insights.
Such critical perspectives on trust repair are not the only way forward, and we
conclude this chapter by suggesting other alternative theoretical perspectives on trust repair:
structure agency debates, process theory and institutional theory. We also point the reader to
recent reviews by Bachmann et al., (2015), Dirks et al., (2009) and Kramer & Lewicki,
(2010) for further suggestions on the future of trust repair research.
Structure-agency debate and trust repair
The majority of trust repair studies place undue faith in managers’ ability to manage
trust relations, and ignores the role of external factors that might affect organizational
reintegration (Möllering, 2006). Shifting emphasis away from an organization as a unit of
analysis to a broader focus on trust in institutions and social structures might throw some
light on why some organizations cannot repair trust despite their genuine efforts to do so
(Child & Rodrigues 2004). Hence considering both the ‘structure’ (i.e. the broader
23
institutional context for organizations), and ‘agency’ (i.e. management actions inside the
organization), might enrich theoretical insights on trust repair, and have practical implications
for organizations. Such a rebalancing that acknowledges the structure-agency debate
(Giddens, 1984), and takes cognizance of unintended consequences of managerial action
(MacKay and Chia, 2013) in trust repair, may allow trust researchers to recognize the
limitations of the current prescriptions and avoid raising unrealistic expectations of repair.
For example, Gillespie, Hurley, Dietz & Bachmann (2012) apply this dual perspective in their
analysis of strategies for repairing trust in banks following the global financial crisis:
focusing trust repair efforts only internally within banks might not yield any results, if we fail
to acknowledge that more fundamental or radical changes are required in the institution of
banking in general – its governance and state regulation (see also Nienaber, Hofeditz &
Searle, 2014).
Institutional perspectives
Given the a-contextual and a-historical nature of much of the trust repair literature, a
focus on how organizations are embedded in and conditioned by higher levels of institutions
would seem relevant in providing a more nuanced explanation of how trust is restored.
Early institutionalists argued that by their ‘embeddedness’ in a broader institutional context
organizations ensured structural isomorphism and ended up pursuing similar course of action.
In contrast to the early institutionalism, which predicts that organizations do not possess the
necessary degree of agency because they are firmly embedded in the institutional fields, more
recent institutional theory has begun to question the determinism of neo-institutionalism by
promoting the role of agency among organizational actors (Lawrence and Suddaby, 2006).
One such aspect of institutional theorizing is institutional work, defined as ‘intelligent,
situated institutional action’ (Lawrence & Suddaby, 2006: 219). Institutional work provides a
nuanced view of the relationship between actors and institutions (Dacin, Munir & Tracey,
24
2010; Lok & De Rond, 2013) and broadly identifies three institutional processes: creating,
maintaining and disrupting institutions. However in recent years scholars began to discuss
another aspect of institutional work – institutional repair in the face of practice breakdowns.
These studies usually focus on institutions in moments of vulnerability and in situations in
which the institution is being challenged (because of new entrants, practice breakdowns,
breaches, or external jolts) and thus the effortful work of maintaining the institution can be
clearly seen (Lok & De Rond, 2013; Micelotta and Washington, 2013; and Heapy, 2013).
There are some parallels between investigations into trust breaches and practice breakdowns,
and institutional literature might illuminate new ways of theorizing trust repair. An
institutional perspective on trust repair may also open doors to the consideration of wider
institutions such as the legal system, religion or political systems in shaping trust relations in
organizations and institutions.
Process theory of trust repair
Although there is some recognition in the literature that trust in itself is a process
(Khodyakov 2007; Möllering, 2006), the processual nature of trust repair remains
underdeveloped. There have been recent calls for adopting a process theory approach to
produce more complex accounts of trust repair and its attendant problems (Bachmann et al.,
2015; Nooteboom, 1996; Möllering, 2013). Such approaches, which incorporate process
rather than variance theorizing, have much to commend them because they deal explicitly
with the longitudinal nature of trust repair. Recently, Bjilsma-Frankema and colleagues
(2015) proposed a dynamic process model of distrust development that explains how and
why distrust becomes entrenched in a ‘self-amplifying cycle’. As organizational trust failures
not only diminish trust, but typically trigger active distrust, this work provides important
insights for trust repair. In particular, it highlights the central need to overcome perceptions
of value incongruence for distrust to be overcome, and trust to be rebuilt.
25
Some trust repair research can be characterised by imputing a relatively unconstrained
agency to senior managers’ capabilities to restore trust through a set of relatively simple
prescriptions, such as the symbolic and material trust repair strategies and practices discussed
previously. Challenging the notion of inflated managerial agency, Siebert and Martin (2014)
have suggested that ‘leaving things alone’ might in some cases be an effective strategy. This
counter-intuitive strategy of inaction represents a threat to managerial identities and is
inconsistent with the current dominant association between leadership and change. This
approach, however, might suggest that leaving the process of trust repair for example to the
influence of fading memory connected with the passage of time, or distracting the attention of
organizational stakeholders, might work equally well in some circumstances, but empirical
investigations are needed.
Concluding remarks
In this chapter we have provided a selective review of the extant conceptual and
empirical work on repairing trust in organizations and institutions. In so doing, we identified
the dominant epistemological and ontological paradigms taken in the literature to date, which
largely take a normative functionalist perspective based on variance language. We argue that
while these dominant paradigms have provided a necessary and helpful foundation to this
nascent field, there is a need to complement this work with critical and radical perspectives to
deepen understanding of the constraints to, and macro-level influences on, organizational
trust repair. To this end, we encourage future scholarship integrate structure-agency and
institutional perspectives, as well as focus on the processual and dynamic nature of
organizational trust repair.
26
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