Who and Why do Stakeholders Trust when They Trust Firms?

Abstract

A key assumption in stakeholder theory is that stakeholder-oriented firms will be better able to build and maintain trusting relations with their stakeholders than profit-oriented firms. However, this assumption remains to be tested. Moreover, the arguments that recent work in behavioral stakeholder theory has developed to support this assumption is based on yet another key assumption: that stakeholders cognize and experience their relations with stakeholder-oriented firms in ways that are comparable to how they experience and cognize about interpersonal relations. This would suggest that firm humanization, i.e., the attribution of human-like characteristics (agency and experience) to firms, may be an important mechanism to explain why stakeholders may trust stakeholder-oriented firms more than profit-oriented firms. At the same time, other research suggests that dehumanization (i.e., the denial of humanity) of employees of profit-oriented firms may drive mistrust in such firms – providing a potential alternative explanation of the trust differential between stakeholder- and profit-oriented firm. Over a series of experimental studies (total N = 950), we find supporting evidence for stakeholder theory’s assumption that people will tend to trust stakeholder-oriented firms more than profit-oriented firms, and for both explanations of this effect: the trust differential seems to be in part driven by stakeholders’ tendency to humanize stakeholder-oriented firms more, and in part driven by their tendency to dehumanize the employees of profit-oriented firms