HEC Paris Leaders of Tomorrow Series

Digital Trust: Imagined Utopia or Possible Reality?

Trust

For cyber security specialists, trust is mainly a matter of encryption systems for transactions and user accounts. This vision is simplistic or even incorrect, as trust is above all a dual relationship concerning individuals, rather than interactions with a machine.

In the space of a decade, trust has become a major issue for e-retailers and social network operators, who pride themselves on promoting secure and high-quality relationships. In their opinion, it has never been so easy to give one’s trust, since you can consult your contact’s profile within a few clicks and thus establish if you are dealing with a reliable seller on eBay, if an investor is rated as a shark on TheFunded.com, or if a professional has numerous mutual contacts, or even recommendations, on LinkedIn or Viadeo.

In fact, trust is partially based on the phenomenon of transitivity: you build relationships with your friends’ associates, thereby expanding your social network. This type of networking is particularly common on platforms like Facebook that allow you to see a list of your friends’ contacts. Even though these connections can seem credible based on an individual’s relationship to your existing contacts, they’re easy to fake. Although there are exceptions, many members give themselves embellished or false profiles, rendering many of these perceived professional and private connections specious and unrewarding.

Nevertheless, these new forms of virtual exchange based on personal recommendations, social proximity, or geographic location continue to develop. At a time when technology is accelerating, it should be possible to evaluate other people’s reliability in a couple of clicks—but that isn’t usually the case. In a way, it’s like a post-modern version of Kaa, the hypnotic python from Rudyard Kipling’s The Jungle Book. In both the collection of short stories and the Disney animated film, Kaa is alternately helpful and deceptive—even dangerous at times—and alters his behavior to serve his own interests above anything else.

Fortunately, the reality is more complex, and trust cannot be reduced to a graph sketched out by the members of a social network based on reputation. Trust is relative both to a specific object and to a given person. As an enthusiastic young PhD student, I formerly protested against the assertion of Oliver Williamson, an Anglo-Saxon icon of economic science, who had stated that trust had its place in friendship and love but not in the world of business.

TrustWilliamson said, “I submit that calculativeness is determinative throughout and that invoking trust only muddies the (clear) waters of calculativeness.” This essentially means that, according to Williamson, an individual can’t be objective if their decisions depend on trusting someone else.

I struggled to accept this assertion, which I felt was based on an overly excessive utilitarian vision of economic relations, even though I understood the related aphorism attributed to Al Capone: “You can always get more with a gun and a smile than with a gun alone.”

If it is possible to analyze human relations from the perspective of a delicate balance of interest, power, and trust, it seemed difficult to me. How could I rectify this with the “price, authority, and trust” triptych put forward by sociologists David Lewis and Andrew Weigert? To demonstrate that, even in commercial and financial matters, trust could not be reduced to utilitarian considerations, the irony was that I had to measure it—thereby contributing to the quandary of the dialectic of trust and interest.

This work was undertaken before the advent of social networks, which I have always considered with suspicion, even if I do occasionally use them. Going without the benefits of the digital world would be as counterproductive as trusting nothing but this medium.

Trust, taken in the sense of favorable anticipation accompanied by assumed risk, cannot be reduced to stringent calculations of the risk and potential gains pertaining to a given relationship. Such a reduction would be even more hazardous if the trust were based both on a moral dimension—the nature of intentions—and on a technical dimension—competence.

Finally, and above all, trust cannot be “equated” because of another dimension, which is, essentially, irreducible: free choice. In spite of objectively risky characteristics, an investor could thus choose to trust an entrepreneur because they believe the entrepreneur knows how to complete their project successfully, whatever it takes.

For a decade or so, I was in close contact with the founding director and investors of Xiring, a company that became a leading European publisher of security software for electronic transactions during only 10 years of operation. One day, the representative of one of the company’s first financial shareholders confided to me that she had decided to invest because the entrepreneur had shown her the company’s situation in a transparent manner: not only the very promising opportunities but also all the technological and commercial risks.

Such transparency was a display of trust, and what followed shows that the shareholder was right to trust the entrepreneur. The director of Xiring understood that to build sustainable relationships, it was best not to embellish the reality. Opportunities inevitably go hand in hand with significant risks.

To come back to our reticular considerations, networking can certainly contribute to facilitating relationships of trust but the “last yard” remains, above all, a matter of individual choice. When our trust is abused, we experience it as a betrayal; we adopt de facto a register that is more emotional than rational.

TrustBeyond specific cases, our propensity to almost systematically trust or be wary of others is not only a reflection of our free will but also an excellent barometer of our neuroses. Take for example the following aphorism, which is attributed to Léonardo de Vinci: “Experience shows that he who never puts his trust in any man will never be disappointed.”

However, as much as blind trust granted in almost any circumstances may lead to disappointment, never granting one’s trust will inevitably result in a life as a hermit. Popular wisdom has it that, “Trust is the mother of disappointment, mistrust the mother of safety,” but risk is an integral part of our very existence.

In principle, trust “obliges” its recipient to show that they are trustworthy. We thus find ourselves in the gift and counter-gift category so beloved of the sociologists of the Marcel Mauss school—but only in principle. Nietzsche reminds us, “People who place full trust in us believe that in by doing so they have a right to our own trust. This is an error of reasoning; gifts don’t lead to rights.”

Joseph Joubert’s aphorism “We can, by dint of trust, make it impossible for someone to deceive us,” is therefore as questionable as the ideological posturing of Oliver Williamson and the advocates of transaction-cost economics.

I always have great fun reading attempts to measure a given person’s reliability through various indices and reputational scores, which send us back to the torment of school rankings. The underlying logic oscillates between the German proverb “Vertrauen ist gut, Kontrolle ist besser,” [“Trust is good, control is better,”] and the Russian proverb ‘Trust but check!”

In conclusion, we can see that trust is an inexhaustible and eminently specular subject. Giving our opinion on trust inevitably leads us to deliver a part of ourselves. It’s also an invitation to syncretism, since there are rarely topics whose treatment leads one to evoke Nietzsche, Al Capone, Marcel Mauss, Oliver Williamson, and Léonardo da Vinci at the same time!

-Etienne Krieger, Entrepreneur and Affiliate Professor at HEC Paris


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About the Author

HEC Paris specializes in education and research in management sciences. As a leading academic institution in Europe and worldwide, HEC Paris offers a complete and unique range of education programs for students and executive education programs for leaders.