Trust is the Key to Building Successful Companies and Great Nations

The Importance of Trust in Building Successful Companies and Great Nations

Recently the former Prime Minister of India, Dr. Manmohan Singh, made an impassioned plea for building trust among the economic agents and between the citizenry as that would have a salutary effect on the country’s economy.

In a hard hitting article, Dr. Singh, decried the present “climate of fear” and “mutual suspicion” among different stakeholders and called for returning to the atmosphere of trust and cooperation that are so essential for building great nations.

Indeed, if one were to ask, why the Western countries prospered when the East crumbled given that the latter was ruling the world until the time of the Industrial Revolution, it is that the former were more successful in drawing up a “social contract” between the various stakeholders in the economy whereas the Easterners were let down by infighting and a vicious game of upending each other.

For instance, the reason why the West was able to colonize large parts of the world was because of its policy of sowing the seeds of suspicion and distrust among the natives and using the “divide and rule” strategy, conquering them from within. Therefore, it goes without saying that trust is the key to building a great nation.

Real World Examples from the Corporate World of Successes and Failures of Trust

Similarly, for businesses, trust is the key to sustaining their dominance in the marketplace as well as in nurturing generations of employees who stick by them and in turn, are rewarded for their loyalty.

Indeed, take any successful company such as Microsoft or old warhorses such as Unilever and you find that over the decades, their founders and the people who succeeded them invested in building a culture of shared prosperity and trust among the employees and the management.

In the same manner, companies also fall from grace when the trust between the various stakeholders erodes and is replaced by a culture of fear and backbiting and suspicion.

One need not look farther than the case of Infosys, which once its founders exited, turned into a virtual free for all with each layer of the hierarchy engaged in a bitter war of attrition with the ones above and below them.

Indeed, if not anything, Infosys epitomises how organisations that become untrustworthy rapidly lose the confidence of its stakeholders including the shareholders and consequently become victims of Boardroom battles and power games between the various stakeholders resulting in their slow atrophy.

A Practical and Realistic Take on How Trust can be Built and Sustained

Having said that, we are not definitely advocating a Utopian state where each member of an economic or political entity coexists with each other in a perfect and idyllic scenario.

Indeed, such a state while desirable does not sustain itself as history and behavioural economics teaches us.

Rather, our point is that while there would always be intrigue and power games, the basic fabric of the organisation should be one that is stitched on the basis of trust between the various stakeholders.

This basic organisational fabric and culture should then be able to withstand any assault on its structure and keep the organisation intact even during times of crisis.

Indeed, take a look at any of the steady performing corporates and their history would tell you due to the vision of their founders and the successive generations of executives and employees, such corporates have weathered many a storm with their basic DNA not being affected and therefore, they have bounced back from crises.

On the other hand, corporates that have failed and went bankrupt are classic examples of organisations that were not able to prevent the organisational fabric from being torn and worse, shredded to pieces that led to failure.

Applying Economic Theory to Daily Practice

This is where great leaders of history are known for either building successful companies or prosperous nations. While there are many such statespersons and other luminaries who have built companies from scratch or have won in democracies to steer their nations to prosperity, the one that stand out are those who ensured that there is a basic level of trust between the citizenry.

For instance, like in the corporate world, contracts have to be honoured and laws obeyed and the penalties for not following such rules should be harsh with an upright judiciary upholding the laws.

Indeed, without mutual trust, each morning, we would neither get milk delivered to our doorsteps or the many people who make our lives liveable would not be able to do so.

As is mentioned in the popular as well as theoretical economic literature, it is only because the entrepreneurs and capitalists motivated by profit and driven by trust that the economy runs.

Hence, it is the case that unless there is a level of trust, these economic agents would be hesitant to do their work.

Therefore, whether it is in the realm of economy or nation building, trust is the key to sustaining performance.


Last, Dr, Singh’s words should be taken note of and acted upon if the present government is serious about building an inclusive and prosperous country where the economy works for all and not a few.

Indeed, one can almost sense that this is a wakeup call and a dire prognosis of the shape of things to come if trust is eroded.

Moreover, the very foundations of the country are built on trust and hence, one can see how we risk collapsing the structure altogether without trust.

To conclude, there is a danger of the social contract breaking down in both corporates and nations when trust is scarce and hence, aspiring leaders would do well to follow how trust can be built and sustained in their future careers.

❮❮   Previous Next   ❯❯

Authorship/Referencing - About the Author(s)

The article is Written and Reviewed by Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to and the content page url.