Importance of Trust in States and Firms

In: Business and Management

Submitted By uninterrupted
Words 1141
Pages 5
The importance of trust in states and firms
Name: Han Xu
CPR no.: 231092-3616
Date of submission: 11 January 2014
Study programme: BSc. Business Administration and Sociology
Integrated assignment
Supervisors: Jacob Lyngsie, Benedikte Brincker
STU Count: 8102

This essay will focus determining if trust is indeed fundamental, or necessary to every organisation. Since trust usually suggests a relationship between 2 or more parties, the essay will look into how trust is established between organisation and define trust.
Later on, the economic benefits of trust will be explained and lastly, the importance of trust will be evaluated.
Trust and the state
The Corruption Perception Index (CPI) is an The CPI is an example of measuring a state’s economic legitimacy based on an empirical understanding, seeking to shed light on the economic and political legitimacy of a regime by reviewing international institutions’ perception on the transparency and corruption of the state. Every year,
Transparency International releases a CPI report on countries around the globe. The annual report (Transparency International 2013) measures countries according to the perceived level of corruption, reflecting the level of trust in the accountability of each state. In this section of the essay, we point our attention to the state and trust is defined as the ‘belief in legitimacy’ (Rostboll 2013). Such formalised documentation of trust between neutral international institutions and the state is particularly important since it influences the establishment of accountability with other multinational corporations and companies. Departing from Weber’s theory that every system of political domination is dependent on the people’s belief in its legitimacy
(Rostboll 2013), it is also true for economic systems. To establish economic legitimacy and competitiveness, the state…...

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