Organizational Research unit I case study and DQ Question

REPRINT NUMBER 54419 SUMMER 2013 VOL.54 NO.4 Designing Trustworthy Organizations By Robert F. Hurley, Nicole Gillespie, Donald L. Ferrin and Graham Dietz IN THE AFTERMATH of the well-publicized corporate scandals of Enron, WorldCom and Tyco circa 2001 and 2002, there were major efforts in the United States to restore trust and enforce corporate compliance. Among other things, the U.S. Congress passed the Sarbanes-Oxley Act of 2002, featuring enhanced whistleblower protections, holding CEOs and CFOs personally responsible for financial statements, and establishing the creation of the Public Company Accounting Oversight Board, harsher sentencing rules and even new or ganizational guidelines to encourage boards to adopt changes to organization structures and processes to target more systemic approaches to pre- vent wrongdoing. Corporate spending on compliance increased an estimated $6 billion annually, 1 and leading business schools created ethics centers and made ethics training mandatory. Yet despite these reform efforts, corporate trust violations have gone unabated and public trust in business has plummeted. 2 A full recitation of the significant trust violations of recent years would go on for pages, covering Olympus Corporation’s accounting fraud, Barclays’ Libor rigging scandal, News THE LEADING QUESTION How can companies recover from trust failures and create reputations for trustworthi- ness?

FINDINGS Trust failures are often blamed on rogue employees, but usually occur because of faults in the organization’s system.

A common cause of trust failures is a company strategy or culture that serves the interests of one stakeholder group at the ex- pense of others.

Repair requires understanding the systemic causes of the failure and reforming the orga- nizational system. BAE Systems, whose products include parts of the F-35 Lightning II, is an example of a com- pany that launched a trust repair effort. Designing Trustworthy Organizations Companies often blame trust violations on ‘rogue employees,’ but these violations are predic table in organizations that allow dysfunctional, conflicting or incongruent activities to take root.

BY ROBERT F. HURLEY, NICOLE GILLESPIE, DONALD L. FERRIN AND GRAHAM DIETZ BUSINESS ETHICS SLOANREVIEW.MIT.EDU SUMMER 2013 MIT SLOAN MANAGEMENT REVIEW 75 76 MIT SLOAN MANAGEMENT REVIEW SUMMER 2013SLOANREVIEW.MIT.EDU BUSINESS ETHICS Corporation’s phone-hacking scandal, and the BP Deepwater Horizon oil spill. In fact, some of the most insidious practices from the Enron era (notably, dis- guising financial weakness with off-balance-sheet debt) were front and center again during the global financial crisis of 2008. In the wake of that financial crisis, the U.S. Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which extended and tightened the financial regulatory system and strengthened consumer protections. But the apparent inability of governments and industry groups to curb the level of wrongdoing raises im- portant questions: Why do trust failures continue to occur with such frequency, and how can they be re- liably prevented?

The matter is all the more perplexing considering that there is substantial research on organizational trust, including what trust is, how trust affects the functioning of organizations and how trust can be built, lost and repaired. 3 Much of the work sup- ports commonsense notions about how leaders can and should earn the trust of followers. One of us (Robert Hurley) developed the framework below to help leaders understand how to earn trust. 4 It effectively summarizes the empirical evi- dence regarding trust drawn from several decades of research in fields including psychology, game theory, organizational behavior and sociology, identifying six types of signals people consider when deciding whether to trust a person, group or organization (a “trustee”):

1. Common values: Does the trustee share our val- ues and beliefs?

2. Aligned interests: Do the trustee’s interests coin- cide rather than conflict with ours?

3. Benevolence: Does the trustee care about our welfare?

4. Competence: Is the trustee capable of delivering on commitments?

5. Predictability and integrity: Does the trustee abide by commonly accepted ethical standards (such as honesty and fairness), and is he or she predictable?

6. Communication: Does the trustee listen and en- gage in open and mutual dialogue?

In this article, we apply the framework to under- stand how organizations as a whole can consistently produce authentic signals of trustworthiness. To explore the processes of building, losing and repairing trust in organizations, we conducted a series of studies that enabled us to detect patterns across organizations. (See “About the Research.”) We found that building and sustaining organiza- tional trust is different from, and not nearly as intuitive as, building and sustaining interpersonal trust. Thus, while some insights from the trust lit- erature in psychology and management might apply, we believe that a new model is required to understand how to manage trust in large, complex organizations operating in highly diverse global environments. Such a model enables us to explore three fundamental questions:

Why do major trust violations occur within orga- nizations?

Why do some organizations systematically earn and sustain stakeholder trust while others experi- ence repeated trust violations? How can an organization weave trustworthiness into its core?

When trust violations do occur, why are some organizations successful at repairing trust while others aren’t? Why Trust Violations Occur Trust is a judgment of confident reliance on another (a person, group, organization or system) based on positive expectations of future behavior. 5 A trust violation occurs when the trusted party bears some ABOUT THE RESEARCH Our model is based on research we conducted with colleagues over the last 12 years to understand how organizations and their leaders earn, maintain and violate trust and repair it after a violation. We conducted detailed reviews of the academic litera- tures on trust, trust building and trust repair i and basic experimental, field and theoretical research into the nature, development and repair of trust. In 2011, we completed a study commissioned by the Institute of Business Ethics of 30 organiza- tions that had violated trust and then attempted to repair trust (with varying degrees of success) during the prior 10 years ii; the study analyzed case study data based on both archival and interview sources. We have also conducted deep examinations of two large corporate and government organizations experiencing trust crises. For obvious reasons, the identity of the organizations must remain confidential. One was global and headquartered outside the United States; the other was U.S.-based and operated primarily within the United States. In both cases we had extensive access to key employees at all levels and collected interview and survey data. We supple- mented the above research with an examination of best practices at select companies that consistently appear on the “Most Admired” and “Best Companies to Work For” lists compiled by Fortune magazine and data from several hundred executives and managers attending executive education leadership programs on the trust issues they experience in their organizations. SLOANREVIEW.MIT.EDUSUMMER 2013 MIT SLOAN MANAGEMENT REVIEW 77 responsibility for an act that significantly deviates from positive expectations (for example, fraud, de- ceit, gross incompetence, negligence or exploitation).

When people perceive a trust violation, they lower their expectations of future behavior — in other words, they reduce trust. 6 Although companies often blame trust violations on “rogue employees” and “a few bad apples,” our research indicates that major organizational trust violations are almost never the result of rogue actors.

Rather, they are predictable in organizations that allow dysfunctional, conflicting or incongruent ele- ments of their organizational system to take root.

Numerous cases bear this out: Mattel, the California- based toy manufacturer, for example, had a strong reputation for quality, but weak oversight of its Chinese supply chain resulted in lead paint contami- nation of toys and massive recalls in 2007. BP’s Deepwater Horizon oil rig explosion and oil spill in 2010 highlighted the conflict between the company’s strategy and culture of minimizing costs to enhance profitability and its focus on safety. The 2011 U.S.

Senate Permanent Subcommittee on Investigations report on the financial crisis was very critical of Gold- man Sachs and its role in the Abacus fund, where investigators found that Goldman’s stated values of client focus and integrity were at times overshadowed by a less formal culture that emphasized getting deals done with less than full disclosure. 7 Indeed, virtually all companies that have experi- enced major trust violations had some, and often extensive, systems and processes in place to produce trustworthy behavior (for example, compliance pro- cedures, quality checks, codes of conduct and ethics training). However, as important as these systems and processes may be, other elements undermined the companies’ ability to deliver on their core re- sponsibilities to stakeholders. The problem is the inconsistency in embedding trustworthiness.

Our in-depth analysis of large organizations that experienced major trust violations highlights the organizational root causes of trust violations.

When we asked several hundred leaders at a large multinational company, “What are the most fre- quent trust issues you encounter at work?,” the most frequent responses focused on fundamental aspects of how the organization functioned: orga- nizational restructuring and instability; poor support and follow-through; poor talent manage- ment; lack of communication and information; and leadership and strategy issues. When we asked employees of a government agency, “What one change would you make to improve trust in the organization?,” respondents provided similar an- swers: improve communication, enhance senior management capability, provide more accountabil- ity for performance, empower employees and enhance collaboration across groups.

In examining trust failures, we have found that one type of incongruence that frequently led to widespread loss of trust was the development of a company strategy (and, in turn, the allocation of re- sources) that either accidentally or deliberately favored the interests of one stakeholder group while betraying those of others. This problem has often been defined as letting shareholder profits take precedence over core responsibilities to other stakeholders (such as employees, customers, suppli- ers or communities). To be sure, it is not uncommon for organizations to favor some stakeholders’ inter- ests over those of others. 8 Rather than simply prioritizing certain groups, however, a trust betrayal occurs when the organization actively caters to a group (or groups) but fails to uphold responsibili- ties to others (such as providing employees with a safe working environment). The balance goes be- yond merely serving one stakeholder group better than another to serving the selected group at the expense of and even causing harm to another group.

Given the global prevalence of social media, online global forums and 24-hour news cycles, a breach of trust with any one stakeholder group can rapidly Although companies often blame trust violations on ‘rogue employees’ and ‘a few bad apples,’ our research indicates that major organizational trust violations are almost never the result of rogue actors. 78 MIT SLOAN MANAGEMENT REVIEW SUMMER 2013SLOANREVIEW.MIT.EDU BUSINESS ETHICS undermine an organization’s reputation for trust in its broader stakeholder community.

Building High-Trust Organizations Creating and sustaining a high-trust organization requires understanding how the various stakeholders — the investors, employees, suppliers, customers and other affected communities — gauge trustworthiness.

Based on our studies of high-trust organizations and cases of effective trust repair, we propose that the six criteria highlighted above — common values, aligned interests, benevolence, competence, predictability and integrity and communication — can serve as a foun- dation for organizational trust. But how can an organization use these criteria to advance trustwor- thiness when the company already has preexisting social, technical and political subsystems in place?

Our model draws on trust research, systems theory and strategic organizational design to conceptualize the elements of organization design that are central to engineering high-trust organizations. 9 (See “A Model of Organizational Trust.”) Developing sustainable trust with a broad range of organizational stakehold- ers demands effective organizational infrastructure (strategy; leadership and management; culture; struc- ture; and systems), which generates and sustains effective core processes (the development, production and delivery of products and services). Trustworthi- ness must be embedded in a way that is congruent and mutually reinforcing in order to reliably produce sig- nals of trustworthiness. Organizations that weave trustworthiness signals into all elements of their infrastructure and core processes, over time, earn reputations of trust with their stakeholders. In con- trast, trust failures occur when important elements are allowed to become misaligned.

Engineering trustworthiness into each element of the organization involves setting formal and informal constraints, incentives, expectations, values and norms, which influence the behavior of employees and agents. These formal and informal controls can promote diligence and honesty — or recklessness and malfeasance. Having positive signals across all of the elements can inspire and regulate employees’ trustworthiness; having mixed or deviant messages can lead to cynicism and unpredictable behavior.

(See “How Trustworthy Is Your Organization?”) Effective external governance plays an integral role in supporting organizational trustworthiness.

However, for several reasons, it should be viewed not as the complete answer but as only a starting point in creating trust. The legal system and regula- tory agencies establish minimum standards, but because regulators are often under-resourced, they cannot prevent all trust failures. Sadly, external reg- ulation may give organizations a false sense of security that can lull them and their stakeholders into complacency about trustworthy conduct.

QuikTrip, a privately held company based in Tulsa, Oklahoma, with more than 600 convenience stores and over $10 billion in annual sales, provides a helpful illustration of how a trustworthy organi- zation can be created. An industry leader, the company has been on Fortune’s “100 Best Compa- nies to Work For” list for 11 straight years. The company has a clear competitive strategy and a mission that emphasizes obligations to employees, customers and communities. For example, the company returns 5% of its net profits to the com- munities it serves. The leadership team is largely homegrown and is populated by people who be- lieve in the company’s values. This is sustained by a A MODEL OF ORGANIZATIONAL TRUST Organizations that weave trustworthiness signals into all elements of their infrastructure and core processes, over time, earn reputations of trust with their stakeholders. Embedding Organizational Trustworthiness Strategy Clear mission with trust-inducing core values that accommodates stakeholder interestsLeadership and Management Leaders who embody the company values and expect the same from their teams Culture Strong shared norms and beliefs that encourage upholding companywide values and deter deviance Systems Planning, reporting, budgeting, HR and compliance reinforce trust-inducing behaviors, linked to the culture and strategy Product and Service Development, Production and Delivery Processes that ensure stakeholder needs and expectations are met, company values upheld and legislation adhered to Structure Formal organization and governance that set clear roles and accountability and provide discretion within prudent oversight SLOANREVIEW.MIT.EDUSUMMER 2013 MIT SLOAN MANAGEMENT REVIEW 79 rigorous succession planning process that ensures that those rising in the organization share the com- pany’s values and deliver results with competence.

In our study of the QuikTrip culture, we found that “doing the right thing” — for customers and employees — was almost a religion. The company has an experienced and active board and clear accountability for key functions and geographies across the organization. Key leaders from each region periodically undergo extensive reviews by senior management that go beyond profit analysis to include store quality and employee and customer satisfaction. The company’s communication, HR and planning systems all reinforce fairness, compe- HOW TRUSTWORTHY IS YOUR ORGANIZATION?

To provide some guidance for embedding trustworthiness into the organization’s infrastructure and core processes, managers can consider the following questions.

StrategyAre we clear about our mission and our strategy to serve all stakeholders?

Is execution against strategy evaluated from all stakeholders’ perspectives?

Does the strategy align with the company’s values and meet triple bottom line (people, planet, profit) responsibilities?

Are decisions made and resources allocated in a way that shows benevolence, integrity and alignment with stakeholder interests?

Are we developing the competencies required to exceed stakeholder expectations over the long term?

Do stakeholders perceive that strategic trade-offs are made in a transparent and fair manner?

Leadership and Management Does management at all levels model company values?

Does management serve stakeholder interests before self, act with integrity and competently and predictably deliver on commitments?

Does management communicate openly, listen and demonstrate concern for employees?

Do managers hold their teams accountable for competent execution of strategy while upholding company values?

Culture Are there strong cultural values and beliefs that bond people and unify subcultures to serve stakeholders well?

Are the values of benevolence (respect, fairness) for stakeholders, integrity, competence (excellence) and predictably delivering on expectations deeply held, so that acting against them would feel wrong and uncomfortable?

Are values translated and activated such that employees support the organization’s mission, beyond self or subgroup interests?

Structure Does the structure provide clear roles, responsibilities, accountabilities and alignment of interests across groups?

Does the structure provide adequate governance and monitoring at all levels to ensure competent execution of strategy in a manner that upholds company values?

Does the structure engage and facilitate open communication with stakeholders?

Systems Do selection, induction, training, compensation, promotion, evaluation and succession systems reinforce the espoused values?

Do communication, planning and information systems enable effective coordination, alignment of interests and meaningful mutual dialogue?

Are there robust mechanisms to surface and facilitate reporting of ethical violations?

Product and Service Development, Production and Delivery Are development and production processes focused on serving both company and stakeholder interests (the interests of customers and suppliers)?

Is benevolence (safety, sustainability, fairness) a priority for all product and service teams?

Is there testing to ensure that production competently and predictably meets standards?

Is the entire supply chain monitored to ensure benevolence, predictability and competence in meeting stakeholder expectations?

Are products and services advertised in a way that avoids deceptive communication?

Does the company value communication about (listen to) customer needs and concerns, and respond benevolently to (care about) them? Do products and services exceed expectations?

Is there a robust product and service recovery process to ensure customer satisfaction even when a failure occurs? 80 MIT SLOAN MANAGEMENT REVIEW SUMMER 2013SLOANREVIEW.MIT.EDU BUSINESS ETHICS tence and benevolence. For example, the CEO and senior management team invest considerable time each year attending employee meetings around the United States with the primary goal of listening and taking action on feedback. The company has low employee turnover and high customer satisfaction for its industry, and its community and other stake- holder relationships are characterized by high trust.

Our research suggests that the key differentiator between companies that violate trust and those that sustain it is integrity and consistency within and across the organization. The organizational design — how the elements of the organization’s architecture and core processes are configured and aligned — enables reliable delivery on the expecta- tions of stakeholders, and hence minimizes the likelihood of an organizational trust failure.

Restoring Trust Ironically, trust failures can act as positive catalysts for creating a high-trust organization. Much can be learned about how to establish and sustain organi- zational trustworthiness by examining how organizations successfully restore trust after a major violation. (See “How Three Companies Sought to Repair Trust.”) Beyond immediate crisis management, the key to restoring stakeholder trust is identifying the root causes of the failure and im- plementing and reinforcing real organizational reforms to tackle the problems. 10 In analyzing cases of companies that have attempted to repair trust, we identified three critical stages: investigation, organizational reform and evaluation. 11 1. Investigation. One contributing factor to effec- tive trust repair is the credibility, rigor, independence and accuracy of the investigation of the trust viola- tion. Companies are often so concerned with appearance and damage control that they are un- willing to engage in the degree of examination required to root out the entrenched causes of trust violations. Such was the case of BP after the 2005 Texas refinery explosion and of News Corp. follow- ing the jailing in 2007 of an employee who had engaged in phone hacking. As a result, the seeds of the trust violation are embedded within the system and can result in future violations (such as BP’s 2010 oil spill in the Gulf of Mexico and News Corp.’s 2011 phone-hacking scandal).

Effective investigations need to make clear how each element of the organizational system directly or indirectly contributed to trust failures and what needs to change to prevent other incidents in the future. Siemens and BAE Systems, which both paid fines to settle bribery charges, launched their trust repair efforts with independent and rigorous inves- tigations, which led to recommendations for systemic reforms. 2. Organizational reform. Since trust failures are typically systemic, the organizational reforms need to be systemic as well. Structures, systems and pro- cesses should be the first point of intervention because they are relatively easy to change and de- sign. However, such interventions by themselves are unlikely to produce sustainable change. The more difficult challenges involve making changes to the organization’s culture, strategy and leader- ship and management practice. Indeed, adding training in ethical conduct probably won’t affect organizational behavior in any meaningful way if supervisors, workplace norms and/or performance management objectives continue to encourage questionable activities.

In successful repair efforts, systemic reforms need to be reinforcing and congruent so that trustworthi- ness becomes embedded in the organization’s culture over time. Ethics and compliance officers know that this is the holy grail of trustworthiness, but it is notori- ously difficult to realize because it often confronts deeply embedded mindsets. For example, BAE Sys- tems restricted itself for ethical reasons from using The more dif cult challenges involve making changes to the organization’s culture, strategy and leadership and management practice. SLOANREVIEW.MIT.EDUSUMMER 2013 MIT SLOAN MANAGEMENT REVIEW 81 sales contractors in some parts of the world, which created enormous challenges for the global sales force.

Yet the fact that the company implemented the re- strictions, despite the difficulties they caused, clearly communicated to the organization that management was serious about reform. Companies that are serious about their trustworthiness are convinced that real culture change doesn’t happen without changing how employees do their work and are rewarded, as well as changes in the behaviors that leaders model.

3. Evaluation. Even when a trust crisis recedes, old habits have a way of returning. Reforms must be evalu- ated to ensure they are working as intended, and shortfalls must be addressed. BAE Systems, for exam- ple, works with an auditing firm to evaluate the execution of its reforms. Because it takes time to change systems and deep change is hard to realize, in some respects the most important part of trust repair is the ongoing assessment, learning and course correction required to build authentic, sustained trustworthiness.

Successful trust repair requires going beyond crisis communication, first to take a systems perspective to accurately diagnose and reform the true faults in the organizational system, and then to evaluate the effec- tiveness of the reforms. Through this process, organizations not only repair trust but also embed trustworthiness into the organization’s design, making the organization more resilient to future trust failures.

It is challenging for companies to meet goals and manage trust in complex, competitive and dynamic markets and a globally interconnected, HOW THREE COMPANIES SOUGHT TO REPAIR TRUST Restoring stakeholder trust involves implementing and reinforcing organizational reforms to tackle the problem.

COMPANY ISSUE ELEMENTS OF REPAIR SiemensAgreed to pay fine of more than $1 billion to settle charges of using bribery to secure government contracts iii Appointment of an externally led, comprehensive and independent investigation, including a staff “amnesty” Appointed a respected independent expert to advise on reforms Revised codes of conduct, reformed policies on compliance and anticorruption and created an internal ombudsman and compliance help desk Trained more than 200,000 employees on anticorruption practices to shift beliefs and values Streamlined structure to provide clear line of responsibility Revised strategy to avoid competing in known corruption hot spots Fivefold increase in staff numbers dedicated to compliance High-profile departures and more than 900 disciplinary actions BAE SystemsAgreed to pay more than $400 million in fines to settle charges alleging corporate bribery iv Formed the independent Woolf Committee to investigate and make 23 recommendations New responsible trading principles guide staff in commercial decision making Revised codes of conduct and policies and procedures on bribes, donations, hospitality and political lobbying New governance structures: oversight by an independent ethical leadership group and an ethics helpline Training programs in ethics, especially for senior managers Independent audit of implementation of reforms Mattel ToysA Chinese supplier outsourced produc- tion resulting in the use of lead paint in the production of millions of toys, a substance banned for health reasons in many of Mattel’s mature markets v Ceased production in named facilities, followed by massive recall Full and proactive cooperation with regulators worldwide Thorough investigation with extended remit to include all Chinese vendors A second voluntary recall, linked to faults in Mattel’s own design of a toy Coordinated sector-level discussions on mandatory safety regulation Revised and strengthened supply chain audits and procedures Established a new “corporate responsibility division” reporting directly to the CEO Agreed to an audit by an independent NGO of its supply-chain practices 82 MIT SLOAN MANAGEMENT REVIEW SUMMER 2013SLOANREVIEW.MIT.EDU BUSINESS ETHICS multi-stakeholder community. Companies that do this well develop robust trustworthy organizational systems that enable them to reliably deliver on their core responsibilities to stakeholders and rapidly recover in the event of a trust failure. They reap ben- efits from having earned a sustained reputation of trust among employees, customers, investors, sup- pliers and communities. In fact, we would argue, and some research supports the idea, that high-trust or- ganizations also tend to be high-performing, with lower employee and customer turnover, lower monitoring costs and even better financial re- turns. 12 The good news is that we know how to engineer trustworthy organizations. If leaders and senior managers get smarter about how to manage trust, perhaps we can stop the deluge of damaging headlines and reverse the declining measures of trust in business by manifesting authentic and con- sistent signals of trustworthiness. Robert F. Hurley is a professor of management and director of the Consortium for Trustworthy Organizations at Fordham University in New York City. Nicole Gillespie is a senior lecturer in manage- ment at the University of Queensland in Australia.

Donald L. Ferrin is a professor of organizational be- havior and human resources at the Lee Kong Chian School of Business at Singapore Management Uni- versity. Graham Dietz is a senior lecturer in human resource management at Durham University in the United Kingdom. Comment on this article at http://, or contact the authors at [email protected].

REFERENCES 1. J. Schaller, “Almost Ten Years After the Enron Meltdown:

More Costs, More Persecution, More Compliance?” July, 7, 2010,

2. “2013 Edelman Trust Barometer,” January 2013,

3. See, for example, K.T. Dirks, R.J. Lewicki and A. Za- heer, “Repairing Relationships Within and Between Organizations: Building a Conceptual Foundation,” Acad- emy of Management Review 34, no. 1 (January 2009):

68-84; and R.M. Kramer and T.R. Tyler, eds., “Trust in Or- ganizations: Frontier of Theory and Research” (Thousand Oaks, California: Sage Publications, 1996).

4. R.F. Hurley, “The Decision to Trust,” Harvard Business Review 84, no. 9 (September 2006): 55-62; and R.F. Hurley, “The Decision to Trust: How Leaders Create High-Trust Organizations” (San Francisco: Jossey-Bass, 2011).

5. D.J. McAllister, “Affect and Cognition-Based Trust as Foundations for Interpersonal Cooperation in Organiza- tions,” Academy of Management Journal 38, no. 1 (February 1995): 24-59. 6. P.H. Kim, K.T. Dirks and C.D. Cooper, “The Repair of Trust: A Dynamic Bilateral Perspective and Multilevel Conceptualization,” Academy of Management Review 34, no. 3 (July 2009): 401-422.

7. C. Levin and T. Coburn, “Wall Street and the Financial Crisis: Anatomy of a Financial Collapse,” 2011, http:// FinancialCrisisReport.pdf.

8. M.D. Pfarrer, K.A. Decelles, K.G. Smith and M.S. Taylor, “After the Fall: Reintegrating the Corrupt Organization,” Academy of Management Review 33, no. 3 (July 2008):


9. N. Gillespie and G. Dietz, “Trust Repair After an Organi- zation-Level Failure,” Academy of Management Review 34, no. 1 (January 2009): 127-145; D.A. Nadler and M.L.

Tushman, “Competing by Design: The Power of Organi- zational Architecture” (New York: Oxford University Press, 1997); and W.W. Burke and G.H. Litwin, “A Causal Model of Organizational Performance and Change,” Jour- nal of Management 18, no. 3 (September 1992): 523-545.

10 . Gillespie and Dietz, “Trust Repair After an Organiza- tion-Level Failure.” 11. G. Dietz and N. Gillespie, “The Recovery of Trust:

Case Studies of Organisational Failures and Successful Trust Repair,” occasional paper no. 5, Institute of Busi- ness Ethics, London, 2012,

12. See, for example, I.S. Fulmer, B. Gerhart and K.S.

Scott, “Are the 100 Best Better? An Empirical Investiga- tion of the Relationship Between Being a ‘Great Place to Work’ and Firm Performance,” Personnel Psychology 56, no. 4 (December 2003): 965-993; and P.A. Saparito, C.C.

Chen and H.J. Sapienza, “The Role of Relational Trust in Bank–Small Firm Relationships,” Academy of Manage- ment Journal 47, no. 3 (June 2004): 400-410.

i. K.T. Dirks and D.L. Ferrin, “Trust in Leadership: Meta- Analytic Findings and Implications for Organizational Research,” Journal of Applied Psychology 87, no. 4 (Au- gust 2002): 611-628; K.T. Dirks and D L. Ferrin, “The Role of Trust in Organizational Settings,” Organization Science 12, no. 4 (July/August 2001): 450-467; Gillespie and Dietz, “Trust Repair After an Organization-Level Failure”; Hurley, “The Decision to Trust”; and R.J. Lewicki, E.C. Tomlinson and N. Gillespie, “Models of Interpersonal Trust Develop- ment: Theoretical Approaches, Empirical Evidence, and Future Directions,” Journal of Management 32, no. 6 (December 2006): 991-1022.

ii. G. Dietz and N. Gillespie, “Building and Restoring Orga- nizational Trust.” iii. E. Lichtblau and C. Dougherty, “Siemens to Pay $1.34 Billion in Fines,” New York Times, December 15, 2008; and S. Schubert and T.C. Miller, “At Siemens, Bribery Was Just a Line Item,” New York Times, December 21, 2008.

iv. M. Peel and S. Kirchgaessner, “BAE to Pay $450M to End Bribery Case,” Financial Times, February 5, 2010.

v. L. Story, “Lead Paint Prompts Mattel to Recall 967,000 Toys,” New York Times, August 2, 2007.

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