Honesty Incorporated: Can the Development of a Trust Culture Create Sustainable Competitive Advantage?

By Philip R. Walsh and Cinla Akinci.

Published by The Organization Collection

Format Price
Article: Print $US10.00
Article: Electronic $US5.00

Companies all over the world are trying to become better places to work because they realise that it is essential for their survival. A work environment supportive of trust and good employee relations at all levels clearly brings the best performance out of the employees which in turn benefits the organisation as a whole. Employees who are committed to their work will exhibit higher productivity, establish stronger relationships with customers, and provide better services, thus creating customer loyalty in the long-term. This in turn will provide higher returns for the company.
Creating a culture of trust and positive employee relations is not an easy job. However, it tends to be stable and difficult to copy, thus providing a sustainable competitive advantage for the companies who are successful in creating such an environment.
This study is an investigation of this relationship by statistically testing the firm performance of eight multinational companies which show up repeatedly on Fortune’s “100 Best Companies to Work for in America” list in 1998-2005, against their global-based competitors, over a five-year period. The paper serves to measure the influence of trust on financial performance by establishing firstly, whether or not there is a statistically significant relationship between organisational trust and financial performance, and secondly, whether those companies which employ a culture of trust possess a sustained competitive advantage in their industry.
The findings of this research indicate that the companies that have continuously been on the “100 Best” list were significantly better performers, outperforming the competition in 80% of the qualifying comparative performance measures applied. The results provide evidence that the superior financial performance of the “100 Best” companies are attributable to the culture of trust that each of them had developed, and strongly support the notion of sustainable competitive advantage for those companies over their competition.

Keywords: Corporate Culture, Trust, Sustainable Competitive Advantage, America's Most Trusted Companies, 100 Best Companies to Work For

The International Journal of Knowledge, Culture and Change Management, Volume 7, Issue 1, pp.121-132. Article: Print (Spiral Bound). Article: Electronic (PDF File; 757.751KB).

Dr. Philip R. Walsh

Associate Professor - Strategy, School of Business Management, Ryerson University, Toronto, Ontario, Canada

Dr. Phil Walsh is an Associate Professor of Strategy in the School of Business Management, Faculty of Business, Ryerson University, Toronto, Canada. Phil has also practiced for the past 26 years as a strategic planning consultant and professional geoscientist working with many of Canada’s top energy companies and provincial energy ministries. His research over the past few years has focused on sustainable development in the energy industry both from a management and technical perspective. He has published papers in the field of strategic change management with an emphasis on scenario planning, networks and sustainable competitive advantage. Dr. Walsh holds a B.Sc. in Geological Sciences from Queen’s University, Canada, an MBA from the Ivey School of Business, Canada and a Ph.D. in Strategic Management from the University of Bradford, UK. Prior to joining Ryerson, he was the MBA Programme Director and a Lecturer in Corporate Strategy at the University of Surrey, U.K.

Cinla Akinci

KTP Associate - Business Development Analyst and Ph.D Candidate, School of Management, University of Surrey, Guildford, Surrey, UK

Cinla Akinci is currently working as Business Development Analyst on a Knowledge Transfer Partnership (KTP) project at University of Surrey, UK. Previously, she has worked on various UN projects as Project Coordinator in Cyprus. Cinla holds a BA in Business Administration and Economics from Trent University, Canada, and an MSc in International Business Management from University of Surrey, UK.

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