IDEAS home Printed from https://ideas.repec.org/a/wly/mgtdec/v39y2018i1p46-55.html
   My bibliography  Save this article

Trust and trustworthiness in organizations: The role of monitoring and moral suasion

Author

Listed:
  • Giuseppe Danese
  • Luigi Mittone

Abstract

We ask whether the corporate law provisions establishing that the conduct of the manager is subject to review by the investors (monitoring) and that managers are held to an honorable behavior (moral suasion) can increase trust and trustworthiness in organizations. We answer this question through a laboratory experiment. We find that moral suasion increases the investors' trust. Monitoring also increases trust but only when the manager is not aware of the experimental identity of the monitor. The manager returns more to those investors who trust more but appropriates around 50% of the available resources. The trustworthiness of the manager is, however, unaffected by monitoring or moral suasion. We discuss possible causes of the difference between the investors' expectations regarding the behavior of the manager and the observed behavior of the manager.

Suggested Citation

  • Giuseppe Danese & Luigi Mittone, 2018. "Trust and trustworthiness in organizations: The role of monitoring and moral suasion," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 39(1), pages 46-55, January.
    • Handle: RePEc:wly:mgtdec:v:39:y:2018:i:1:p:46-55
    DOI: 10.1002/mde.2866
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/mde.2866
    Download Restriction: no
    File URL: https://libkey.io/10.1002/mde.2866?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:cup:judgdm:v:17:y:2022:i:5:p:1123-1145 is not listed on IDEAS
    2. repec:jdm:journl:v:17:y:2022:i:5:p:1123-1145 is not listed on IDEAS
    3. Minnameier, Gerhard & Bonowski, Tim Jonas, 2021. "Morality and Trust in Impersonal Relationships," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242438, Verein für Socialpolitik / German Economic Association.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:mgtdec:v:39:y:2018:i:1:p:46-55. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www3.interscience.wiley.com/cgi-bin/jhome/7976 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.