1. Managing Business Relationships Trust
Dr. Vesselin Blagoev

2. Trust is Foundation of Leadership
Trust: A positive expectation that the other will not act opportunistically
Positive expectation assumes knowledge and familiarity about the other party
Opportunistically refers to the inherent risk and vulnerability in any trusting relationship

3. Trust is Foundation of Leadership
Jurgen Schrempp, while Daimler Chrysler’s Chairman, called the merger of Daimler Benz and Chrysler “a merger of equals” and later admitted he lied
Can he be leader in Daimler Chrysler if he is not trusted there anymore?

4. Trust is Foundation of Leadership
As D.Zand sais: “Part of the leader’s task has been, and continues to be, working with people to find and solve problems, … but whether …leaders solve problems depends on how much people trust them. Trust and trust-worthiness modulate the leader’s access to knowledge and cooperation”

5. Trust is Foundation of Leadership
Three types of trust:
Deterrence-based trust: based on fear of reprisal if the trust is violated
Knowledge-based trust: based on behavioral predictability that comes from a history of interaction
Identification-based trust: based on mutual understanding of each other’s intentions and appreciation on the other’s wants and desires

6. Trust is Foundation of Leadership
5 Key dimensions that underlie the concept of trust:
Integrity – it refers to honesty and truthfulness
Competence – technical and interpersonal knowledge and skills
Consistency – individual’s reliability, predictability and good judgment in handling situations

7. Trust is Foundation of Leadership
Loyalty – the willingness to protect and safe face for another person
Openness – can you rely on the person to give the whole truth?

8. Game theory and the prisoner’s dilemma
Criminal A
Confess
Don’t confess
6 years
10 years
Confess
1 year
6 years
Criminal B
3 years
1 year
Don’t confess
10 years
3 years

9. Game theory and the prisoner’s dilemma
Criminal A
Confess
Don’t confess
Death
10 years
Confess
Death
Death
Criminal B
3 years
Death
Don’t confess
10 years
3 years

10. Attribution Theory of Leadership
Leadership is merely an attribution that people make about other individuals
Example: George H. Bush lost the second term elections after saying “Read my lips. No new taxes.”

11. Is Trust in Our Leaders in Decline?
WordCom fakes about USD 4 billion
Enron executives manipulate the financial statements
Tyco Intl – cheating on sales taxes
Merrill Lynch pays USD 100 million in fines for misleading investors
Sofia Water – salary 60 K

12. Moral Leadership
The means used by the leaders – paying to the participants in riots – good or bad ?
Using leader’s charisma to benefit from follower’s full support – religious fights
Leadership is not value free