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

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