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Justice to Generate Trust, Two Aspects of Human Relationships in Management

Written By

Natàlia Cugueró-Escofet

Submitted: November 19th, 2021 Reviewed: February 4th, 2022 Published: April 2nd, 2022

DOI: 10.5772/intechopen.103058

IntechOpen
The Psychology of Trust Edited by Martha Peaslee Levine

From the Edited Volume

The Psychology of Trust [Working Title]

Dr. Martha Peaslee Levine

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Abstract

Justice and trust have largely been considered important in organizations, to generate sustainable management practices that when maintained generate improvements over time. Trust is the organizational glue allowing people to enter into mutual benefiting interactions and relationships for a continuous long-term coordination. Trust is unavoidable as not all participants have all the information and should rely on others’ decisions. Justice is a personal virtue that affects all the relationship participants, the decision-maker, the recipient and the beholder. Justice is also a perception of these participants about decisions, people involved and results. Justice as a personal virtue is important for the decision-making, but as an organizational value is coming as a set of requisites for organizational formal and informal systems. In this chapter I aim at understanding the foundations of trust, understanding justice dimensions, and finally disentangling the relationship between trust and justice and how both can mutually be cause and effect of each other. I also examine how trust and justice brought together may cause other desired effects into organizational performance. I propose an understanding of the interplay between trust and justice that helps to improve management practices and their design to maintain and promote economical and socially sustainable organizations.

Keywords

  • justice
  • fairness
  • trust
  • ethics
  • sustainable management
  • practical wisdom

1. Introduction

Justice has been studied in several organizational disciplines, the most important being ethics and human resource management. But this is not all the picture, as justice has also been studied in some research that fundamentally tries to show how to design systems and decision processes with justice in the core of their formal and informal elements. Trust has been considered the best intangible asset that serves as an invisible glue that sets together people and organizations to coordinate for common goals. Trust is necessary to be in place between people in organizations and between organizations and their stakeholders. Being an intangible, the mechanisms to generate and promote trust are hidden; therefore trust is not possibly exchanged as a normal asset, and in fact, organizations that “buy” trust from their stakeholders usually do not generate anything close to it. The mere fact of entering in a conventional exchange involving trust (try buying with money trust) removes the motives that people hold when willing to trust others, and even poses red flags that motivate just for the opposite. Trust, when in place, allows performance as a consequence for the long run, promoting socially sustainable organizations.

The relationship between trust and justice has been also considered crucial, as both are aspects that involve social interaction, better fulfillment, and increasing alignment of people’s and organizational goals (goal congruence). Many researches in management have concentrated on these two elements, and how both can mutually affect each other. In this chapter I am going to devote time to propose a way of how both are important and should be brought together to promote long run organizational performance and sustainability.

I proceed to study first trust, then justice and eventually the interaction of both, to conclude which may be a good approach to understand both in terms of implications in organizational management. Finally, I end up stressing the importance of ethics and specifically see how ethics come in the form of showing trust and justice to be the crucial embedded aspects of ethical relationships.

Including the ethical dimensions of justice and trust into organizational relationship and coordination allow going beyond the social and psychological characteristics already posed. Then, ethics, or the principles that guide and serve as basis of what should be done, make justice and trust the two intangibles that are the most important in organizational relationships and therefore in the long-run survival of organizations as a social system of coordination, relationships, interactions, and worth exchanges.

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2. Trust, justice, and a comprehensive interaction model

Trust has been an elusive concept that has been studied in many fields, most importantly in economics and management. From an economic perspective it is the necessary intangible glue that makes people exchanges progress in a smoother way. Trust should be built to make coordination last, but economists discovered that it is not a commodity that has its own market to be exchanged. This implies that trust has value but there is no price of acquisition, so it is generated in a way that incorporates personal morality and the willingness to do good for ourselves and, in case of trust, for the others. Arrow, a preeminent Nobel awarded economist arrived to this conclusion, as we will show below [1]. In the “Limits of Organization” in fact what Arrow is showing is more the “limits of the markets” to organize interaction, as precisely organizations as a coordination mechanism, involving trust, is what go beyond the pure market reasoning of facilitating exchanges in a pure monetary basis.

Trust is needed when people as consumers decide over a set of potential options, as they eventually chose one option that they trust. But also, into organizations to make people rely on other people assessments and opinions, when they cannot arrive to one personal opinion due to lack of information or expertise. Or complementary to this, when people rely on other’s information to form their own opinion.

Justice is both a cause and effect of some specific characteristics that are incorporated into relationships, their process and distributions. Studied as the main moral virtue of character, the mother of moral virtues, it makes people pursue their own good and the overall good of the organization and its participants. Both concepts, trust and justice, are crucial in the ethical dimension of business interactions and relationships.

In the next sections, I am going to study both of them separately and then explain the relationship between the two, to generate socially and economically sustainable organizations. I am going to stress that trust and justice should incorporate their ethical dimension as these are the ones that allow nurturing interactions between people and between people and organizations for the final end people have, which implies fulfilling themselves through their purposes and mutual supporting.

2.1 Trust and its foundations

Trust has been studied in several organizational disciplines, the most important ones being economics and management. Trust is not an easy intangible to study. All incumbents in organizations are talking about trust generation as one of the crucial aspects to be promoted to generate involvement in coordination for the common goals, and specifically, a long-term coordination. Brands talk about trust generation and use brand ambassadors for that purpose. Organizations talk about generating trust and care for their employees first and the rest of the stakeholders afterwards. So, all management disciplines talk about trust as the most necessary intangible to be incorporated in their relationships with clients, workers, and all the stakeholders. Trust should be built and not destroyed; these two objectives are clear and widely shared. But how to achieve those goals? This is a complete personal career in any managerial field, no matter which discipline, no matter which organization. All managers care about this but are not sure how to implement it successfully. Another aspect of trust is that it is hard to build and easy to lose in any reputational dispute, so it is not only that trust is important, but managing any short-term reputational effects over the trust that has been long term generated, is also very important (i.e. it is important to note that as people have their own perceptions of trust, managing them is important, and making them close to factuals).

One of the scholars worried about trust has been Kenneth Arrow. In his book “The Limits of Organization”, Arrow considers trust as the necessary glue of economic systems. Trust, according to Arrow, is elusive and non quantificable, and without trust desired transactions do not occur [1]. In fact, he considers that trust is in the boundaries between authority and responsibility, as a crucial aspect that has value but not clearly an exact and known transactional price. Therefore, in Arrow’s words, if you have to purchase trust, you are not really sure about what you have really bought. In fact, we can even say that when you try to put trust as a mere exchange good, what happens is that at some point you force people to concentrate in mere motivations that imply short-term win/lose analyses. Then the prophecy self-fulfills and finally you have people that usually mistrust the rest and only focus on the short term.

So, if trust is not a commodity this means that cannot be easily transacted. Thus, it is difficult to know how to generate and destroy trust which makes more important its study as a worth ethical characteristic of economic and organizational systems. And on top of that, trust is unavoidable in exchanges and coordination, if we want it to last, so the fact is that trust is not exchangeable easily but at the same time it is a must.

In fact, organizations that try to buy trust among their employees are paving the way to precisely generate the opposite. Why? Because, people are easily aware that the interest of the organization is instrumentally using trust as an excuse for something else, so not being transparent of their real interest and purpose, so ending up generating just the opposite: distrust. So, looking for trust generation should bring something genuine in place so people could think it is for the best of all, not merely a few or for some spurious organizational interest.

Arrow was a preeminent economist, and his last work was devoted precisely to the nature and value of trust, that he considered an ethical concept, to be necessary in economic interactions. He considers trust to be the most efficient lubricant in social interactions as it allows to save lots of resources. Therefore, he looks at trust as an ethical aspect with real pragmatic value, so, trust is not only a nice thing to have in organizations but a necessary ethical requisite. Markets and ethics are confluent, and this confluence needs specific attention and implementation. In the end morality is unavoidable to get markets that work [2]. You should be more or less confident that persons interacting in a market generally act in a morally sound way and so should build relationships that make them trust each other. From the point of view of an economist, Arrow considered trust as a social norm based on morality, that equals transparency, integrity, and honesty to make reciprocal social interactions follow the right path to bring good for everyone. The fact that Arrow considers trust, and ethics (as the broader recipient of the first), as the foundational aspects that make organizational deals work, is seeing trust as the cause of worth relationships in business.

To put it simply, trust in its minimal approach implies 1) two persons, the trustor and the trustee, 2) evaluation from trustor to decide whether to follow the trustee advice in something of his or her interest, 3) an act from the trustee that shows whether the trustee honors or betrays the trustor’s trust on him or her, and 4) an evaluation of the interaction from the trustor of whether it has been worth to trust the trustee.

Following this simple trusting mechanism, several definitions of trust have been posed from the researchers’ community. There is a broad conceptual definition of trust that summarizes the concept in a meaningful way. According to Zand, trust is composed by the “actions that increase one’s vulnerability to another whose behavior is not under one’s control in a situation which the penalty one suffers if the other abuses that vulnerability is greater than the benefit one gains if the other does not abuse this vulnerability” [3]. So, there is something to lose from the trustor’s perspective. Also, not honoring trust from the trustee can have some short-term surplus gain compared to honoring it (so trustee is better off when not honoring trust compared to honoring it), because otherwise, there is simply a win-win game, without any need for trust to be in place. Of course in this situation of win-win, the trust specific interaction does not exist, but it could happen that trust over that person in general exists anyway, the issue is that the trust interaction does not start, or it is not even necessary when everyone earns trusting the other, usually, trusting in a specific moment in time, should imply having some tradeoff, so there is something to lose when the trustee honors trust compared to some gain for taking advantage of not honoring it. The same happens for the trustor that she/he is worse off in case the trustee does not honor the trust compared to honoring it.

So, first, there is the decision to trust, and enter into a trustworthiness evaluation (from the trustor about the trustee), and afterwards the decision to honor the trust (from the trustee). Of course, for trust to last, both parties (specially the trustor) should evaluate how worth has been the actual interaction and therefore as a consequence how probable it is to trust the other party again. Meaning, how probable is to enter into a long-lasting trust, that is the glue that is needed in Arrow’s terms [4].

But which is the process of trust generation, and which the process of mistrust generation or trust destruction? More recently, organizational scholars have tried to see trust as a sequence of personal dynamics that involve at least two parties, in which, one of the two (trustor) decides whether to assign to the other party (trustee) the required trustworthiness. In case the required trustworthiness is assessed and the trustor considers it enough, then this makes the trustor trust the trustee. As Dietz believes, there is a basic dynamic, common to all trust encounters, in which “an assessment of the other party’s trustworthiness which informs a preparedness to be vulnerable that, in genuine acts of trust, leads to a risk-taking act” [5, p. 215]. Then, trust, looked at this way, is a consequence of trustworthiness (defined as a perception of trust placed on a person who is evaluated as to whether he or she deserves to be trusted or not).

So, trust is a consequence of trustworthiness which acts then as a cause. So, it is a risk-taking activity that involves some time of perceptional process of the trustor about the trusted party (trustee).

Some researchers consider that there are several types of trust, for instance rational calculative trust, altruistic trust, or blind trust, or also depending on the parties, if these are two individuals, the trust is labeled “personal trust,” or in case of involving organizations, then it is called “institutional trust” [6].

But, other scholars, like Dietz, suggest that trust can be considered as general trust experience process that, depending on the individual and group characteristics, may differ in how this universal trust experience or process occurs, and which steps are more or less prevalent when compared to the others. This group of scholars consider that different evaluations of trustworthiness, cognitions, and actions of trust will thus originate different effects coming from the trust experience [5].

Then, trust is a choice? Not always, as people may be obliged to enter into trust, as maybe they are interdependent to the other party. In this situation there is no decision of trusting the trustee, so this specific condition is not there, but still the rest of the trust process remains. In this case, trust is not a decision, but the process of generating trust should occur for sure. So risk and interdependence are intrinsic elements of trust, the definition then being more a general one, so trust is ‘the willingness to be vulnerable in conditions of risk and interdependence’ [7]. Considering trust this way, trust is not a cooperative behavior or a choice of taking some risk, but instead a situation in which risk and interdependence may generate necessarily an evaluation that once is positive, conduces to trust generation, and then, implies cooperation and taking the risk.

But one caution here, the mere existence of risk and interdependence may not need trust process to occur. In some cases there is only the need to calculate to arrive to a decision; then, it is not easy if this can be considered “calculative trust” or really trust is not even in place nor needed [8]. Boundaries of the concept of trust still exist and there is not a complete agreement between researchers.

In all instances, even if trust is a decision or a situation in which there is some obligation to be interdependent with some other party, trust requires an evaluation from the trustor about the trustworthiness of the trustee. This trustworthiness is a construct formed by the perceptions of some trustee’s aspects, that were revised in an integrative paper by Mayer, Davis, and Schoorman [9].

When assessing trustworthiness people evaluate the following three aspects of the trustee: ability, benevolence, and integrity. However, in a more recent paper about trust quoting this research by Mayer et al., it has been argued that “the Mayer et al. definition misses an important aspect of trust, though: in order for the situation to be meaningful, the potential trustee has to have something to gain by performing an action that is not favorable to the interests of the trustor. If not, the interests of the two people are perfectly aligned and thus, in general, there should be no problem” (8, p3). Meaning again, that boundaries of trust are still there in discussion. This latest boundary incorporates, then, the avoidance of trustee’s opportunistic behavior, seen from the perspective or assessment of the trustor [10]. This evaluation of the trustworthiness of the trustee is done in some specific situation, that is, the specific “trust encounter” or in other words, the trust exchange.

This vision of trust being a consequence of trustworthiness incorporates morals, and each of the three aspects go parallel to the Aristotle concepts incorporated into his book Rhetoric. Ability corresponds to Aristotle’s concept of “intelligence.” integrity to Aristotle’s “character,” and benevolence to Aristotle’s “goodwill”. Then, the Aristotle concept of persuasion that would imply making appealing what a trustee says to convince others of being trusted is linked to the building blocks of the trustworthiness concept, a very successful construct in the literature of organizational trust.

In general, when trusting someone implies an assessment about this person’s consistency (sometimes even we think that this person in that matter is even more consistent than ourselves), to actually make this person capable of putting into practice what is good for all (also ourselves) according to his or her system of values. Then what we in the end trust is his or her capacity to do that, to act in that specific ethical way. In consequence, we think that the trustee is a person that shows the integrity between his or her actions and values and does this for the good of the ones involved in the relationship or also for the entire organization (in case of he or she acting on its behalf). Then trust is linked to believing from the trustor’s perspective that the trustee is a virtuous person and so pursues the good. Here comes the ethical part of trust, that is, the trustee’s capability of making right choices about what is good to be pursued. Right choices imply deciding over which objectives area good, and it is here when justice comes to place into the trust equation. As being good and right implies being just. So, looking at the ethical dimension of trust, this implies we trust someone because we consider she or he is the one that is just when deciding, and therefore incorporates in the decision-making, standards of just behavior. We trust in his or her justice standards.

In conclusion, we trust someone because the choices he or she usually makes are leading to generate just outcomes; therefore this person shows up justice standards and learns and evolves to individually increase these justice standards over time. We are going to examine justice as the moral virtue that managers need to put in place to generate trust. Managers should include justice into their decision-making process to generate trustworthiness and therefore trust among organizational relationships between individuals and between individuals and the organization.

But first, I should examine justice as a crucial concept in many disciplines, including management, to finally look into the concepts that are worth to be built-in trust generation.

2.2 Justice in organizational relationships

Justice has been studied in several organizational disciplines, the most important ones being ethics and human resource management. But these are not the only ones. Justice is studied in management control systems to show that managers should design systems and decision processes with justice in mind (formal and informal management control systems with justice incorporated) [11]. Justice is also the basis for the full theory of law, and it is also a social norm, in the discipline of sociology. In ethics or normative theories justice is considered a virtue or a mandatory set of requisites for a worth societal scheme. I am going to revise all the concepts of justice and how they have been integrated to some extent.

Organizational justice has started some decades ago, with the study of the perceptions of justice that people have regarding aspects related to processes, distributions, relationships, and information. Under the label of ‘organizational justice’, perceptions of justice from organizational participants have been rated to decide whether the organization or the manager is fair or not. Organizational justice is formed by four justice types: distributive, procedural, informational, and interpersonal, depending on the aspect of perceptions people focus on. Distributive justice refers to the perception of what people receive, as rewards or resources, tangible or intangible. Procedural justice asks about the perceptions regarding the processes to arrive at any decision that people consider may generate some effect upon them. Informational justice refers to the fairness people perceive about the information a manager shares and delivers in the process of deciding. And interpersonal justice measures fairness of the treatment received by a decision-maker in decision processes that affect the recipient. Research has linked organizational justice and close constructs to many desired performance effects in organizations [12]. Recently in the actual investigations around sharing economy, organizational justice has been found as a requisite to build socially sustainable organizations over time, as it serves as an antecedent of knowledge sharing among organizational participants [13].

The entire field of organizational justice has usually evolved through empirical enquiry. Researchers have studied perceptions and how people react to these aspects of distributions, procedures, information, and interpersonal treatment. The underpinning of this reasoning relies on Adams’ equity theory [14]. Adam’s equity theory states that people compare their own ratios of output and input with the same ratios of others, which is similar to Aristotle’s concept of merit. Of course, there are other underlying mechanisms for people to judge fairness, in which people assess what they actually receive compared to what they think they “ought to” receive [15]. In this last one, some ethical standards about what should be are necessary. In this respect the worries are not about deciding between ethical standards and which are sounder, but in understanding that people when assessing fairness have implicit in mind some ethical standards. Both approaches are based on psychology, and some way of looking at justice as a subjective aspect of people’s thinking, without caring about which should be the good justice for everyone, or the good thinking of justice or ways to compare which thinking of justice is better suited than the other to generate the good.

But some questions still remain unanswered, as, for instance, are some concepts of justice better than others? Is there a way to decide which justice is better suited to generate the good? And this is the type of questions answered by ethic theories. Ethics is concerned about what is good and what is better. The ethical individual reasoning, subjective in nature, that makes people assess something to be fair or not, treats justice as a black box, subjective and personal, and does not care about the actual black box, containing some specific justice definition or standards. In fact, it presumes all individual standards of justice are equally good. But, here is when ethical reasoning enters into the picture to underline that some justice norms are a central requirement to create good societies for everyone, and therefore, justice is the foundation for a correct functioning of society that aims at providing high levels of happiness and common good to its constituent members [16, 17].

Therefore, once entering into the philosophy and ethical domains, some concepts like justice norms and justice standards appear to be defined, and along with them, specific ways to reason which requirements are needed to generate the best conditions for justice, that in turn may be the foundations of the good and the better.

There is an ongoing discussion of whether justice is a fact or more an ideal to be attained, so a desirable value. And in fact, justice may be, to some extent, both. Of course, justice is not only what people thinks is just, as people can be misled. But justice is also not only what some ethical standards think it is.

Both aspects of justice are important and correspond to different concerns. Normative research remains into the “ought to” type of reasoning that does not attempt to discover at all “what actually is”. The same with looking at what people perceive as just. This can indicate whether some justice is in place and, of course, can be an indicator of what people think regarding justice, but these perceptions cannot be a guide to generate norms of what “ought to be” and following implementations. All of these have their own role, as perceptions of justice indicate the actual state of justice implementation and justice while the “ought to be” justice should guide what reasonably people should follow to achieve a long-run just result in their interactions.

But people’s actual subjective thinking of what ought to be is also linked to the ethical reasoning of what ought to be. Some research has focused on interconnecting both types of queries, to find out whether people’s concepts of justice are actually aligned to the notions ethicists claim justice to be. From existing data, we know that favorability tend to be correlated to positive perceptions of justice of actual outcomes received, meaning that we believed we deserve (and find it just), the outputs that favor us. In specific distributions, people tend to value just what they positively receive (as they believe they deserve it) and unjust when they are not receiving anything (as they think they deserve it), even if in the normative sense it does not follow justice requirements. This is even stronger in some real and actual situations and not some hypothetical ones. In the hypothetical people tend to be more prompt to actually match what they think about justice ought to be and what theories reason justice ought to be.

Both types of justice, perceptions of fairness and justice as a virtue or ideal for systems and decision-making processes, have some connections and attempts of integration. In fact, moral motives are a very strong psychological motivation to care about justice, even if there is nothing to gain personally in this specific caring. It means people see justice as a moral value and not just a means to achieve selfish ends. Some research asks respondents how they perceive the work behavior “ought to be” and how they perceive “actually is.” And surprisingly these are not that far away. This means that, first, as my actual subjective “ought” thinking is not far from the philosophical normative theories, and as I try to be consistent with this, in the end what I do tends to get closer to what I should do, over time. And when asked about perceptions I tend to be consistent on what I think it should be and what I think it actually is regarding what it should be.

Then not all organizational groups think the same; for instance managers think they are implementing justice following this “ought to be” standard, whereas the rest of the organization thinks differently, as they report managers acted differently from what they ought to [18]. All stated before is important, as understanding normative theories people adhere to can improve predictions. And for ethicists, empirical studies about perceptions can also indicate the behavioral and perceptual constraints of justice desired ideals, and how far or close to the standards people think the others and themselves are.

But we should also be aware that differences exist even if researchers come from a similar background. Justice studied from the perspective of organizational justice differs from justice studied from a behavioral sciences perspective. Organizational justice research has assumed individuals are motivated for selfish reasons and by social identities, while behavioral ethics has usually focused on internalized moral convictions and duties and on moral identities. So, justice has different underlying concepts even if the mainstream approach is from a psychological background and through empirical studies. Then it seems justice take several approaches because the questions to answer differ and the visions of humans differ as well.

There is also a paper summarizing justice concepts and providing a useful way to integrating inquiries in a meaningful way in organizational contexts [19]. In this it is explained that a full concept of justice across disciplines would be difficult to incorporate and arrive at. But, instead, we should be aware of the matters and questions around justice that are responded following each approach.

Investigation of perceptions alone cannot replace reflection and discussion about justice. Many situations in organizations reflect this. Imagine the case of an organization in which employees experience a really bad environment, even if they are given voice to express it. And this given voice has not positively converted into a real change. When they are asked about “procedural justice” they rate it high. However procedural justice is upheld, the voice they are actually given has no real impact on their actual working conditions. So, managing group’s perceptions of justice without addressing real issues of power distribution and safety at the workplace could be judged as unjust from a beholder perspective or from an ethical point of view, even if the worker is rating justice high.

This late example does not mean that perceptions of justice are not important, if correctly managed for the good purposes and for the change towards a greater justice environment. In fact, if we just follow a normative approach without caring for actual perceptions about justice, this dogmatic approach can generate unhappiness in case people’s preferences are not incorporated to some extent, or people feel they are not capable to follow the normative approach in place. And moreover, some existing normative approaches are a close system and are simply obsolete. Many normative systems are closer to societal norms at some past point in time rather than being a truly humanistic approach for promoting the rights of all. It should be important to create a paved way to change the current norms for some better ones, in all instances. Discussions in normative approaches cannot be avoided in any instance. Even claiming around legality, when legal norms are outdated, is even worse, as in some moments in time, some norms in institutions followed strictly the legality and were totally unjust (i.e. apartheid). So thankfully, societies evolve in terms of updating their normative and legal systems to improve justice over time. Another aspect in terms of normative approaches is that in some specific instances, competing normative approaches exist when solving specific ethical dilemmas, and so, it is not clear which is the best one to choose.

In summary, justice has been studied as a social norm in sociology; as a minimum set of rights or duties in law; as a perception of specific instances regarding distributions, procedures, information, and treatment; in organizational justice; and as a moral motivation in behavioral sciences. All are valid and useful concepts around justice worth taking into account, even if some are invalid or useless because they have become outdated or show incompatible visions of human beings.

With respect to the questions responded and the methods used, organizational justice is concerned with the perceptions of justice from the individual point of view, the group point of view, or the beholder point of view, as a psychological construct. Organizational justice addresses questions regarding why people care about justice, how people judge justice, and which are the effects of justice or injustice perceptions.

The questions aimed at being responded in normative justice theories are concerned with justice as an ideal, precisely trying to figure out what a just society is and should be and what is and should be a just person. Responding to these questions could characterize how should be individuals and socities as to be considered just. Or similarly, knowing the requirements for just leaders, companies and society. This then responds also to the additional query of why justice is important. There are connections between both, as it is presumed that in good (therefore just) societies or organizations, people can develop also personal justice skills and so become fairer over time.

Usually the concepts of justice useful in management implementation are the ones concerned with design of systems and their use, which take a normative approach, and also measuring perceptions of actual justice, once these systems are used and implemented. This is nicely explained in this research that proposes a model of formal and informal justice and how when they are present, generate a greater alignment between the interests of stakeholders, and then build the way to increase justice perceptions of individuals under those systems [20].

In the next section I am incorporating practical wisdom as the required virtue of knowledge that Aristotle incorporates as crucial for organizational decision-makers. This is also a point to be made as practical wisdom is a necessary requirement for taking commonsensical decisions in specific organizational situations and arrangements and so, part of situational knowledge that a decision maker faces when deciding over anything today that has huge consequences in the long term.

2.3 The role of practical wisdom

It is important to notice that apart from justice, there is another virtue (the main virtue of knowledge, in Aristotelian terms) that has been considered important in managerial decision-making, and this is practical wisdom [21]. Even if some research has given more importance to this virtue than to justice, in fact there are virtues of a different type. Justice is a moral virtue concerned with what is a good objective to pursue, so it comes first. And afterwards, practical wisdom is the process of implementing that objective to improve the chances of success. Also, when there are several possible good (so just) objectives to choose among, practical wisdom assists to determine which is (or are) the best suited to prosper.

Thus, justice is a moral virtue, and therefore informs about which options are good, and practical wisdom is the virtue associated with the process of decision making; once good options (just options) are in place, practical wisdom is necessary for implementing them, so to build the process to be followed for that implementation. Therefore, practical wisdom is not really useful to discuss about the morality but helps to follow a rationalistic approach of implementing the good and just option in place, or to choose details to make proper just alternatives when several of them are available.

In short, justice is the main moral virtue that allows us to have sound objectives in organizations. Once there are alternatives that accomplish justice requirements, situational knowledge, specific for real life implementation, requires managers with practical wisdom. This practical wisdom is the virtue associated with the practical knowledge to apply specific courses of action that have proven possible in specific situations. This process is clearly explained in this article and proves to be generating learning processes of acquiring practical wisdom over time [22]. It seems that as practical wisdom and justice, put together, help to align people’s goals with the organization, this can also be seen as a limit for the need of trust in terms of specific transactions, as the general trust on the virtues of the decision maker, which in turn increases this alignment over time, goes for a lesser need of specific transactional trust.

But, it is the combination of practical wisdom as the principal virtue of situational knowledge, and justice as the moral prevalent virtue in social systems and interpersonal relationships for the good, that makes the organization fulfill its endeavor and be socially and economically sustainable over time [23].

2.4 Justice and trust virtuous circle in management

From the trust literature and the seminal ethical literature, we have arrived at the conclusion that justice is a generator of trustworthiness, and therefore potential trust. Justice in this vein is one of the components that are incorporated into the assessment of trustworthiness of the trustee from the trustor’s point of view.

Trust is not a considered a virtue, but it is considered an ethical fundamental concept, that is referred as an intangible asset that serves as a glue to increase efficiency of human interaction at the market and organizational level. Also, trust is a result of trustworthiness evaluation, meaning that, to trust someone, first the trustor needs to evaluate whether the trustee deserves to be trusted or not. As a characteristic of the trustee, trustworthiness also has many ethical elements, mainly involving justice and fairness. Then, trustor should judge the trustee fair to enter into the trusting process; otherwise it is difficult that trust could be built over time. And this can happen in both voluntary and forced trust events in which risk is involved and interdependence exists between the trustor and the trustee.

Justice as a requisite then is an antecedent of trustworthiness and also an antecedent of systems requisites to generate future fairness perceptions, that are also necessary to generate future trustworthiness, once some trust interaction has started. Therefore, justice is both an antecedent and a consequence of trust in someone.

In organizations justice has been considered as a construct based on perceptions, on the form of organizational justice that is the aggregation of perceptions of how fair are procedures, distributions, relationships, and information. It has also been studied as being part of formal systems and system’s use (what has been labeled as informal systems). Following this late definition, a seminal paper in the literature of management control systems and justice has considered that there are two types of justice, the formal justice (attached to system design) and informal justice (attached to system use or managerial use of the system, which is the same). Then informal justice is linked to the informal organization and formal justice to the formal organization. Both formal and informal justice have a positive effect over goal congruence, meaning that people that perceive the system and its use are fair tend to increase their alignment between their individual goals and organizational goals over time. So, justice tends to increase the alignment of interests between the institutions and participants [11]. Even if in terms of justice, it seems that informal justice has more potential to actually change the system and generate greater improvements over time rather than formal justice alone, the use following justice criteria seems more appropriate to learn and suggest improvements [24]. So, the ethical or virtuous use of the systems (which mainly should be just) generates greater alignment of goals and greater overall future fairness compared to the mere implementation of formal justice in a mechanical way.

Additional research on the matter uses this underlying relationship between justice and goal congruence, and incorporates also the trust in managers variable [25]. In this model, ex-ante justice (formal and informal), trust in managers, and interest alignment between participants are shown to generate future perceptions of justice over time. This means that when managers use the system following justice requirements, people trust them, their interests are more aligned with the organization, and finally justice is generated also in the long term. This is creating a virtuous cycle, as once this starts, this new justice perceptions reinforce future trust generation, helping to improve the system and its use over time.

Goal congruence or interest alignment on its own, when high also makes people increase fairness perceptions, meaning that it increases how they perceive the justice in all organizational dimensions (distributions, processes, information, and personal treatment). Then, once informal justice is in place, it generates a positive effect trusting managers, and this in turn has a positive effect in future perceptions of fairness that following this virtuous circle feeds again the process of trust generation. The previous virtuous circle, once in place reinforces the alignment between the interests of the organization and stakeholders, increasing the willingness of a shared meaningful purpose.

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3. Conclusions

Trust is the most desired intangible to be generated in economic exchanges. Trust functions to bring ethics into the market interactions and into the organizational relationships, which is considered the best way to increase efficiency. The big characteristic of trust is that it increments efficiency but in nature is a moral aspect that cannot be traded. In fact, thinking of its tradability makes it clear that we are trading something that we can assure is not trust at all [1]. So, ethics should be incorporated into this with a genuine interest for the good, and when doing so, it is trust, this ethical intangible, that eventually makes the economic world function smoothly and with ease.

But trust needs to be generated, and fundamentally foundations of trust rely on how trust is generated and so, how one party (trustor) makes a specific assessment to what extent the other party (trustee) deserves to be trusted or not. Fundamentally this assessment is based on ability, integrity. and benevolence, psychological characteristics that are found also in the Aristotelian Rhetoric, being there labeled intelligence, character, and goodwill.

The first (ability) is more linked to technical skills and expertise (I am trusting your ability to perform efficiently and effectively some specific tasks and duties), but the other two (character and goodwill) are mainly linked to building the specific virtuous aspects of managers. And which are the aspects of managers that generate trust? Managers generate trust when acting according to what they say and based on a system of values that incorporate virtues, justice being the mother of moral virtues, central to generate the good in organizations. Therefore, managers generate trust when the ones that are affected by their decisions judge they are going to act according to justice for the good of all, not for selfish interests. This good, then, can be judged by the ones that have trusted managers, in terms of justice perceptions related to processes, information, relationships, and outcomes. Once these perceptions are present can feed new trust interactions, which in turn affect future generation of trust and trustworthiness. Justice is an antecedent of trustworthiness, and future justice is an antecedent of future trustworthiness. Thus, the loop generated is clear, and the virtuous circle is clear too. Both trust and justice are crucial ethical dimensions in organizational relationships to serve as the long-term fuel to build social and economic sustainable institutions. Trust cannot be generated out of the blue; instead it needs strong justice implementation and performance to start being generated. Once the virtuous circle is implemented it should be fueled over time, as learning to be fairer is a path of improving character and goodwill of managers that never ends. Ethical standards and justice standards evolve, and managers should evolve too. This learning is necessary to allow trust to increase, as if the process of increasing trust is not in place the process of destroying has, for sure, started.

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Acknowledgments

I acknowledge the invaluable help of my colleagues at Open University of Catalonia and IESE Business School for our discussions on the topics of this chapter, mainly Josep Maria Rosanas, my advisor and colleague with whom I have shared uncountable hours of conversation and fruitful debates.

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Written By

Natàlia Cugueró-Escofet

Submitted: November 19th, 2021 Reviewed: February 4th, 2022 Published: April 2nd, 2022