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Trust in the context of business and entrepreneurship can be defined is the perception of the likelihood that other agents and stakeholders will behave in a way that is expected and expressed. Similarly to how trust influences personal and social relationships with others, it also has an impact on economic interaction. Why has trust been so intrinsically linked to entrepreneurship? Likely because entrepreneurs operate in conditions of uncertainty.
Entrepreneurs have to gain the trust of the market and users of its final good or service, who are unable to obtain the full knowledge of what is being introduced to the market. There are also key trust-based relationships with partners, employees, and suppliers to fulfill obligations, vital to a smooth function any business enterprise as explored below on the case study of Amul. Trust should be viewed as an essential element in a wider-set of entrepreneurship-supporting values.
Amul’s success is fully built on trust both within and from the outside in its complex system of dairy production for the country. First, the company maintains the trust of the rural farmers which sell their product to the company. Amul fills a critical institutional void by connecting decentralized farmers with consumers. Farmers trust in the transaction platform, knowing that they receive a fair price for their goods and efforts.
Meanwhile, on the demand side, Amul emphasizes consumer trust by being an enhancer of credibility of the milk quality, ensuring that it is properly processed and safe for consumption in its various dairy products. Amula also has the trust of the government, which although democratic, has become significantly centralized under Prime Minister Modi. The company and its founder develop key relationships with the government in support of its mission of alleviating food insecurity through dairy products while being a successful business.
At all levels of operations, Amul has established trust-based relationships, without which it would not experience such astounding popularity and success. People realize this, which is why Amul had become a barometer of public opinion of sort and an innovative experiment in collective trust in an entrepreneurial idea. Should Amul intentionally abuse the trust placed into it, its whole system begins to collapse. Similarly with BRAC in Bangladesh, where a private organization has taken on many roles of incompetent government agencies, filling an institutional void. Nevertheless, the entrepreneurial effort requires public trust to be effective in its efforts, and that trust is difficult to both obtain and maintain as a private organization due to the pro-profit nature of any business which commonly creates mistrust in the general population.
Trust is potentially one of the most powerful tools for an entrepreneur to utilize, both insider and outside their realm of control. In developing countries such as India discussed in this module, there are often institutional gaps, while legal, regulatory, and social institutions are not well-established. Entrepreneurships have to take on the responsibility themselves, by ensuring high quality of product such as Amul, competent organizational capacity such as BRIC, and other elements of security, reliability, and stability which are lacking. To some extent this may be applicable even in developed countries such as the US where people feel like they were let down.
Entrepreneurs, both for their economic success as well as the social good, begin rebuilding trust between consumers and a specific product/service or industry which can be necessary and helpful. Effective entrepreneurship builds extended trust aided by the approach to the business as well as using factors such as technology and transparency to distribute and enhance that level of trust with the public.
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