April 16, 2008

Matters of Trust Play Out on the Global Stage

Why do Americans and Japanese show different levels of trust? Ko Kuwabara examines how different cultures build relationships and social networks.


In today’s increasingly globalized world, understanding differences in customs, mannerisms and the way relationships are built can make or break international business dealings. For that reason, says Professor Ko Kuwabara, it is important to understand how trust develops in exchange relations.

His new research — conducted with Robb Willer of the University of California, Berkeley; Michael Macy of Cornell University; and Rie Mashima, Shigeru Terai and Toshio Yamagishi of Hokkaido University — highlights the role of social networks in explaining the differences in trust levels between Japanese and Americans.

“The popular view is that Japanese society is very high in trust — it is a safe country with low crime, a high level of social order and an emphasis on relational obligations,” Kuwabara says. “This is in contrast with the perception of the United States as an individualistic culture that values self-interest. However, the surprising finding is that if you carefully measure trust in controlled studies, Americans tend to report higher levels of trust in strangers than Japanese.”

What is Kuwabara’s explanation for this paradox? “Trust is like a muscle: you use it or you lose it. That is, trust is less likely to develop in societies where people are trustworthy.” In Japan, the cultural value system stresses building durable relationships — for example, lifelong employment with one company was very common until recently, and Japanese people tend to interact with people within denser networks with more limited exposure to outsiders. “The United States, on the other hand, is characterized by higher mobility — people move around and switch jobs a lot more — which requires Americans to develop greater trust in strangers,” Kuwabara says. This implies that Japanese tend to build on existing relationships to sustain trust and that Americans develop trust to explore opportunities for new relationships.

To test their theories on what drives how trusting and trustworthy Japanese and Americans are, the researchers conducted a variation of the Trust Game. The game is a commonly used research tool in which participants are given money and must decide how much to keep and how much to entrust to another participant who may or may not return the money. For example, players may be given $50; any portion of it that they decide to keep becomes their personal profit for that round. If they entrust $20 to another player, the amount is tripled (it’s now worth $60) and given to the receiver, who then decides how much to keep and how much to send back.

The dilemma for the truster is that entrusting money creates a surplus for both parties, but the action is rational only if the receiver returns more than the amount entrusted. This tension between individual self-interest and the mutual beneficial exchange for both parties, Kuwabara explains, makes this game an ideal way to study how people make trust decisions in a very controlled environment.

In this study, participants played the game on the Internet, which allowed real-time interaction between players from the two countries. Participants could choose with whom to interact, so they could build networks by playing repeatedly with the same players or transact with different players each time. 

This ability to build exchange relationships was a key factor behind the central result of the study. The researchers found that the Japanese players were more trustworthy (that is, they were more likely to return the money entrusted to them) than the American players, but that difference was due to the exchange relationships built by the Japanese players.

“The difference in levels of trustworthiness can be explained in terms of the kind of relationships Japanese and Americans players built during the game,” Kuwabara says. “Americans chose to ‘play the field’ and transact with multiple players, while Japanese were more likely to commit to exchanging with fewer people, which reduced untrustworthy behavior within these relationships.” On the other hand, the Japanese players were more likely than Americans to trust and cooperate with their partners, but only to the extent that they were in durable relationships. Outside of these relationships, Kuwabara explains, they were no more trusting or trustworthy than their American counterparts.   

The researchers’ findings reinforce the widespread perception that Japan is a more collectivistic society with higher levels of trust and prosocial behavior than are found the United States. But more important, the research points to the way each culture develops social networks as the root of these differences.

“Americans doing business in Japan need to understand the importance of concrete social relations when dealing with Japanese people,” Kuwabara says. “While Americans think of networking as a chance to build their Rolodex, Japanese people use social networks to develop deeper trust within close relationships.”

 

Read More

Kuwabara, Ko, Robb Willer, Michael Macy, Rie Mashima, Shigeru Terai and Toshio Yamagishi. “Culture, Identity and Structure in Social Exchange: A Web-based Trust Experiment in the United States and Japan.” Social Psychology Quarterly 70, no. 4 (2007): 461–79.

Ko Kuwabara is assistant professor of management at Columbia Business School.

Read the Research

Ko Kuwabara, Robb Willer, Michael Macy, Rie Mashima, Shigeru Terai, Toshio Yamagishi

"Culture, Identity, and Structure in Social Exchange: A Web-based Trust Experiment in the United States and Japan"

View abstract/citation 

Have You Read Columbia Business?

Columbia Business School’s alumni magazine connects alumni with each other and the School; celebrates alumni milestones and accomplishments; and chronicles the impact of Columbia Business School alumni, faculty members, and students on the global business landscape.

Read Columbia Business>