Trust and Reputation of public organisations: Some Foundations of Social Capital in Finland2004 ECSR Summer School on Social CapitalTrento, Italy, August 2004

Vilma Luoma-aho(vilma.luoma-aho@jyu.fi)Organisational Communication and PR Department of Communication University of Jyväskylä, Finland

Key concepts

Values, normsValues, norms

TrustTrust Repu-tationRepu-tation

ORGANISATION

S O C I A L C A P I T A L

EnvironmentThreats & opportunities

Change & stability

Point of departure • The authorities’ ability to communicate and trust in their word are important parts of functional democracy and add to social capital (Fukuyama 1995, Sztompka 1997, Lehtonen 2001)

• The quality of public organisations and the trustworthiness government have emerged as central factors behind the economic growth and the wellbeing of a nation (Rodrik 1999, Olson 1996, North 1993, & La Porta 1999 in Rothstein 2003)

Point of departure• The legitimacy, welfare and effectiveness of an organisation is based on stakeholder trust and reputation Should they weaken, the organisation would become handicapped.

• Stakeholder trust and reputation are important assets to measure.

Research questions1) “What kind of experiences do the

frequent stakeholders have of public organisations?”

2) “What role, if any, do trust and reputation play in the relationship between the public organisation and its

frequent stakeholders?

Finland• small country in terms of population (5 million)• a leader in technological development (Nokia, Kone & Linux Thorwald)• Finnish public welfare system is one of the most efficient and expensive in the world• Finland has been ranked as the least corrupt country in the world• by international standards has repeatedly high levels of social capital

Finnish Social Capital • The traditional thinking of social capital is that where the welfare state is strong, social capital is limited, and vice versa. • In Finland and Sweden the measured amount of trust and social capital remain high despite the strong welfare state • Trustworthy public organisations may radiate trust in society and even produce social capital as trust networks: well designed universal welfare state institutions and public organisations can help build social capital, not destroy.

The research process

But what do the stakeholders of Finnish public organisations say?

• This paper reports a pilot part of a larger research process of 19 Finnish public organisations• The pilot organisation: 1 Finnish authority organisation • Main focus on the stakeholder assessments: reputation and trust.

The research process

1. Pilot interviews (5 directors of the pilot organisation) for target reputation (WINTER 2001)2. Desk research and formation of the pilot questionnaire (WINTER 2001)3. Testing of the pilot stakeholder questionnaire on 500 frequent stakeholders (SPRING 2002)4. Pilot stakeholder questionnaire and analysis (SPRING 2002)

Target reputationMentioned attribute Number of times the

same attribute was mentioned during the 5 interviews

Professional, expert 34 Safety 16 Regulatory authority 14 International 11 Open 10 Co-operative 10 Trustworthy 9 Esteemed 9 Customer-oriented 8 Efficient 7 Ability to predict 6 Well-known 5 Credible 4 Expensive 3 Bureaucratic 3 Courageous 3 Impartial 3 Flexible 2

Questionnaire

Chosen stakeholders

• The stakeholders chosen were all frequent contacts of the pilot organisation, as only recurring relationships enable judging of trustworthiness and reputation (Bromley 1993, Rothstein 2003) • Those who deal with the case organisation frequently are the ones who benefit most from a repeatable stakeholder questionnaire

Returns

• 521 questionnaires were sent • The return rate was 60 %

high for a reputation questionnaire • The measured reputation matched the target reputation quite well

Professional, trusted butbureaucratic

Reputational factors

Five factors were found from the data: The first factor overpowered the rest 1. Trusted

2. Professional 3. Active 4. Customer Server 5. Authority

Factor means

Altogether five factors were found

1. Trusted 2. Professional 3. Active 4. Customer Server 5. Authority

The Head-model

Some correlations and comparisons

• The only factor without statistically significant differences between the stakeholder groups was the factor Trusted All stakeholders were quite unanimous about the trustworthiness of the pilot organisation• Those heavier regulated were more critical of the professionalism of the pilot organisation

Conclusion

• Professionalism and Trust received the highest values from all stakeholders

This could be seen as a step toward confirming the importance of trust in the relationship between the public organisation and its stakeholders

• Do the trusted public organisations add to social capital in Finland? • Further research on the topic is on the way

Literature • Bromley, D. B. (1993): Reputation, Image and Impression Management. Wiley: West Sussex.• Eurobarometer (2004): Eurobarometer 60. Public opinion in the European Union. Autumn 2003. [online] [cited 18.4.2004].<URL:http://europa.eu.int/comm/public_opinion/archives/eb/eb60/eb60_rapport_standard_en.pdf>• Fukuyama, F. (1995): Trust: The Social Virtues and the Creation of Prosperity. Free Press: New York.• Lehtonen, J. (2001): Yhteisöviestinnän suuntauksia. Unpublished teaching material of the Organizational Communication and PR, University of Jyväskylä.• Rothstein, B. (2003): Sociala fällor och tillitens problem. SNS Förlag: Stockholm.• Sztompka, P. (1997): Trust, Distrust and the Pradox of Democracy. Wissenschaftszentrum Berlin Für Sozialforschung. [online] [cited 20.10.2003]. <URL: http://skylla.wz-berlin.de/pdf/1997/p97-003.pdf> • Transparancy International Corruption Perceptions Index (2003): [online] [cited 8.4.2004]. <URL: http://www.transparency.org/cpi/2003/cpi2003.en.html>