The impact of perceived due care on trustworthiness and free market support in the Dutch banking sector

Johan Graafland and Eefje de Gelder

Business Ethics, the Environment & Responsibility, 2023, vol. 32, issue 1, 384-400

Abstract: Public interest theory has argued that lack of trust in companies may reduce support for free markets. The literature did not address, however, the underlying causes of lack of trust and support of free markets in customer’s perceptions of virtuousness in economic actors. Combining public interest theory with virtue theory and stakeholder trust theory of organizations, we surmise that if customers perceive that employees of companies have insufficient due care for customers’ interests, the perceived trustworthiness of those companies will be low. Customers will then be more inclined to support government regulation in that particular sector or industry. In this paper, we test the relevance of these relationships for the banking sector using a representative sample of 5844 respondents in the Netherlands. We find that if bankers are perceived as persistent in their due care for customers, this encourages a perception that banks are trustworthy, which in turn induces support for free markets in banking and reduces the call for government regulation. An important management implication of our research is that banks should foster due care by means of employee‐virtue training programs to enhance trust, thus generating more support for free market operations in the banking sector.

Date: 2023
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https://doi.org/10.1111/beer.12448

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Persistent link: https://EconPapers.repec.org/RePEc:wly:buseth:v:32:y:2023:i:1:p:384-400

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