Trust is…seen as an economic lubricant, reducing the cost of transactions, enabling new forms of cooperation and generally furthering business activities, employment and prosperity.
This chapter will briefly analyse the role of reputation in competitiveness and its main contributory factors. A firm can develop reputation by providing value to the buyers of its products. If a firm in a particular industry of a country develops a favourable reputation it will be beneficial to the whole industry and country because it involves dynamic external economies of reputation, contributing to the competitiveness of not only a firm but also the related country, as described in Chapter 5. The quality of products and after-sale services are important factors in creating and maintaining a favourable reputation.
The reputation of a firm is made by a combination of ‘image’ and ‘identity’. The way a firm is viewed and identified by customers, stakeholders and its employees is an important factor in its competitiveness. Such perceptions are influenced, to a large extent, by the development of trust between the firm and these customers, stakeholders and employees and thus there is an interrelation between trust as social capital and reputation (Chang et al. 2006). Trust among employees themselves and between the firm and government authorities is also important to reputation and sociopolitical and cultural factors play a significant part in the development of trust among various actors and agencies involved in the interrelations of firms with others, particularly in their relations with government authorities.