An Empirical Examination of Organisational Trust Recovery: Influences and Implications

• Author: Donald J. Lund,Husni Kharouf
• Published date: 01 December 2019
• DOI: http://doi.org/10.1111/emre.12309
• Date: 01 December 2019

An Empirical Examination of Organisational

Trust Recovery: Influences and Implications

HUSNI KHAROUF

1

and DONALD J. LUND

2

1

School of Marketing and Management, Coventry University, Coventry, UK

2

Marketing, ID and Economics, The University of Alabama at Birmingham, Birmingham, AL, USA

Building trustbetween organizations andtheir customers has attractedconsiderable academic researchattention.

However, researchinto the trust recovery process,following a trust violation has occurred is limited in comparison.

This study investigates the trust recovery process by examining six recovery approaches which organizations can

employ to repair trust.Six trust recovery approaches were firstexamined using canonical correlation.Our research

investigatesthe impact of these six trust recoveryapproaches followingtwo different types (integrityand competence)

of trust violations. We assessed the influence of these approacheson customer loyalty, satisfaction and perceptionsof

organizationaltrustworthiness using structural equation modelling. Results suggest that apology and denial are the

most effectiveapproaches to repairing trust,and that the effect of these recoveryapproaches on customer satisfaction

and loyalty are med iated by organizatio nal trustworthi ness.

Keywords: Trust repair; competence recovery; integrity recovery; trust violation; trustworthiness

Introduction

Building and maintaining strong relationships between

organizations and their customers is a common strategy

employed bysellers to improve firm performance(Martin,

2018). Trust is a critical component of any relationship

(Colquitt et al., 2007; Lewicki and Brinsfield, 2017;

Stevens et al., 2018). Most of the extant literature

investigates the initial development of trust in a new

relationship or building trust during an ongoing

relationship, withlittle focus on how to recover trust once

it has been broken (Haselhuhn et al.,2010).Relationships

between firms and customers are often difficult to build,

and are likely even more challenging to rebuild following

a trust violation (Child and Rodrigues, 2004; Simsarian

Webber et al., 2012). For organizations to maintain

long-term relationships with customers, an understanding

of what actions are most effective at repairing tru st is

required (Bozic, 2017). Therefore, organizations should

have a trust recovery strategy in place to enable them to

respond quickly and appropriately to trust violations if

they occur.

There are several views about how organizations can

recover broken trust,and some scholars question whether

trust recovery is actually possible. Kramer and Lewicki

(2010) Schweitzer et al. (2006) and Tomlinsonand Mayer

(2009) argue that thenature of the violation and customer

disposition andpropensity to forgive are directly linkedto

the likelihood of recovery. Bachmann et al. (2015)

criticize the trust repair literature and claim it mainly

focuses on the microlevel and argue that there is no single

mechanism that can be relied upon to repair trust. Others

proposed multiple paths to organizational trust repair.

For example, Grover et al. (2014) explore trust violation

and restoration from leadership perspective, see also

(Bozic, 2017). Moreover, Kim et al., (2009) argue that

trust recovery depends on the nature of the violation, that

is, competence or integrity-based, and customers form

negative and positive responses accordingly. They find

that customers are less likely to forgive integrity-based

violations.

Although the concept of trust has been conceptualized

extensively in the extant literature, academic studies

focusing on trust repair have generally categorized trust

violations,and the resulting repair efforts,into two distinct

categories: competence-based and integrity-based trust

violations(see literature review in Table 1).This is largely

based on the fact that ‘numerous researchers have

observed that competence and integrity represent two of

the most important qualities for determining

Correspondence: Husni Kharouf, Faculty of Business, Environment

and Society, Coventry University, Priory Street, WMB25 Coventry,

UK, Tel: ++44 (0) 24 7765 9438; Fax: +44 (0)24 7688 8400.

E-mail: h.kharouf@coventry.ac.uk

©2018 European Academy of Management

DOI: 10.1111/emre.12309

European Management Review, Vol. 16, –, (2019)

1115 1128