Attending to the importance of context: Trust as a process in global microfinance

ABSTRACT

Previous research has shown that trust is often not a given but grows over time, in a process including various steps of trust-building. In a similar and interrelated vein, the context within which trust emerges is not a given but is continuously processed by the actors involved. The paper explores this understudied research area, namely actors’ continuous efforts in shaping the context of (their) trust (in others), and identifies three basic patterns of contextualisation. These are developed from empirical findings from the case of global microfinance. In particular, fund managers’ various trust strategies and associated contextualisation practices, which help them to determine the trustworthiness of a potential or already existing investee, are investigated. Against this backdrop, the paper confirms, refines and extends existing process theories of trust and, in particular, existing research into ‘active trust’. A key contribution consists of a new concept of active trust, for which the term ‘synthesised trustworthiness’ is coined.

KEYWORDS:

• Trust
• process
• culture
• international business
• finance

ACTION EDITOR:

• Guido Möllering

Acknowledgements

I would like to thank the two anonymous reviewers and the editor of JTR for their many useful comments to the paper, including earlier versions. I am also grateful for support by the following people: Markus Arnold, Sophia Cramer, Larissa Fischer, Martina Merz, Menisha Patel, Sophie Ritson, Helene Sorgner, Jakob Tanner, and Markus Tumeltshammer.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes on contributor

Barbara Grimpe is a sociologist conducting qualitative research into a variety of domains and sub-disciplines such as Science & Technology Studies, Cultural Sociology and ‘responsible’ finance, research and innovation. Earlier ethnographic work concerned the public debt management of nation states.

Notes

1 Most of microfinance investments are still made through loans, but other means of funding exist as well, for instance, equity investments.

2 There are even more trust strategies identified by other authors such as, creating trust within small groups (Jagd & Fuglsang, 2016b, p. 10) that are relevant in the case of microfinance. However, I have been selective in order to keep the paper focused. After all, the point is not to identify all relevant trust strategies in the empirical case but to focus on the ways in which trust strategies are interrelated and form specific patterns of contextualisation. The major aim is a conceptual contribution, not empirical completeness.

3 The firms’ sizes and their portfolios vary over time, and I am deliberately vague in order to preserve anonymity.

4 This is not an exhaustive list of relevant clusters of typical signs, and I shall also not go into the depths of each of these clusters, but just ‘open up’ the financial indicators’ cluster to some extent (see section 4.2.2). As I said previously, not empirical completeness but conceptual reconsiderations are the focus of this paper.

5 Many firms manage more than one fund, which may yield different financial returns.

Additional information

Funding

This work was supported by Swiss National Science Foundation under Grant [124534].