1
Dynamics of Trust in
Reputation Management
A Two-Fold Case Analysis of ING Group N.V.
A thesis presented to the Faculty of Governance and Global Affairs at Leiden
University (campus The Hague) in partial fulfillment of the requirements for the
degree of Master of Science in Crisis and Security Management
Author: J.M. Vivié
Student number: S1909940
Word count: 23345 (excluding references, appendix and bibliography)
25742 (including references, appendix and bibliography) Number of pages: 75
Thesis supervisor: Dr. Jaap Reijling
Second reader: Dr. Sanneke Kuipers
2
3
| Abstract
This thesis presents an analysis of two crises that ING Group N.V. faced in 2018. Specifically, it looks at how these crises affected the organization’s reputation, with the latter defined as network trust, and to what extent reputation management strategies have had an influence on this effect. Results of the analysis indicate that stakeholder trust in ING was affected but that reputation management strategies of apology and regret, combined with a number of practical measures employed by ING, have proven moderately successful in restoring stakeholder trust, thereby protecting ING’s reputation.
4
“There is a time for many words, and there is also
a time for sleep”
Homer
These words by the fabled Greek poet Homer are some that will undoubtedly be honored in the weeks to come. Writing this thesis has been an inspiring and gratifying, but likewise arduous endeavor. I would like to present my appreciation to a number of people. Bas, thank you for the daily sparring sessions on the thesis process, a process that for both of us has now come to an end – I could not have done this without you. Jelleke, senior consultant at COT Institute for Safety Security and Crisis Management, thank you for stirring my interest in crisis communication – it remains remarkable how a simple anecdote planted the seed for what would ultimately become the topic of this thesis. My parents, thank you for sticking up with at times nearly endless cantankerous behavior when things were not working out as I had hoped, and for the sparring sessions we had on the topic of my thesis – your support was as invaluable as ever. Lastly, and with gratitude, I thank my supervisor, Dr. Jaap Reijling. Your in-depth and sensible feedback in both our meetings and in our digital correspondence, as well as the speed with which I received this, have proven absolutely invaluable in this process.
I further thank all those who have, in some way or another, contributed to my efforts in writing and finishing this thesis.
Jack Vivié
5
| Table of contents
1 | Introduction ... 6
1.1 Focus ... 6
1.2 Social and academic relevance ... 9
1.3 Brief case introduction ... 10
1.4 Structure ... 11
2 | Theoretical Framework ... 12
2.1 Crisis ... 12
2.2 Organizational reputation and trust ... 16
2.3 Protecting reputation ... 24
2.4 Conceptual model ... 29
3 | Research Design ... 35
3.1 Design of the study ... 35
3.2 Data collection ... 36
3.3 Data analysis ... 38
3.4 Reliability and validity ... 40
4 | Analysis ... 41
4.1 About ING ... 41
4.2 CEO pay rise and executive compensation ... 42
4.3 Money laundering affair ... 51
4.4 Conclusion ... 61
5 | Reflection ... 65
6 | Bibliography ………. ……..66
6
1 | Introduction
For many an institution or organization alike, reputation and the management thereof has been and is increasingly becoming a crucial and particularly essential element of core business. Reputations are considered a “valuable if intangible asset” (Coombs, 2007, p. 24): A positive reputation arguably increases the possibility and/or likelihood that citizens, customers or any stakeholder involve themselves with said institution or organization. Vis-à-vis, an unfavorable reputation may decrease this degree of involvement, possibly resulting in a plethora of negative consequences. A reputation, therefore, is as Coombs notes:“… an evaluation stakeholders make about an organization” based on upon direct and indirect interactions, in which “… positive interactions build favorable reputations while unpleasant interactions lead to unfavorable ones” (2007, p. 24).
Moreover, reputation and the management thereof could metaphorically translate to the maintaining of a bank or savings account, in which one has built up financial credit that can be accessed on a ‘rainy day’ in order to counter the effects of an unforeseen event. Likewise, if institutions, organizations or companies have progressively maintained and managed a (positive) reputation, they too have the ability to tap into such a hypothetical account in order to mitigate against the repercussions of an unforeseen event, issue or full-fledged crisis. The latter often exacts a degree of damage upon reputation and therefore nearly always robs organizations and companies of some of the reputational credit it has amassed (2007, p. 25). If one, like Coombs, posits the notion that “crisis management represents a set of factors designed to combat crises and to lessen the actual damage inflicted” (2007, p. 5), reputation management arguably embodies a key factor in crisis management.
1.1 Focus
The banking sector is but one of many business fields in which crisis- and reputation management is of great importance. This was exemplified during the period of economic decline in the late 2000s and early 2010s, otherwise dubbed the ‘Great Recession’, which wreaked havoc on the international financial market to a degree not seen since the ‘Great Depression’ of the 1930s. On a global scale, many banks and financial institutions needed assistance or all-out rescue by national governments through loans, financial waivers or other measures. Given that the financial backing that allows such measures by governments largely comes from capital gained through taxation, the crisis in the worldwide financial system
7
inevitably led to what is best described as an economic trauma for citizens and consumers. A sense of betrayal manifested: businesses and banks, and bankers in particular, had been “playing fast and loose with financial instruments that few seemed to understand” (Uslaner, 2010, p. 111), with all consequences as such. This financial turmoil has in turn led to a crisis of public confidence from which the financial and banking sector has considerable difficulty recovering. Although the origins of the financial turmoil can be traced back to the United States’ subprime mortgage crisis, the spillover effect on financial markets was global and had profound effects on the Dutch markets, where multiple financial institutions required backing from or all-out rescue by the Dutch government. Examples of financial institutions that needed such support include AEGON, SNS Reaal, ABN AMRO and ING, with ABN AMRO ultimately even ending up being nationalized. Public confidence in financial institutions in the Netherlands was significantly affected, and in 2016 the Dutch National Bank (hereinafter: DNB) reported that pre-crisis levels of public confidence have far from been attained, both in terms of confidence that consumers have in their own financial institution as well as in the sector as a whole (De Nederlandsche Bank, 2015, p. 13). Given that financial markets and financial institutions arguably thrive best under circumstances in which consumer confidence and trust is high, facilitating this confidence and trust and maintaining a strong, positive reputation is a priority for financial institutions (Coombs, 2006, p. 246). As noted prior, reputation management in the broader context of crisis management proves an important factor in contemporary business. This is further exemplified if one considers the number of reputation-damaging issues, events or crises that have manifested in the financial sector in the years following the financial crisis of the late 2000s and 2010s.1
The fact is that these issues and crises, with a potential to seriously damage reputations, have been prevalent. To name but a few recent international examples: the Libor scandal, in which numerous major global financial institutions, in which amongst others Barclays, Citigroup and JPMorgan Chase pleaded guilty to charges of manipulation of currency markets. Next, the Japanese Tibor affair, in which multiple Japanese banks stood accused of rigging lending rates and for operating as a cartel in doing so. Lastly, the Rabobank settling with the U.S. Justice Department on charges of knowingly laundering money for Mexican drug cartels. In the Netherlands, similar examples exist: accusations against institutions such as ING, Rabobank and ABN AMRO with regard to investing capital in businesses that are involved in
1
8
the often-detrimental palm oil industry. Next, investigations into the complicity of Dutch financial institutions in money laundering affairs related to Russian tax fraud. Moreover, the considerable public outcry and political pressure that ING faced after announcing it would raise the financial reward of its CEO by 50%, granting him a salary of over 3 million euros annually. This list of examples is incomplete, but shows the broad scope of issues and (reputational) crises such financial institutions face. It also provides a brief insight into how these institutions find themselves in a state of constant scrutiny: any (perceived) misstep or (slight) wrongdoing places them in a vulnerable spot and has the potential to strike a serious blow to reputations.
Ever since the financial crisis, financial institutions and their affairs have been under a magnifying glass, their every move questioned and scrutinized. In the Netherlands, one need only look at a variety of media to note that financial affairs rank high on socio-political agendas. As noted, levels of public confidence in financial institutions are nowhere near their pre-crisis levels, reputations have suffered and continue to suffer, and affairs or crises as mentioned before do not contribute to restoring previous states of affairs. It is therefore interesting to delve deeper into the practices that such institutions employ to mitigate against the adverse effects of incidents and crises, and to assess whether these have been effective in protecting from or in minimalizing reputational damage. In this thesis, ING Groep N.V. is considered as part of a broader network with stakeholders such as the government, society, supervisors and regulators, and the (financial) press. Mayer, Davis and Schoorman (1995) as well as Lambright, Mischen and Laramee (2010) studied the building of trust within such a network, focusing on the elements of ability, integrity and benevolence. Coombs and others have focused extensively on the issue of reputation with crisis management, focusing amongst others on protective powers of crisis response strategies. This thesis focuses on the specific element of trust as a part of reputational damage. This is further discussed in the following segments on societal and academic relevance.
This is, amongst others, what this thesis sets out to do. This thesis focuses two specific crises that posed a reputational threat which Dutch bank ING faced in 2018. This then leads to the following research question:
“How has ING’s reputation, as defined by network trust, been affected by the developments in the two presented cases and to what extent have reputation management strategies influenced this effect?”
9
1.2 Social and academic relevance
One of the key characteristics of academic and scientific research is to shed light on the functioning of the world around us. Wilbertz (2013) posits that one element of gathering knowledge is that this acquired insight may “be used to develop various sectors of society such as industry, education, governmental practices, the health system or social cohesion” (p. 2). As such, Wilbertz holds that “A main characteristic of the so-called societal relevance of research is therefore the quest towards answering questions that society asks or to solve problems it faces” (ibid.). One may also posit that the societal relevance of research can be found in elucidating issues and/or cases which (from time to time) rank high on socio-political agenda’s, and which generate significant interest from larger parts of society. Such is the case with regard to this thesis. It has been established that the presented cases provoked quite the stir in the Dutch public debate. A preliminary look at both issues, however, would appear to suggest that a year after occurring, a return to business as usual has materialized. The question then arises whether the uproar was a mere consequence of the overall admonitory stance of the Dutch population2, a
civic mantra often associated with the Dutch , or whether ING was through active practice able to mitigate against the various (negative) effects that occurred as a result of both crises. This, amongst others grants a degree of social relevance this thesis sets out to answer. Next, the following segment elaborates on that other element of pertinence: academic relevance.
Academic relevance may be defined as the added value of particular research to the scientific field in which it is situated, and whether it contributes to filling up knowledge gaps in existing literature and theory. Regarding the theme of this thesis, the importance of trust in reputation management in times of crises, there are a number of questions in existing literature that validate further research. One of these questions concerns the lack consensus on the definition of reputational crisis. As such, research into specific cases of reputational crises may contribute to a deepened understanding of the concept. Moreover and more elaborately discussed in chapter 2, is the question regarding the existence or nonexistence of what has been dubbed the ‘halo’ effect. Key notion of this (supposed) effect is that prior reputation “might work as a shield that deflects the potential reputational damage from a crisis” or “might encourage stakeholders to give the organization the benefit of the doubt in the crisis” (Coombs & Holladay, 2006, p. 123). However, there is little to no empirical evidence that seems to
2 Frequently phrased in Dutch as ‘het opgeheven domineesvingertje’. See also Witteman, J. (2018, March 8).
Woedende reacties op maandsalaris van 250.000 euro voor ING-topman. Hoe Nederlands is die woede? De
10
support the existence of this phenomenon. Again, further research into cases such as those presented in this thesis may contribute to either supporting this notion, or in supporting the non-existence of this effect. This thesis presents a new perspective on reputational management by increasing the focus on the importance of trust. It thereby addresses a knowledge gap, as conventional reputational theory appears to focus largely on internal organizational factors, whereas reputation should be seen as a concept within a broader network. This thesis examines the building of trust as an essential element of reputational management within broader networks.
1.3 Brief case introduction
Although chapter 3 provides a far more in-depth elaboration on the two cases this thesis sets out to analyze, this segment provides a brief introduction on why these cases have been selected. The first case concerns the crisis that followed after the considerable public outcry and political pressure that ING faced after announcing it would raise the financial reward of its CEO by 50%, granting him a salary of over 3 million euros annually. The second case revolves around the reputational crisis following the public outcry and political pressure surrounding the settlement ING struck with the Dutch Public Prosecution Service (Openbaar Ministerie) for a fee of 775 million euro. This case saw ING accused of negligence in and as indirect accomplice to money laundering, relating to amongst others criminal and terrorist financial activities. These cases share both similarities and differences. In terms of similarities, both occurred in the same year, and happened in brief succession of each other. Both presented a reputational crisis and challenge to an institution in a sector already under socio-political scrutiny, and in both, senior management was called upon to defend and give account to society and politics for what had happened, and why. Moreover, particularly regarding the importance trust, both cases present incidents that degraded those factors identified by Lambright et al. (2010): ability, integrity and benevolence, which makes the cases even more interesting to analyze. Differences between both cases can be found in the typology of what crisis presented itself. Furthermore, it is interesting to consider whether the crisis that manifested first in any way amplified the severity of the consequent crisis, particularly in terms of reputational effects.
11
1.4 Structure
This chapter, chapter 1, is the introduction to the thesis. It has introduced the topic of research and situated the phenomenon of reputation management within the larger field of crisis management. Furthermore, it has mentioned a number of case examples that exemplify how reputation management can effectively be considered to be a ‘current’ or ongoing phenomenon that serves as an interesting topic of research with social and academic relevance. Chapter 2 will provide the theoretical framework leading to the analytical or conceptual model, which forms the basis for the analysis presented in chapter 4. The theoretical framework elaborates extensively on a number of concepts and existing theoretical models as forwarded in scientific literature. It also provides a number of expectations with regard to the posed research question and sub-question. Chapter 3 provides the empirical research design in which an explanation is given on how the research is designed, how data is collected and why it has been done in this fashion, as well as reflecting on matters of reliability and validity. Consecutively, chapter 4 provides an elaboration and extensive analysis of the two cases this thesis investigates and connects these to the conceptual model as worked out in chapter 2. This chapter is divided into several subsections, which feature partial conclusions. These partial conclusions are subsequently integrated into an overall conclusion, thereby effectively answering the research question presented in chapter 1. Finally, chapter 5 presents a reflection on the results of the analysis and on the possible limitations on generalization and broader applicability. It ends with a number of recommendations for possible policy changes and suggestions for the direction of future scientific study.
12
2 | Theoretical Framework
The following chapter provides the theoretical framework leading to the conceptual model that will form the basis for the analysis presented in chapter 4. This framework is essentially twofold: first, it presents a list of concepts that require thorough examination. Said concepts make their return in the second component of the framework, which is an elaboration on theoretical models of crisis response strategies as forwarded in scientific literature, and which are later applied to the two cases that form the basis of this research. Arrival at these elements of the theoretical framework follows from the research question and scope of this research. First, an idea has to be presented of what constitutes a crisis and what kind of different types of crisis exist. This aids in defining the type of crisis out of which the subsequent reputational crisis ING faced originated. Subsequently, a closer look needs to be taken at what constitutes a reputation, and consequently in needs to be examined how a crisis can threaten an organizational reputation and may lead to a reputational crisis. Given that in this study special attention is given to trust, a segment is devoted to the examination of the concept of trust and the indicators for this that are forwarded in existing literature. Subsequently, this chapter investigates a number of theories on crisis response strategies. This allows for a categorization and analysis of the crisis response selected by ING in chapter 4, and a consecutive analysis on the rebuilding of trust this crisis response seeks to facilitate. This chapter finishes by presenting a conceptual model, the operationalization of which is further elaborated upon in chapter 3.2.1 Crisis
As with many a concept, scholars have long debated numerous definitions of what constitutes a crisis. Depending on the context, a crisis can be defined in various ways. The Merriam-Webster dictionary grants a first, albeit general definition: it defines a crisis as an “unstable an unstable or crucial time or state of affairs in which a decisive change is impending” and as something that has “the distinct possibility of a highly undesirable outcome.” Crises tend to strike suddenly and are more often than not unanticipated, and the mentioned decisive change is frequently of a negative nature. Sellnow and Seeger (2013) posit how “crises are increasingly important social, political, economic and environmental forces” that facilitate change in a manner greater and more rapid than “any other single phenomenon” (p. 1). Similarly, Fearn-Banks (2002) holds that “a crisis is a major occurrence with a potentially negative outcome affecting the organization, company or industry, as well as its publics, products, services, or good name” whilst also noting that such an event “interrupts normal business transactions and
13
can sometimes threaten the existence of an organization” (p. 2). Heath and Millar likewise propose that crises are events that have “actual or potential consequences for stakeholders’ interests as well as the reputation of the organization suffering the crisis” but argue that while these events are untimely, they are often predictable (2004, p. 2). Latter authors further provide an extensive list of approximately twenty definitions of crisis (2004, pp. 4-5). Contrarily, whereas the definitions mentioned above provide primarily business- or organization-centric (i.e. inside-out) definitions, Coombs provides a definition of crisis that is somewhat more outside-in when he notes that:
“A crisis can be viewed as the perception of an event that threatens important expectancies of stakeholders and can impact the organization’s performance. Crises are largely perceptual. If stakeholders believe there is a crisis, the organization is in a crisis unless it can successfully persuade stakeholders it is not. A crisis violates expectations; an organization has done something stakeholders feel is inappropriate” (2009, p. 100)
Additionally, drawing upon the work of a multitude of authors and two decades of academic writing, Bundy et al. (2017) note a convergence from which they define an organizational crisss as “as an event perceived by managers and stakeholders to be highly salient, unexpected, and potentially disruptive” (p. 1663). Given the scope of this research and the presented cases, it serves as useful to focus on a definition of crisis that spotlights organizational aspects. Ulmer, Sellnow and Seeger provide such a definition:
“An organizational crisis is a specific, unexpected, and nonroutine event or series of events that create high levels of uncertainty and simultaneously present and organization with both opportunities for and threats to its high-priority goals” (2007, p. 7).
Said authors further provide an elaboration on what they refer to as the key components of this working definition. Unexpectedness concerns how an event comes as a surprise, which the organization had not anticipated. Nonroutine refers to the nature of crises, and particularly how they cannot be dealt with using the routine organizational procedures that are applied when dealing with ‘regular’ daily problems. Uncertainty, naturally, concerns the potential lack of organizational awareness of causes and effects of crisis. Threatening high-priority goals, finally, concerns the potential of a crisis to debilitate organizational attempts at achieving crucial goals and the potential of a crisis to bring about irreversible damage (2007, p. 8)
As noted, crises can be defined in various ways depending on context. To list a few examples applicable to the Netherlands: the prolonged period of draught and heat in the summer
14
of 2018, the 2019 gas explosion in a residential area of The Hague or the impact of the recent shooting incident in a tram carriage in Utrecht are all incidents or events that could be described as a crisis situation. Conceptualizing these different contexts, Ulmer, Sellnow and Seeger make a distinction in crisis types by dividing them into two categories. The first of these is the intentional crisis cluster, in which seven crisis categories are identified: terrorism, sabotage, workplace violence, poor employee relationships, poor risk management, hostile takeovers, and unethical leadership. Crises that follow from any of these categories are the result of considered intentional acts, designed to do organizational harm (2007, p. 9). On the other hand, said authors denote the second category as the unintentional crisis cluster, in which five crisis categories are described: natural disasters, disease outbreaks, unforeseeable technical interactions, product failure, and downturns in the economy. Crises that originate from any of these categories are of an unforeseeable or unavoidable nature. (2007, p. 11). Despite the variation in these crisis types, Coombs posits that these in turn can be clustered into a number of identifiable types, and presents the following synthesized “master list” of 10 typologies based on crisis typologies presented in the writings of other authors:
Natural disasters: When an organization is damaged as a result of the weather or “acts of God” such as
earthquakes, tornados, floods, hurricanes and bad storms
Workplace violence: When an employee or former employee commits violence against other employees
on organizational grounds
Rumors: When false or misleading information is purposefully circulated about an organization or its
products in order to harm the organization
Malevolence: When some outside actor or opponent employs extreme tactics to attack the organization,
such as product tampering, kidnapping, terrorism or computer hacking
Challenges: When the organization is confronted by discontented stakeholders with claims that it is
operating in an appropriate manner
Technical-error accidents: When the technology utilized or supplied by the organization fails and causes
an industrial accident
Technical-error product harm: When the technology utilized or supplied by the organization fails and
results in a defect or potentially harmful product
Human-error product harm: When human error results in a defect or potentially harmful product Human-error accidents: When human error causes an incident
Organizational misdeeds: When management takes actions it knows may place stakeholders at risk or
15
Amongst other authors, Bundy et al. (2017, p. 1664) and Coombs (2007, p. 17) argue that a crisis can be divided into three primary stages: crisis, crisis, and post-crisis. The pre-crisis stage is usually of a preparatory nature in which Coombs differentiates between three sub-stages: signal detection, prevention and crisis preparation (2007, p. 18). The crisis stage is the period during which a “trigger event” occurs, marking the advent of the crisis and consists of two sub-stages: crisis recognition and crisis containment (p. 19). During the post-crisis stage, organizational and operational activities return to normal as the crisis is considered to be over, although post-crisis actions are defined. According to Coombs, such actions assist organizations in three aspects: “to make the organization better prepared for the next crisis … make sure stakeholders are left with a positive impression of the organization’s crisis management efforts … and check to make sure that the crisis is truly over” (ibid.). The pre-crisis, crisis and post-crisis stages thus all have their own characteristics in terms of how they are combatted through crisis management as a whole. What follows is a brief elaboration on the concept of crisis management.
Crisis Management
A common factor in discussing the various definitions of crisis is that regardless of context, crises constitute threats of varying nature. Moreover, nearly any kind of organization, institution or business has become susceptible to crises. Crisis management has therefore become an integral part of organizations. Crisis management concerns the development and application of the organizational capability to deal with crises, and as noted in the introduction, “represents a set of factors designed to combat crises and to lessen the actual damage inflicted” and may according to Coombs, be divided into a “set of four interrelated factors: prevention, preparation, response and revision” (2007, p. 5). The first of these, prevention, entails “the steps taken to avoid crises” and may also be referred to as mitigation (ibid.) Second is the preparation factor, which constitutes “diagnosing crisis vulnerabilities, selecting and training a crisis management team and spokespersons, creating a crisis portfolio, and refining a crisis communication system” (ibid.) and also includes the crisis management plan. Steps and measures established in the preparatory stage come into play when a crisis manifests and are dubbed by Coombs as the third factor, namely response. Finally, the fourth factor is revision, which involves “the evaluation of the organization’s response in simulated and real crises, determining what it did right and what it did wrong during its crisis management performance” (ibid.). This thesis research considers all four factors of crisis management and applies these when analyzing the two cases in chapter four. Additional attention is given to the factors of
16
response and revision. Given that this research focuses on the threat crises pose to reputation,
what follows is an examination of the concept of organizational reputation, before moving on to theorizing crisis as a threat to organizational reputation. Crisis management is further explored in a later section of this chapter, specifically by looking at a number of crisis response theories as forwarded in literature.
2.2 Organizational reputation and trust
Before elucidating how crises can inflict serious damage on an organization’s reputation, it is necessary to examine what defines the concept of reputation. As is the case with the definition of crisis, numerous definitions of reputation have been proposed and academic debate on the matter is extensive. The concept can be approached from different disciplines and areas of research. From an institutional perspective, for example, Roberts and Dowling contribute that reputation can be viewed as “as global perception of the extent to which an organization is held in high esteem or regard.” They derive from this that “reputation is a general organizational attribute that reflects the extent to which external stakeholders see the firm as ‘good’ and not ‘bad’” (2002, p. 1078). Latter authors posit that a good reputation is of great strategic value and provides for “a valuable asset that allows a firm to achieve persistent profitability, or sustained superior financial performance” (ibid.). Similarly, Coombs (2007) argues that “a reputation is an aggregate evaluation stakeholders make about how well an organization is meeting stakeholder expectations based on its past behaviors”, and defines stakeholders as “any group that can affect or be affected by the behavior of an organization” (p. 164). Another notion is that “organizational reputation is defined as a set of beliefs about an organization’s capacities, intentions, history, and mission that are embedded in a network of multiple audiences” (Carpenter & Krause, 2011, p. 26). From a sociological point of view, Lang and Lang (1988) note that reputation is “an objective social fact” and a “prevailing collective definition” of what the relevant public at large knows about particular actors. (p. 84). From a marketing perspective, Hall considers reputation to represent “the knowledge and emotions held by individuals about, say, a product range” and as something that can be “a major factor in achieving competitive advantage” (1992, p. 138).
A review of existing academic literature on the concept of reputation, as well as the three examples provided above, indicates that definitions of reputation both overlap and contrast. Numerous authors have observed this and some have taken it upon themselves to systematically analyze a significant number of existing articles and books on the topic. Rindova
17
et al. (2005) provide a first example of such systemic analysis and conclude “that two schools of thought inform the construct’s definition.” From the perspective of economics, they hold, reputation is defined as “the observers’ expectations or estimations of a particular attribute of an organization … especially the organization’s ability to produce quality products” (p. 1033). In contrast, from an institutional perspective, reputation is defined as “a global impression, which represents how a collective—a stakeholder group or multiple stakeholder groups— perceive a firm” and reputations are formed as “a result of information exchanges and social influences among various actors interacting in an organizational field” (pp. 1033-1034).
A second example of systematical analysis is delivered by Lange, Lee and Dai, who suggest that in “the current stage in the study of organizational reputation, a definitive definition of the construct has yet to emerge in spite of numerous attempts to describe and integrate the definitions in use” (2011, p. 155). Based on a review of a considerable amount of academic work, said authors propose that one can distinguish three broad conceptualizations of organizational reputation: first, being known, defined as “generalized awareness or visibility of the firm or the prominence of the firm in the collective perception.” Second, being known for
something, defined as the “perceived predictability of organizational outcomes and behavior
relevant to specific audience interests.” Third and last, generalized favorability, defined as the “perceptions or judgments of the overall organization as good, attractive, and appropriate” (ibid.). Ultimately, Lange, Lee and Dai conclude by endorsing the notion that the concept of organization reputation is multidimensional and not easily caught in a single definition. Having explored the concept of organizational reputation, a more thorough assessment of how crises can damage these reputations is made in the following section.
Threat of crises to organizational reputation
Comparable to the concepts of crisis and reputation, there is no consensus on the definition of reputational crisis. Sohn and Lariscy postulate that the term is a frequent passerby in academic literature, though lacking “an agreed-upon definition” (2014, p. 23). Based on an extensive literature review, their study advances a definition of reputational crisis as “a major event that has the potential to threaten collective perceptions and estimations held by all relevant stakeholders of an organization and its relevant attributes” (p. 24). Furthermore, said authors make a distinction between a reputational problem and a reputational crisis: the latter is explained as consequential to a particular critical incident, whereas the former is the result of “an ongoing weakness or shortcoming, such as managerial shortcoming or failure to cultivate a strong and favorable name for the organization” (p. 25). A further distinction between problem
18
and crisis relates to scope and magnitude: crises are major threats, whereas problems are “minor localized disruptions” (ibid.)
Organizations and institutions stand to gain from strong reputations. Coombs and Halladay have listed several of these gains: “reputational assets have been linked to significant outcomes such as attracting customers, generating investment interest, attracting top employee talent, motivating worker, increasing job satisfaction, generating more positive media coverage, and garnering positive comments from financial analysts” (2006, pp. 123-124). Similarly, Zavyalova et al. (2016) note that a strong reputation will “provide an organization with specific advantages, such as better access to resources, the ability to employ high-quality workers, and greater chances of financial success” (pp. 253-254). Contrarily, crises and simultaneous threats to reputation can have far-reaching consequences. Such consequences can be of financial nature, as Larkin (2002) exemplifies: “a decline in revenue as a result of product boycott, asset value depletion from a brand collapse, resource diversion from fixing problems, increased cost of capital as a result of share premium erosion, exposure to predatory takeover, costlier compliance through regulatory intervention or even bankruptcy” (p. 4). Additional consequences that can be considered are a loss of customers, losing key employees, a decrease in opportunity to attract and maintain business- or organizational partners, and the ability to draw in material and non-material resources, amongst others. To exemplify said resource diversion, the table on the next page provides an indication of the estimated costs various organizations have had to account for when dealing with a wide range of crises. Costs presented are not necessarily indicative of whether crisis management processes have been effective or not, but are indicative of the total costs made in terms of both physical costs as well as the costs of reputational damage.
19
The introduction chapter of this research introduced the metaphor of the savings account in which one has access to financial credit that can be accessed to deal with unforeseen events. A comparison was drawn to organizations or companies, which, should they have progressively maintained and managed a (positive) reputation, have the ability to tap into such an account in order to mitigate against the repercussions of an unforeseen event, issue or full-fledged crisis. In practice, numerous authors argue that favorable reputation prior to crises are an invaluable asset during crises. It has been established earlier that strong and favorable reputations indeed grant organizations considerable advantages and as such, one could argue that above notions intuitively make sense. Coombs and Holladay dub this assumption the “halo effect” in which prior reputation “might work as a shield that deflects the potential reputational damage from a crisis” or “might encourage stakeholders to give the organization the benefit of the doubt in the crisis” (2006, p. 123). Although empirical research into this effect to date has been limited, Coombs and Holladay argue that there appears to be little to no empirical evidence that would back the existence of this phenomenon (2006, p. 125) whereas others note that finding from empirical research are at best inconsistent (Kim, 2017, p. 280). What follows is an inquiry into an import element of reputation: trust and trustworthiness.
Table 1: cost of crises
Corporation Event Estimated costs $M
Pan Am Lockerbie 652
Union Carbide Bhopal 527
Exxon Valdez spill 16,000
Perrier Product recall 263
Occidental Piper Alpha 1400
P&O Zeebrugge 70
Barings Collapse 1200
Ford/Firestone Product recall 5000
Coca-Cola Product recall 103
TotalFinaElf Oil spill 100
Monsanto GM crops 2–3000
20
Trust
An important element to be taken in account in reputation management is trust. Kroeger (2015) notes that “over the past two decades, trust has evolved into a central concern in much of organization theory” (p. 431). He relates to how trust has become an issue in a wide range of social sectors, ranging from food production and regulation to businesses and governments (ibid.). Kroeger moreover divides trust into two components: interpersonal and system trust. Following Mayer, Davis and Schoorman (1995), interpersonal trust is defined as
“…the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform in a particular action important to the trustor, irrespective of the ability to monitor or control that other party” (Kroeger, 2015, p. 432)
The elements in this definition also find application in system trust, in which according to Kroeger “the trustor basically assumes that a system is functioning and places his trust in that function, not in people” (ibid.). Another definition of trust is provided by Sellnow, Veil and Streifel (2006), who hold that “trust is used to refer to the expectation that both parties will behave reliably and predictably” (p. 661). It has been noted prior that that financial markets and financial institutions arguably thrive best under circumstances in which (consumer) trust is high. Being trusted and having a good reputation is an invaluable asset and improves the effectiveness of businesses (Mosch & Prast, 2008, p. 28). Additionally, in reference to Ennew and Sekhon, Delin (2013) notes that given the levels of risk involved in financial services, trust is crucial:
“…customers experience high levels of risk when making purchase decision … many customers are dependent on financial service institutions (FSIs) to offer products of an appropriate type and quality and must trust them do so. However, there is a growing concern about the extent to which FSIs are trustworthy and the extent to which consumers trust them” (p. 185).
Similarly, this thesis has forwarded that “organizational reputation is defined as a set of beliefs about an organization’s capacities, intentions, history, and mission that are embedded in a network of multiple audiences” (Carpenter & Krause, 2011, p. 26). Following the latter, particularly regarding networks of multiple audiences, it can be argued that financial institutions such as banks operate within the context of a network with numerous stakeholders. In order for such a network to function effectively, Lambright et al. (2010)posit that trust is critical, further noting that “trust is essential because networks replace hierarchal power with cooperative relations based on interdependence and have fewer superordinate mechanisms for ensuring
21
sustained operations compared with hierarchies and markets composed of competing hierarchies” (p. 65). In short, the degree of trust that prevails (or do not prevail) in the relationship between institutions and their stakeholders is something worthwhile assessing. In order to make such an assessment, it is key to characterize what constitutes trust in such a network.
A significant volume of academic research on the issue of trust in networks and organizational settings is based on the influential work of Mayer et al. (1995), which forwards an integrative model of organizational trust. Said authors identify and characterize the two parties in a relationship: the trustor and the trustee. The former is primarily analyzed in terms of “propensity to trust”, in which trust “is viewed as a trait that leads to a generalized expectation about the trustworthiness of others” (1995, p. 715). Moreover, the latter is examined in terms of trustworthiness, specifically by looking at “three characteristics of the trustee that determine trustworthiness.” Lambright et al. consider these three to be the factors that shape “the extent to which to which a trustee will be viewed as trustworthy” (2010, p. 66). Although numerous other factors that can contribute to trust are listed (Mayer, Davis, & Schoorman, 1995, p. 718), these three overarching characteristics appear frequently in academic literature. Said characteristics similarly form the basis for establishing what constitutes trustworthiness in more recent research, amongst others by Lambright et al. (2010, p. 66), Gillespie et al. (2012, pp. 189-190) and Colquitt and Salam (2009, pp. 389-390). The three factors considered are
ability, benevolence, and integrity, and are briefly described in the table below.
Table 2: factors of trustworthiness and corresponding attributes
Factor Attribute
Ability The group of skills, competencies and characteristics
that enable a party to have influence within some specific domain. The domain of the ability is specific because the trustee may be highly competent in some technical area, thereby affording trustee trust on tasks related to that area.
Benevolence The extent to which a trustee is believed to want to do good to the trustor, aside from an egocentric profit motive. Benevolence suggests that the trustee has some specific attachment to the trustor.
Integrity The trustor’s perception that the trustee adheres to a set of principles that the trustor finds acceptable.
22
To a certain extent, the three factors that determine the trustworthiness of a trustee, have been violated in the two the cases this paper analyses. The breaching of this trust has, consequently, affected the reputation of the trustee, id est ING.
Moreover, Lambright et al. (2010) further expanded on the work of Mayer et al. and as noted above used the three indicators to form the basis for establishing what constitutes trustworthiness. Former authors integrated these indicators into a larger model of factors influencing trust in networks, in which mention is made of another important factor: third party
relationships. Lambright et al. posit that these third party relationships are of influence in the
development, sustaining and maintaining of trust in networks and are therefore worth assessment (2010, p. 65). Said authors note that research assessing the influence of third party relationships on the development of trust is limited, and an extensive literature review appears to confirm this, apart from the work of Ferrin, Dirks, and Shah (2006), on whose efforts Lambright et al. develop, and the work of Gupta, Ho, Pollack and Lai (2016). Regardless, the work of Lambright et al. with regard to these relationships provides added value to the literary framework of this thesis. This relates particularly to the position occupied by the stakeholder group of supervisors and regulators within the network. This is expanded upon in the analysis of this thesis.
The model provided by Lambright et al. identifies three types of third party relationships likely to have an indirect effect on the development of trust, namely network closure, structural
equivalence, and trust transferability. The first type, network closure is defined as “the number
of third parties who interact with both the trustor and trustee” (p. 68), further nothing that “in situations where the trustee and trustor only interact with each other, successful cooperation will just enhance the trustee’s reputation with the trustor” (ibid.) whereas in situations of network closure, “there will be an audience for cooperative efforts” (ibid.). Lambright et al. argue that this creates opportunities for “the trustee and trustor to influence the impressions of third parties” (ibid.). Subsequently, the expectation is voiced that
“…when a third party is aware of an instance of successful cooperation between the trustor and the trustee, one would expect this to favorably affect the third party’s assessment of both the trustor and trustee. As a result, successful cooperation will not just enhance the trustee’s reputation with the trustor but will also enhance the trustor’s and trustee’s reputation with third parties.” (2010, p. 68).
23
This expectation may however, be inversed in part. Doing this would imply that in case of unsuccessful or negative cooperation, a trustee’s reputation with a trustor will be diminished. The application of this inversion is further expanded upon in the analysis of this thesis.
Lambright et al. define the second of the three types, structural equivalence, as “the extent that the trustor and trustee are similar in terms of the relationships they have with others as well as in terms of the relationship they do not have with others” (2010, p. 68). They note that in a network “both the set of network members that the trustee and trustor interact with and the set of network members that the trustee and trustor do not interact with will be very similar when structural equivalence is high” (ibid). The degree of structural equivalence between the stakeholders in the network is further explored in the analysis of this thesis.
The last of the three types, trust transferability, is defined as the “the number of third parties who trust the trustee and are also trusted by the trustor” (2010, p. 69). Lambright et al. further note here that “even though a trustor will not be able to directly observe many of the interactions between a trustee and trusted third parties, the trustor often will want to take these interactions into account when assessing whether a trustee is trustworthy” (ibid.). Moreover, “judgements of the third party provide valuable supplemental information on the trustee’s trustworthiness,” as a result which “in situations where a trustee has earned a reputation of being trustworthy with a third party and that third party is trusted by the trustor, the trustor is more likely to believe that the trustee is trustworthy” (ibid.). This, as was the case with network closure, can arguably also be inversed. Arguably, such an inversion constitutes that situations may occur in which a trustee loses trustworthiness with a third party trusted by the trustor, which in turn may lead to that latter trustor lose trust in the trustee, identifying said trustee as less trustworthy or wholly untrustworthy. The application of this inversion is further expanded upon in the analysis of this thesis.
24
2.3 Protecting reputation
Thus far, this chapter has introduced the concepts of crisis, reputation, trust, and has explored how crises can harm reputations. This in turn begs the question of how organizations, institutions and businesses can best respond to crisis events in order to mitigate reputational damage as much as possible. Enter crisis response strategies, which are used “to repair the reputation, to reduce negative effect and to prevent negative behavioral intentions” (Coombs, 2007, p. 170). What follows is an examination of a widely applied theory in an analyzing crisis response: situational crisis communication theory (SCCT). SCCT develops on Image Restoration Theory as forwarded by Benoit (1997), another widely applied theory in the study of organizational crises (Elmasry & Chaudri, 2010, p. 144) and in analyzing crisis response (Smudde & Courtright, 2008, p. 3). Coombs has integrated the crisis response strategies forwarded in image restoration theory “into a system that predicts how stakeholders should react to the crisis and the crisis response strategies used to manage the crisis” (2007, p. 171). This system is the subject of the following section.
Situational Crisis Communication Theory
Coombs’ situational crisis communication theory (hereinafter: SSCT) finds its roots in Attribution Theory (hereinafter: AT), a set of models in social psychology which examines the processes in which people explain the causes of behavior and events. AT holds that “a person attributes responsibility for an event and will experience an emotional reaction to the event” (Coombs, 2007, p. 165), and these attributions “shape affective and behavioral responses to the person involved in the event” (Coombs, 2010, p. 37). Effectively, “SSCT translated attribution theory into the language of crisis communication as a base for the theory” (Coombs, 2010, p. 24). Coombs and Holladay note that crises are events for which people seek to find causes and explanations, as well as attributions. When crises occur, “people evaluate organizational responsibility for a crisis when they determine the cause of a crisis” (Coombs & Holladay, 1996, p. 282). Consequently, and important in terms of crisis management, “the more publics attribute crisis responsibility to an organization, the stronger the likelihood is of publics developing and acting upon negative images of the organization” (ibid.). As opposed to image restoration theory, SSCT does consider the nature and type of the crisis by asking such questions as whether the crisis resulted from situational factors an organization had no control over, or if the crisis was a result of something, over which the organization did have control (Coombs, 2007, p. 166). Understanding the nature and cause of the crisis aids organizations in selecting
25
response tactics that help maximize reputational protection (ibid.) Coombs forwards that SCCT contains three core elements (2006, p. 243), which are discussed next.
The first element is the crisis situation. This is arguably the most important element within SCCT. The potential damage a crisis can exact on organizational reputation is what lies at the core of selecting a crisis response strategy. The reputational threat is comprised of three features: first, crisis responsibility, i.e. “how much stakeholders attribute the cause of the crisis to the organization” (ibid.). Second, crisis type, given that “stakeholders will attribute different amount of responsibility to the various crisis types” (ibid.). Third and last, severity of damage, which is an indication of “the amount of financial, physical, environmental, or emotional harm” that the crisis causes. Acting as potential intensifiers to the reputational threat are crisis history and relationship history, the former referring to the crisis history of the organization and the latter referring to the quality of (previous) interaction between stakeholders and the organization (Coombs, 2006, p. 244). The interplay between above elements is illustrated in figure 1 below. Moreover, SCCT identifies a list of crisis types and breaks these down into three clusters based on the degree of crisis responsibility attribution: this is shown on the next page in table 4. Said clusters are sequential: when moving down from the victim cluster to accidental and preventable, the more reputational damage is inflicted and the more responsibility is attributed.
Severity of Damage Reputation Organizational Responsibility Intensifiers: Crisis History Relationship History (Coombs, 2006, p. 245) Figure 1: SCCT Concepts
26
The second element of SCCT concerns crisis response strategy. After having identified crisis type, attribution of crisis responsibility and having assessed initial reputational damage, an organization can move on to select a corresponding response. Coombs (2007) holds that “the words used and actions taken by management affect how people perceive the organization and/or the crisis” (2007, p. 171), and that response strategies have three different objectives.
27
These objectives are summarized as shaping the attributions of the crisis, changing the perceptions of the organization in crisis, and reducing negative affects generated by the crisis (ibid.). Table 5 provides an overview of the different response strategies and an explanation. As noted, SCCT builds upon AT, and similarities with Benoit’s work can be seen (table 2.2.).
28
The third and final element of SCCT is about the fundamental matching process and describes matching crisis clusters to crisis responses. Coombs argues that if an organization can demonstrate that there is no crisis, it can utilize the deny options in their response (2006, p. 249). In case there is a crisis, organizations’ should opt for the response strategies of diminish or deal, and do this in accordance with the degree of attribution apportioned to the organization by stakeholders. This is arguably a relatively simple matching process. In case of limited attribution, deny strategies can be utilized. In case minimal attribution, diminish strategies can best be used. As Coombs notes: “there is a greater violation of societal norms” but “stakeholders are open to influence on attribution of the crisis because the threat is minimal” (ibid.). In case of strong attributions of responsibility and the corresponding severe reputational threat, deal strategies should be prioritized: societal norms have been seriously violated and “the potential damage to the organizational reputation is great and so the response must work to rebuild the reputation” (Coombs, 2006, pp. 249-250).
29
2.4 Conceptual model
Having established key concepts and having elucidated on a number of existing concepts and theories, a conceptual model is introduced that forms the basis of the study. This model integrates the view of Lambright et al with the theory and strategies as forwarded by Coombs.
Per the work of Carpenter and Krause, reputation is defined as “a set of beliefs about an organization’s capacities, intentions, history, and mission that are embedded in a network of multiple audiences” (2011, p. 26). This is in line with Coombs’ definition of reputation, who speaks of an “aggregate evaluation stakeholders make about how well an organization is meeting stakeholder expectations based on its past behaviors” (2007, p. 164). Here, a ‘network of multiple audiences’ and ‘stakeholders’ can be considered the same, which also goes for ‘a set of beliefs’ and an ‘aggregate evaluation’. As such, ING’s reputation can be considered to be comprised of a set of beliefs about ING’s capacities, intentions, history and mission that are embedded with stakeholders within a stakeholder network. As noted prior, positive reputations can have “significant outcomes such as attracting customers, generating investment interest, attracting top employee talent, motivating workers, increasing job satisfaction, generating more positive media coverage, and garnering positive comments from financial analysts” (Coombs & Holladay, 2006, pp. 123-124). Accordingly, when reputations are positive, it can be presupposed that ‘audience’ and ‘stakeholder’ belief in the network surrounding the organization is high. Lambright et al (2010) have identified trust as “critical to the functioning of effective networks” (p. 65). Thus, for ING to function in such a network and for the effectiveness of the network as a whole, it is essential that levels of trust are significant.
As noted, Lambright et al. recognize that trust can be subdivided along the lines of three factors: ability, benevolence and integrity. In turn, these three factors can be considered to be part of the aforementioned ‘set of beliefs’ as well as being part of an ‘aggregate evaluation’. A crisis negatively affects these embedded beliefs and aggregate evaluations, as stakeholders often come to question an organization’s ability, benevolence and integrity. In so doing, a crisis frequently negatively affects organizational reputation.
An organization will seek to mitigate and protect against the effects of a crisis that negatively affects organizational reputation. As elaborated upon in earlier in this theoretical framework, Coombs’ SCCT presents a number of strategies to do this, amongst others based on the degree of crisis type and crisis attribution. Coombs’ strategies are of a conceptual nature; that is to say, that they provide an indication of what an organization ought to do, but his works
30
provide no explicit practical examples. It can be argued however, that in attempting to protect or restore reputation, said strategies effectively endeavor to restore belief in elements such as ability, benevolence and integrity and undertaken practical organization measures can be matched with these strategies. They thereby seek to restore the network of multiple audiences’ embedded set of beliefs and ‘stakeholders’ aggregate evaluations’, and by doing so seek to restore trust and the organizational reputation. Subsequently, this elucidation on the integration of Lambright et al. and Coombs, leads to the following schematic overview of the conceptual model this thesis utilizes:
You will now need to introduce a conceptual model that will form the basis of the study.
To assist in providing an answer to the overarching research question, three sub-questions have been formulated within the conceptual model. These questions are listed below: the subsequent operationalization of the conceptual model is provided in chapter 3.
“To what extent did crises A and B influence the trust placed in ING by relevant
stakeholders?” (RQ.1)
“How did ING attempt to regain trust during and in the aftermath of crises A and B by using
communication strategies geared towards regaining this trust?” (RQ.2)
“Which strategy geared towards regaining trust and protecting ING’s reputation can be
considered most successful, and why?” (RQ.3)
Crisis communication strategies geared toward regaining trust Reputational crisis
influencing trust in the network
Factors of network trust, influencing reputation: Ability Benevolence Integrity RQ.1 RQ.2 RQ.3
31
The identification of Lambright et al. of three types of third party relationships likely to have an indirect effect on the development of trust, network closure, structural equivalence, and trust transferability, are somewhat harder to place in the schematic overview as presented. These can however be assessed in terms of to what extent they have been at play in the presented crises cases. This is presented in the final segment of the analysis.
32
2.5 Preliminary expectations
Based on the concepts and theory elucidated in this chapter, a number of expectations with regard to the (sub) research question(s) can be formulated.
First, and per the SCCT as proposed by Coombs, the type of reputational crisis influencing trust in the network, can be established. Segment 2.3 proposed that a reputational threat/crisis is comprised of three features: crisis responsibility, crisis type and severity of damage. As noted, potential intensifiers to the reputational crises are crisis history and relationship history. It is expected that stakeholders significantly attributed the cause of the crises to ING. Based on degree of attribution, in terms of crisis type, the crises are expected to be placed in the preventable crisis type cluster. This means that in these crisis types, the organization knowingly placed people at risk, took inappropriate actions or violated a law/regulation. With regard to severity of damage, it is somewhat harder to voice expectations. Yet considering the political and societal uproar caused by both crises, this may be considered as emotional harm, and thus is expected to have been significant. Finally, in terms of intensifiers, the expectation is that crisis history and relationship history are not of a positive nature, given prior incidents ING was faced with.
Second, in answering the question to what extent crises A and B influenced the trust placed in ING by relevant stakeholders, an assessment of how the crises influenced the three different elements (per Lambright et al.) that together constitute (see below) trust in the trustee is made. The expectation is that said elements were significantly negatively affected.
Factor Attribute
Ability The group of skills, competencies and
characteristics that enable a party to have influence within some specific domain. The domain of the ability is specific because the trustee may be highly competent in some technical area, thereby affording trustee trust on tasks related to that area.
Benevolence The extent to which a trustee is believed to want to do good to the trustor, aside from an egocentric profit motive. Benevolence suggests that the trustee has some specific attachment to the trustor.
Integrity The trustor’s perception that the trustee adheres to
a set of principles that the trustor finds acceptable. Based on Mayer et al. (1995, pp. 717-720)
Additional elucidation on the factors of network trust of ability, benevolence and integrity, and the operationalization thereof are provided in chapter three.
33
Third, in assessing crisis communication strategies that appear geared toward regaining trust, the expectation is that the employed strategies constitute those of apology, regret and compensation. Coombs posits that these are in fact ‘rebuild’ strategies, that address victims well (2007, p. 172). Although not necessarily always the preferred response because of possible financial consequences for an organization (ibid.), the expected degree of stakeholder attribution of responsibility for and scope of the crises towards ING, it is still expected that these strategies were effectively the only employable options. This both has to do with the level of (positive) stakeholder engagement these strategies present as well as the (in these cases) counterproductive elements that would follow from the employment of other strategies. The three mentioned strategies are briefly explored in the table below.
Author(s) Element Indicator
Coombs, 2010 Compensation Organization provides money, gifts
or otherwise to victims of crisis
Coombs, 2006 Regret Organization states it feels bad
about the crisis and that the crisis incident occurred
Coombs, 2010 Apology Organization states publicly it
takes full responsibility for crisis, (possibly) asks forgiveness
Fourth, in assessing whether the employed strategies have proven to be successful or not, an analysis is made that evaluates whether or not the stakeholders within the network have regained trust in ING and whether or not ING can again be considered a trustworthy trustee. Effectively, this poses the question whether ING was able to restore stakeholder belief in its ability, benevolence and integrity through communication strategies and organizational measures that followed from these. The expectation here is that while strategies and measures were employed by ING with a relative degree of success, but that stakeholder belief in ability, benevolence and trust was only restored to some extent. It is expected that stakeholder trust in ING has not fully been restored and that ING’s reputation has suffered significant damage. A preliminary confirmation of latter expectation may be found in recent reporting3 which divulged that ING has witnessed an increase in the net amount of retail clients serviced. Yet on the
3 See Haegens, K. (2019, February 6). Het winstwonder van ING: waarom is de grootste bank van Nederland zo
34
contrary, new reports4 of ING’s involvement in other cases may continue to affect the degree of trust placed in the bank by other stakeholders, in particular the likes of supervisors and regulators, and may pose a continued if not renewed reputational threat to ING.
Finally, the three types of third party relationships likely to have an indirect effect on the development of trust. Although it has been indicated that these are somewhat harder to integrate into the conceptual model, they can still be assessed in terms of to what extent they have been at play in the presented crises cases, and a number of expectations can be voiced. With regard to network closure, it is expected that the ‘negative’ interaction between ING and the stakeholder group of supervisors and regulators has negatively affected the trust placed in ING by other stakeholders. Regarding structural equivalence, the expectation is that this factor is not wholly applicable to the crises and that structural equivalence cannot be considered to have been of great effect. Last, with regard to trust transferability, the expectation is that because of ING’s losing of trustworthiness with a third party (supervisors and regulators), other trustees’ (i.e. stakeholders) trust in ING was negatively affected.
4
See amongst others Kreling, T. (2019, March 17). ING nu ook in Italië onder vuur vanwege witwassen. De
Volkskrant. Retrieved from https://bit.ly/2W3b8kJ, and Kleinnijenhuis, J. (2019, March 6). Russische tak ING
