Trust Tales: Trust is good business. But does it work online?

By Nicolai Fast Sørensen

This interview is part of the series called Trust Tales. Extracts from the IWDK20 magazine, that’s valuable perspectives in the ongoing debate in the technological field.

This time it’s Aarhus University professor, Gert Thinggaard-Svendsen who back in March shared his takeaways on Trust. Enjoy.

Danes might be called the world champions of trust.

Danes generally regard their politicians as honest. Businesses regularly close deals without written contracts. Even new mothers leave sleeping babies in prams outside restaurants without worry. In fact, according to a 2019 PricewaterhouseCoopers study, 72 percent of Danes express a high level of general trust in their fellow citizens.

“This also affects productivity,” says social researcher Gert Tinggaard Svendsen of Aarhus University.  “The high level of trust means that we can do business with fewer control mechanisms, and, ultimately, this positively impacts our competitiveness – because control is expensive.”

Social researchers like Tinggaard-Svendsen agree that high social trust is an important “raw material” and a common core characteristic of the world’s most productive nations.

But will trust continue to matter as more and more commerce moves online?

In the same PwC survey, only about half of the 1,500 respondents expressed trust in e-commerce. And for good reason.

Statistics from Denmark’s National Police show that 12,162 fraud cases were reported on the Internet in 2018, which is more than triple what they were in 2009 and, according to Denmark’s national statistics registry, Danmarks Statistik, the number of new fraud cases is outpacing both the number of new online shoppers and online transactions each year.

According to Tinggaard Svendsen there is a natural explanation for the trend.

“It’s much easier to hide online, and therefore the same social control doesn’t exist as it does with physical commerce,” he says. ”Therefore it is possible to risk dealing with people from countries with a different kind of social contract where confidence is low and corruption higher. The risk of being cheated is simply higher.”

 

To control or not to control?

Shoppers can take precautions when shopping online by reading reviews on platforms like Trustpilot, but it’s not always enough to make sure that you are not being cheated, he says. because online shopping often extends beyond national borders.

“There’s a lot of evidence to support the concept of increased control of e-commerce, particularly when shopping in the global market, but finding the line between that and overcontrol is very tricky”

He says the costs of hiríng people to control and monitor online commerce can quickly outweigh the competitive advantages of relying on trust.

“Online fraud should be seen as having a negative impact on social coherency in general. When we are deceived, we automatically become more cautious. Various institutions online ensure that cheating is more difficult and it’s absolutely beneficial. There a lot of opportunities to cheat online, and that’s why it’s important we overcome it,” he says.