MAKING A DIFFERENCE IN PRINCIPAL-AGENT RELATIONSHIPS: The role of mass media as producer of trust

In relationships, trust promotes exchange (Bromiley & Cumming 1995, Tyler & Degoey 1996), reduces uncertainty (Mayer, Davis & Schoorman 1995), improves cooperation (Gilson 2003), and contributes to positive outcomes (Dahlstrom & Nygaard 1995, Gilbert 1998, McEvily, Perrone & Zaheer 2003). Following from recent research that describes the role of mass media as a ‘guardian of trust’ (Patel & Everett 2004), this paper explores mass media’s role in providing information and producing trust in principal-agent relationships. The development of trust between agents and principals is beneficial for both parties (Chiles & McMackin 1996, as cited in Singh & Sirdeshmukh 2000), and acts as a control mechanism to reduce opportunism in these relationships (Beccerra & Gupta 1999, Creed & Miles 1996, Singh & Sirdeshmukh 2000). Traditionally, trust is produced at interpersonal and impersonal levels (Bachmann 2003, Shapiro 1987, Zucker 1986). In this paper, we propose that, in a time of crisis when two agents are involved in an exchange and little information exists, mass media act as producer of trust. Building on Zucker’s (1986) trust production concept, this study examines the empirical adequacy of the proposed model through a case study of mass mediated exchanges between the Australian Federal Minister for Health and the Australian Medical Association President to resolve a medical indemnity policy crisis in 2003. The case study documents the extent to which framing of mass mediated exchanges produces trust at process, characteristic, and institutional levels (Zucker 1986).