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THE MARKET thrives on trust, according to a UP Baguio economist who studied its nature as part of a study. PHOTO BY EV ESPIRITU/INQUIRER NORTHERN LUZON

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It’s a matter of trust

By Vincent Cabreza
Inquirer Northern Luzon
First Posted 22:17:00 10/24/2009

Filed Under: Entrepreneurship

BAGUIO CITY, Philippines?While panic buying reportedly gripped stores and markets at the height of a storm, some housewives here clung to their abiding trust in their ?sukis??favorite vendors who saw to their needs through thick and thin.

That stormy weekend, supply lines to the summer capital were cut as roads to and from the city were rendered impassable due to Tropical Storm ?Pepeng.? As expected, food stock quickly disappeared from the shelves.

But savvy housewives were told exactly what was going on by their sukis, ?so they bought what they needed and survived the calamity,? said Victor Calimlim, a market vendor himself.

?The suki vendors and the suki buyers are always a team, and this is something [government regulators like the Department of Trade and Industry] should monitor if they want to get a clear picture of trading in small communities even during calamities,? he said.

Suki is a social phenomenon peculiar to Filipinos, which the University of the Philippines Baguio has started to explore in a study about business ?trust? relations.

Economics professor Lorelei Mendoza said she pursued the study to find out why good business is a consequence of trust.

Concepts

?Trust belongs to the same class of abstract concepts as freedom, justice, knowledge, power, prosperity, solidarity, or truth, which are all highly evocative, but also highly ?elusive? and which keep on fascinating not only generations of scholars but anybody with at least a slight proclivity for social philosophical questions,? she said, explaining the study which she is conducting with Prof. Julius Mendoza.

This is because trust in business transactions is rarely quantified, she added.

When asked, many public market vendors were unable to define why their ?sukis? rely on their judgments.

But according to Ronnie Segundo, a poultry vendor, he is always up front about his supply situation.

?I tell my sukis what the real score is. [In the days when Baguio was isolated], I tell them that chicken was still coming into the city,? he said.

?I also tell them I spend hours at dawn waiting for the supplies because all 500 chicken retailers get allocations. I tell them so they know what to expect later in the day.?

Mendoza?s study stressed that trust, in the Filipino business environment, ?revolves around the other?s trustworthiness or perceived trustworthiness.?

Goodwill

The study observed the transactions of a Baguio-based businessman, who relies on goodwill to secure supplies for his retail shop.

The businessman provides ?educational services like photocopying, bookbinding, [and the] printing of theses and term papers.?

He buys supplies from the same agent he ?inherited? from his brother, who was the previous owner of the business that he now runs.

?The [subject?s] brother had also inherited the trade from an ?uncle? who first established the business relationship with the multinational company. The terms of payment for paper and maintenance services follow the same one given to his uncle and then also to his brother. Why was he being given the same credit terms?? Mendoza said.

?From the point of view of the agent of the multinational company, [the Baguio businessman] was trustworthy, just like his uncle and brother. Since previous experience demonstrated that the uncle was trustworthy and so was his brother, the agent took [the subject of their study] being a kin as an indicator of trustworthiness.?

Like faith

?Trust is more like faith. It is a ?leap??a pure act of agency. It is an act of surrender of the agency so that he becomes ?hostage to fate,?? the economics professor said.

The businessman?s mode of payment was also scrutinized by Mendoza, who noted that the trust binding her subject and his supplier also required nurturing.

The subject in the study began his dealings with the supplier by traveling to Angeles City to pay for the supplies himself.

After eight months, the supplier began shipping the orders by bus based on an understanding that payments would be coursed through a bank.

?Under the new arrangement, the supplier relies on the word of [the Baguio businessman] that he will make the bank deposit as payment for the paper?. [The businessman], on the other hand, makes the bank deposit, ?trusting? that the supplier will send the paper. On both sides, there is some uncertainty,? Mendoza said.

But the fulfillment of the deal ?firms up the trust relationship? which continues until the present.?

Mendoza said trust in the Philippine business setting, therefore, ?is positive expectation toward the actions and intentions of others.?

She said the actors in a typical Filipino business relationship ?cannot go on in their day-to-day interactions with others if they cannot maintain ?a state of favorable expectation towards the actions and intentions of others.??

The study does not define ?suki? levels of trusts.

Mendoza said: ?The challenge to an empirical research on trust is how to capture the ?leap of faith? and to demonstrate [the critical links between] trust and reason.?



Copyright 2011 Inquirer Northern Luzon. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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