Organizational Paranoia Social Uncertainty and the Fragility of Trust: Origins and Dynamics of Organizational Paranoia Roderick M. Kramer Graduate School of Business Stanford University Running head : Organizational Paranoia First Draft – Prepared for Research in Organizational Behavior (Editors: Barry Staw & Robert Sutton) Author Information Early versions of these ideas were presented at the Bellagio Conference on Distrust, Russell Sage Foundation Workshop on Trust in Organizations, and Tutzing Conference on Trust in Society and Organizations. Comments from participants at those conferences are gratefully acknowledged. I am greatly indebted also to Karen Cook, Diego Gambetta, Russell Hardin, James March, Joanne Martin, Jeffrey Pfeffer, Robert Sutton,
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Organizational Paranoia
Social Uncertainty and the Fragility of Trust:
Origins and Dynamics of Organizational Paranoia
Roderick M. Kramer
Graduate School of Business
Stanford University
Running head: Organizational Paranoia
First Draft – Prepared for Research in Organizational Behavior (Editors: Barry Staw &
Robert Sutton)
Author Information
Early versions of these ideas were presented at the Bellagio Conference on Distrust,
Russell Sage Foundation Workshop on Trust in Organizations, and Tutzing Conference
on Trust in Society and Organizations. Comments from participants at those conferences
are gratefully acknowledged. I am greatly indebted also to Karen Cook, Diego Gambetta,
Russell Hardin, James March, Joanne Martin, Jeffrey Pfeffer, Robert Sutton, Bernard
Weiner, and Phil Zimbardo for their insightful comments at various stages of this work.
Correspondence regarding this chapter should be addressed to the author care of:
Graduate School of Business, Stanford University, Stanford CA 94305 or via e-mail at
An instructive parallel to this argument can be found in research on the dynamics
of the development and persistence of patterns of hostile attribution among aggressive
children (Dodge, 1985). Such children, Dodge found, tend to approach social
interactions “pre-offended.” They enter social transactions with a state of heightened
vigilance and prepared for the worst in their social encounters. Because of this stance,
they end up, ironically, eliciting through their own pre-emptive and defensive behaviors
the very outcomes they most dread. In much the same fashion as these overly aggressive
boys, the paranoid perceiver is perceptually vigilant to detecting signs of lack of
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trustworthiness in others. They are prepared for the prospect of trust abuses and prone, as
a result, to code even ambiguous encounters as further evidence of tainted
trustworthiness. Because the paranoid perceiver’s behavior is grounded in presumptive
wariness, it ends up eliciting the very sort of uncomfortable, distant interactions that
reinforce mutual or reciprocated wariness, suspicion and discomfort. Thus, a dubious set
of assumptions and nagging doubts serve as a foundation for an equally questionable set
of social strategies for dealing with them.
Along related lines, Gilovich (1991) has elaborated another reason why people
may be able to sustain beliefs in questionable beliefs and counter-productive
interpersonal influence strategies. Because a given social orientation or strategy is
initially thought to be effective, he notes, only that orientation or strategy is likely to be
employed when similar-seeming situations are encountered. As a consequence, a person
never learns what would have happened had a different interpretation of the situation
given or approach taken. As a consequence, the individual cannot (or, more accurately,
simply does not) assess either the true adaptiveness of the orientation or effectiveness of
the strategy it seems to dictate.
This pattern of dysfunctional social interaction can be aided and abetted, Gilovich
goes on to note, by a self-fulfilling prophecy. Like someone who believes that the only
way to get ahead is to be competitive or come on strong when dealing with other people,
such a person will consistently push too aggressively for what he or she wants. The
occasional success will “prove” the wisdom of the rule, and the individual never learns,
as a result, that an alternative strategy might have been even more effective. As Gilovich
noted further, “Because no single failure serves to disconfirm the strategy’s effectiveness
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(after all, nothing works all the time), the only way it can be shown to be ineffective is by
discovering that the rate of success is lower with this strategy than with others” (p. xx).
Given that alternative strategies are not employed and their consequences not
systematically evaluated, the person never discovers the strategy they are using is sub-
optimal, or that the theory behind it in error. Equally important, they never come to
realize that the model of self, others, and the world on which the rule is predicated is in
error. As Kelley and Schmidt (1989) noted in an analysis of the dynamics of overly
aggressive boys, “with their apparent belief that persistence in coercion finally works,
aggressive boys are likely to develop sustained exchanges of aggression,” fully believing
their experiences bears out the necessity for such belief (p. 256).
In elaborating on this idea, it should be emphasized also that, because of their
other-focused orientation, paranoid perceivers are also unlikely to discern how their own
actions end up eliciting behavior from others that ironically sustain and justify their view
that the world around them as populated by unreliable and untrustworthy others. An
analogy can be drawn, in this regard, with the experience of freeway drivers who are
either much faster than, or much slower than, other drivers in their environment.
Consider the case first of the very fast driver. For these extremely impatient, hurried,
time-urgent drivers, the daily experience on the freeway is one of persistent annoyance
and frustration as countless slow, incompetent drivers are continually found to be in their
way. Each press of the pedal and each lane change generates yet another interaction with
yet another incompetently slow and inconsiderate driver, thwarting their progress and
hindering them from reaching their destination in a timely fashion. Over time, such
drivers are likely to develop a view of the world as populated by terrible drivers. On
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average, their experience is that the people around them are bad (overly cautious, stupid,
etc.) drivers relative to their own beliefs about efficient and prudent driving speeds.
Consider, on the other hand, the experience of the very slow and extremely cautious
driver navigating on the same freeways. From the standpoint of these drivers everyone
else on the freeway seems always to be in a hurry. Other drivers aggressively honk and
gesture rudely as they pass by. The world of the slow driver is a world populated by
reckless, angry, and impatient people.
In both instances, however, it is the simple fact that these social actors remain
“out of synch” with the rest of the world that leads to their self-generated and self-
sustaining theories regarding others’ basic hostility, unreliability and lack of
trustworthiness (see Footnote 6). Note also that, because of the positive illusions that
social perceivers so easily sustain about themselves, they are unlikely to realize fully how
their own behavior might even elicit some of the behavior from other drivers that they
find so annoying. Thus, the fast reckless driver may prompt greater caution and slowing
down of those around them, while the slow driver may actually cause people to speed up
and go around more than might otherwise happen.
Of course, social scientists trying to develop and test theories about trust and
trustworthiness in the experimental laboratory tend to be mindful of such threats to the
internal and external validity of their inferences about human nature. Ordinary social
perceivers, however, are less likely to think spontaneously in such terms. Instead, they
are caught up in a fluid, dynamic world of purposeful action. They are likely to think of
their actions as moving them toward goals, rather than opportunities to test hypotheses
about human nature. Thus, beliefs about others’ trustworthiness tend to develop
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incidentally and only after the fact. Such beliefs are residues of social experience, rather
than intended products of it.
Difficulties in Learning From Experience
Not only do paranoid social perceivers confront significiant barriers with respect
to generating representative and diagnostic samples of others’ behavior, they also face
formidable difficulties in drawing appropriate inferences and lessons from the
experiential samples they do manage to generate. Because of their presumption that
others around them lack trustworthiness, the perceived diagnostic value of any particular
social cue or bit of potentially diagnostic data is, from the outset, tainted. As Weick
(1979) noted in this regard, because all social cues are potentially corruptible, it is easy to
assume that they are in actuality corrupted. To illustrate this point, he cites an interesting
historical example. The day before the Japanese attack on Pearl Harbor, an American
naval attache had informed Washington that he did not believe a surprise attack by the
Japanese was imminent. To justify his prediction, he cited the ‘fact’ that the Japanese
fleet was still stationed at its home base. The clear and compelling evidence for this
conclusion, he noted, was that large crowds of sailors could be observed happily and
casually strolling the streets of Tokyo. Without sailors, the fleet obviously could not
have sailed. If the sailors were still in port, therefore, so was the fleet. Q. E. D.
What the attache did not know—and, more importantly, failed to even imagine--
was that these “sailors” were in actuality Japanese soldiers disguised as sailors. They had
been ordered to pose as sailors and stroll the streets to conceal the fact that the Japanese
fleet had, in fact, left port and was currently steaming towards Pearl Harbor. From the
perspective of the Japanese, this ploy was a brilliant example of what military strategists
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call "strategic disinformation". The purpose of strategic disinformation is, of course, to
mislead an adversary about one’s true capabilities, intentions or actions (Kramer,
Myerson, & Davis, 1990). In this instance the deception worked beautifully.
In elaborating on the implications of this incident, Weick noted that the very
desire and determination of the attache to find a “fool-proof” cue about Japanese
intentions, made him, ironically, more vulnerable to manipulation about the nature of
those intentions. Quoting a passage from Goffman (1969), Weick reasoned that, “the
very fact that the observer finds himself looking to a particular bit of evidence as an
incorruptible check on what is or might be corruptible, is the very reason he should be
suspicious of this evidence” (p. 172). After all, Weick notes, “the best evidence for him is
also the best evidence for the subject to tamper with (p. 173)
From the perspective of the paranoid social perceiver, of course, the attache’s
experience provides dramatic proof of what happens when individuals allow their
vigilance to become too lax. Innocence regarding others’ trustworthiness can be too
readily assumed, and with fatal consequences. In a world presumed to be sinister, social
cues are always corrupted and always in a predictably dangerous direction. As Weick
(1979) pointedly observes, “When the situation seems to be exactly what it appears to be,
the closest likely alternative is that the situation has been completely faked” (p. 173).
From the standpoint of the paranoid social perceive, the fleet, figuratively speaking, has
always stealthily sailed and sailors are never just sailors.
Ironically, even the complete absence of any cues at all can be construed as a
powerful form of confirmatory evidence to the paranoid social perceiver. Dawes (1988)
has provided a nice illustration of this possibility in his discussion of the debate over the
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necessity of internment of Japanese-Americans at the beginning of the Second World
War. The question, of course, was the safety of American society given the presence of a
sizable contingent of Japanese-Americans in its midst in the middle of a war. Where
would their loyalties lie? Could they be trusted? When the late Supreme Court Chief
Justice Earl Warren (then Governor of California) testified before a congressional hearing
regarding the wisdom of internment, one of his interrogators noted that absolutely no
evidence of espionage or sabotage on the part of any Japanese-Americans had been
presented or was available to the committee. Thus, there was absolutely no objective
evidence of danger at all. Warren’s response as to how best to intrepret this absence of
evidence is revealing. “I take the view that this lack [of evidence] is the most ominous
sign in our whole situation. It convinces me more than perhaps any other factor that the
sabotage we are to get, the Fifth Column activities we are to get, are timed just like Pearl
Harbor was timed” (p. 251). He then went on to add, “I believe we are just being lulled
into a false sense of security (p. 251). When a lot is perceived to be at stake, the absence
of reassuring information can be regarded as just as informative and compelling as the
presence of threatening information.
Recent research suggests other cognitive “toeholds” for the development of
paranoid cognition in organizations. As several scholars have noted, it is easier to
destroy trust than to create or sustain it (Barber 1983; Janoff-Bulman, 1992; Meyerson,
Weick, & Kramer, 1996; Slovic, 1993). Slovic (1993) has argued that there are a variety
of factors that contribute to difference in trust-building versus trust-eroding processes.
First, negative (trust-destroying) events are more visible and noticeable than positive
(trust-building) events. Second, trust-destroying events carry more weight in judgment
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than trust-building events of comparable magnitude. As evidence for his asymmetry
principle, Slovic evaluated the impact of hypothetical news events on people’s trust
judgments and found negative events had more impact on trust judgments than positive
events. Slovic noted further that asymmetries between trust and distrust may be
reinforced by the fact that sources of bad (trust-destroying) news tend to be perceived as
more credible than sources of good news.
Other related evidence suggest that violations of trust tend to "loom larger" than
confirmations of trust. For example, studies of individuals’ reactions to trust betrayals
suggests that violations of trust are highly salient to victims, prompting intense
ruminative activity, and evoking greater attributional search for the causes of the
violation (Bies, Tripp, & Kramer, 1997; Brothers, 1995; Janoff-Bulman, 1992). To the
extent that violations of trust are coded as losses, they should loom larger than "mere"
confirmations of trust of comparable magnitude. For example, failure to keep a promise
should have more impact on judgments about trustworthiness than "merely" keeping a
promise. This general argument is supported as well by evidence that cognitive responses
to positive and negative events are often highly asymmetrical (Peeters & Czapinski,
1990). In aggregate, such asymmetries imply that information supportive of a stance of
distrust should be weighted and evaluated differently than information of the same
magnitude that is supportive of trust. For the paranoid social perceiver, such asymmetries
are likely to be even more salient and pronounced because of the perceptual readiness to
detect bad (trust-destroying) versus good (trust-affirming) evidence.
There are also a number of social dynamics that can contribute to the emergence
and maintenance of organizational paranoia. The first concerns the role of gossip in the
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diffusion of paranoia. Recent research indicates that information that provides grounds
for distrust may diffuse through a social system more rapidly than information pertaining
to trust. For example, Burt and Knez (1995) showed how network structures, and the
social dynamics they create, differentially affect rates of diffusion of trust-relevant versus
distrust-related information. Using a sample of managers in a high tech firm, they
investigated the influence of third-parties on the diffusion of trust and distrust within
managers’ networks. Burt and Knez argued that third parties are more attentive to
negative information, and often prefer negative gossip to positive information and gossip.
Consistent with their general theoretical expectation, they found that, although both trust
and distrust were amplified by third-party disclosures, distrust was amplified to a greater
extent than trust. As a result, judgments about distrust had, as Burt and Knez put it, a
“catastrophic” quality to them.
A Model of Organizational Paranoia: How the Intuitive Social Auditor Goes Astray
In the preceding pages, I have attempted to lay a foundation for the general
argument that social uncertainty plays a central role in the development of organizational
paranoia. To advance this argument, I have invoked a number of theoretical constructs
and empirical findings from a number of recent and disparate streams of social cognitive
theory and research. It may be useful, accordingly, to attempt to pull the various strands
of theory and data more tightly together. Accordingly, Figure 1 is offered as a schematic
representation of a social information processing or “auditing” model of organizational
paranoia.
[Insert Figure 1 about here]
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As noted earlier, a prominent assumption of such models is that a complete
understanding of organizational paranoia--or any form of social cognition, for that
matter--requires recognition of the influence that the context in which cognition is
embedded exerts on social judgment and inference. From the perspective of such a
framework, what the intuitive social auditor sees and infers with respect to trust depends
quite literally on where he or she stands in the organization.
As the figure indicates, social uncertainty is presumed to play a central role in
initiating a cycle of social appraisal and coping that fosters paranoid-like perception and
behavior. Specifically, social uncertainty induces several psychological states, including
heightened self-consciousness, heightened perceptions of evaluative scrutiny, uncertainty
about one’s status in the group, and reduced perceptions of psychological safety.
Because social uncertainty and the psychological states it engenders are aversive
states, individuals are motivated to make sense of, and attempt to reduce or eliminate, this
uncertainty. The more discomforting and aversive the uncertainty, the greater the
motivation to do so and the more earnest the effort at uncertainty reduction.
The model assumes that these initial attempts at sensemaking and uncertainty
reduction reflect intendedly adaptive appraisal and coping responses. In other words, an
assumption of the model is that individuals experiencing social uncertainty engage in
what they construe as reasonably vigilant appraisal and mindful action. If these initial
attempts at uncertainty reduction are successful, feelings of psychological safety are
enhanced, self-consciousness diminished, and the perception of being under evaluative
scrutiny reduced. Thus, trust can begin to build and the individual's attention can be
claimed by other emergent concerns.
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However, when individuals' efforts at uncertainty management are unsuccessful,
social vigilance and appraisal are characterized by a hypervigilant mode of social
auditing and a tendency to engage in dysphoric rumination about one’s perceived
problems. As suggested by the figure, hypervigilance and rumination are posited to
enjoy a circular causal relationship. Specifically, hypervigilant appraisal of social
information tends to generate additional "raw data" about which the paranoid social
perceiver is likely to ruminate. Such rumination helps generate, in turn, additional and
ever more sinister "hypotheses" that push the already hypervigilant social auditor towards
ever closer scrutiny of others' actions.
Hypervigilance and dysphoric rumination contribute to several distinct models of
paranoid-like social misjudgment and misperception. Specifically, they foster the
cognitive elaboration of individuals' trust-related "mental accounts," the overly
personalistic construal of social interaction and sinister attribution bias.
These cognitive distortions and biases result in heightened concerns about others’
trustworthiness, fostering self-protective or defensive behaviors. These behaviors include
behavioral inhibition (e.g., reluctant to engage in personal self-disclosure) and social
withdrawal. Unfortunately, these behaviors tend to elicit responses from others that
exascerbate the paranoid perceiver’s difficulties. Specifically, they foster a tendency for
those around the individual to attribute paranoia to them and a reluctance to interact with
the individual. These responses contribute to further social uncertainty on the part of the
paranoid perceiver. Thus, the cycle has a self-entrapping or autistic character to it.
The model does not, it should be emphasized, provide a complete account of all of
the causal factors that influence the development of paranoid cognition within
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organizations. In this respect, the model is offered as a “middle range” account that
serves to organize and integrate a fair amount of what is currently known about the
cognitive underpinnings of organizational paranoia and their origins (see Footnote 7).
The model is offered as a
heuristic device for stimulating further research, rather than intended as a final statement.
Reducing Organizational Paranoia: Rendering Trust Less Elusive and Less Fragile
The model of organizational paranoia developed in this chapter and the evidence
presented in support of it suggests how readily organizational paranoia can gain a toehold
and flourish within organizational situations where high levels of social uncertainty exist.
The analysis identifies a variety of factors that contribute to the emergence of
organizational paranoia, and that help explain the resilience of such paranoia even in
situations where only the flimsiest and most ambiguous evidence exists to support it. The
model also makes clear some of the deleterious consequences associated with such
cognition. In light of the persistence of organizational paranoia and the perverse
consequences it imposes, it is important to consider the question of how the problem of
organizational paranoia might be addressed. Can organizational paranoia be reduced, and
if so how?
The general problem of reducing or eliminating organizational paranoia can be
approached from a number of vantage points, including thinking about organization-level
interventions and remedies that are designed to lessen the climate of collective distrust
and suspicion among organizational members. The problem can be viewed, at least in
part, as one of uncertainty reduction. Concretely, such uncertainty-reducing measures
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include providing sufficient reassurance to individuals that the doubts and concerns they
possess are, in actuality, exaggerated or ungrounded.
One way such reassurance can be provided is through means of structural
solutions that promote more information flows and/or contact between individuals or
groups that distrust each other. If paranoia within organizations is partly about
individuals’ uncertainty regarding the trustworthiness of other organizational members,
then both explicit and tacit understandings regarding transaction norms, obligations, and
exchange practices provide an important basis for addressing such concerns. Particularly
useful is information indicating that others in the organization are likely to behave in a
trustworthy fashion, even in the absence of individuating knowledge about their
trustworthiness. Such generalized knowledge can be viewed as a source of
depersonalized trust described earlier (Brewer, 1981).
Organizational rules, both formal and informal, capture much of the
depersonalized knowledge and generalized expectations that organizational members
possess about each other and the organization as a whole (March, 1995). Rule-based trust
is thus predicated on members' shared understandings regarding the system of rules
regarding appropriate (allowed) and inappropriate (disallowed) behavior. To be most
effective, adherence should be perceived as voluntary and readily forthcoming because of
internalized values, commitments, and a sense of obligation (Fine & Holyfield, 1996). As
March and Olsen (1989) put it, rule-based trust is sustained within an organization “not
[by] an explicit contract . . . [but] by socialization into the structure of rules" (p. 27).
When reciprocal confidence in members' socialization into and continued adherence to a
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normative system is high, mutual trust can acquire a taken-for-granted quality. Trust
becomes tacit.
Fine and Holyfield (1996) provide a nice illustration of how such explicit rules
and tacit understandings function to create and sustain high levels of mutual trust within
an organization. Their study examined the bases of trust in the Minnesota Mycological
Society, an organization that consists of amateur mushroom afficionados. This
organization provides a rich setting in which to study the bases of presumptive trust for
several reasons. First, the costs of misplaced trust in the organization can be quite severe:
eating a mushroom that someone else has mistakenly declared safe for consumption can
lead to serious illness and even, in rare instances, death. Given such risks, Fine and
Holyfield note, credibility is lost only once unless a mistake is reasonable. Consequently,
members are likely to be fairly vigilant about assessing and maintaining high levels of
mutual trust and trustworthiness. Second, because membership in the organization is
voluntary, exit is comparatively costless. If doubts about others’ trustworthiness become
too great, therefore, members will take their trust elsewhere and the organization will die.
Thus, the organization’s survival depends upon its ability to successfully instill and
sustain perceptions of mutual trustworthiness among its members.
Fine and Holyfield identified three important bases of trust within this
organization, which they termed awarding trust, managing risk, and transforming trust.
One way trust is created, they observed, is to award trust to others even when confidence
in them may be lacking. For example, considerable social pressure is exerted on novices
to consume dishes at banquets prepared by other members. As Fine and Holyfield put it,
there is an insistence on trust. Thus, even if members remain privately anxious, their
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public behavior connotes high levels of trust. Collectively, these displays constitute a
potent form of social proof to members that their individual acts of trust are sensible.
An insistence on trust is adaptive, of course, only if collective trustworthiness is
actually in place within the organization. The difference between blind, foolish trust and
mindful and constructive commitment to an organizational order is obvious.
Accordingly, a second crucial element in the creation of trust within this organization
occurs through practices and arrangements that ensure individual competence and due
diligence with respect to all of the routines and activities that the collective life of the
group depends on. This result is achieved partially through meticulous socialization of
newcomers to the organization. Novices participate in these socialization processes with
appropriate levels of commitment because it helps them manage the personal risks of
mushroom eating and also because it helps them secure a place in the social order of the
group. In turn, more seasoned organizational members teach novices out of a sense of
obligation, having themselves benefitted from instruction from those who came before
them. This repaying of their own instruction constitutes an interesting temporal
(transgenerational) variant of depersonalized trust. This requirement that oldtimers
socialize newcomers has a second and less obvious benefit: it continually forces them to
articulate the rules, reminding them as well which attitudes and behaviors are critical to
the maintenance of collective trust. Thus, this form of trust is not simply trust in the
expertise and motivation of specific individuals, but more importantly, trust in a social
system characterized by collective expertise and high motivation.
Over time, Fine and Holyfield argue, as members acquire knowledge about the
organization, the nature of trust itself becomes transformed. Early on, the organization is
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simply a “validator” of trust for new members. Eventually, however, it becomes an
“arena in which trusting relations are enacted and organizational interaction serves as its
own reward” (p. 29).
Sometimes organizations and their members are even willing to accept sub-
optimal rules as solutions to their trust dilemmas, rather than live with the fear or even
mere suspicion they are being exploited or taken advantage of by others in organization.
Gambetta (1993) provided a very nice illustration of such a structural solution that
emerged among Palermo taxi drivers, where a climate of collective paranoia had resulted
in the collapse of cooperation among them. A radio-dispatcher service was initially
instituted in Palermo to help drivers locate prospective fares. Each driver contributes to
provide the central dispatcher, so the dispatcher is, in this sense, a public good. The
dispatcher, on receiving a call, was supposed to give the call to the driver who happened
to be nearest the caller. Unfortunately, knowing this decision rule, drivers had incentives
to misrepresent (overstate) their proximity to the caller, because there was no obvious
way for the radio dispatcher to verify whether cabbies were telling the truth or not
regarding their location. As suspicions spread that others were cheating the system by
strategically misrepresenting their location, individual drivers began opting out of the
system, feeling why pay for a public good that’s gone bad. Individual drivers maintained
that “a lot of cheating” was going on, even though objective evidence of such cheating
was hard to come by (p. 221). As Gambetta noted, “If a driver were lucky enough to land
a few extra runs in a day, the other drivers would almost automatically leap to the
conclusion that he was cheating” (p. 224). Moreover, once this judgment had
crystallized, there was little that could be done to undo it. Drivers had ample time to
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privately ruminate in their cabs about such “cheating.” Additionally, they could reinforce
such conclusions through collective or social rumination, by 'comparing notes' when they
took their breaks together. “In Sicily,” Gambetta wryly observed, “there is nothing as
suspicious as luck” (p. 224). By 1987, despite a population of over a million inhabitants,
this system of radio-dispatched taxi-service in Palermo had almost collapsed entirely.
The solution to this trust dilemma—and one that emerged only after ten years of
chronic and bitter failure, was to create a new allocation system where all cabs would go
to a central area, que up, and take incoming calls in order. The system readily allowed
visible verification of location. Thus, all drivers could remain assured that the system
was working fairly. Ironically, this solution did mean that passengers had to wait longer
and pay more on average for taxi service because the meter starts running once a call is
taken by the radio dispatcher and, additionally, passengers have to wait for the cab to
traverse from the central location to their destination, even if other cabbies happen to be
much closer to their calling point. As Gambetta wrly observed, however, even clearly
inferior service dominates no service at all for people whose mobility is dependent on cab
transportation.
In the case of interventions intended to create positive collective identities and
expectations of mutual trustworthiness, these prompts make salient and reinforce the
perception that organizational members, as a group, are on the whole trustworthy. Miller
(1992) provides an excellent example of this kind of socially constructed and ultimately
self-reinforcing dynamic. In discussing the underpinnings of cooperation at Hewlett-
Packard, he noted that, "The reality of cooperation is suggested by the open lab stock
policy, which not only allows engineers access to all equipment, but encourages them to
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take it home for personal use" (p. 197). From a strictly economic perspective, this policy
simply reduces monitoring and transaction costs. However, from the standpoint of a rule-
based set of expectations about trust-related interactions, its consequences are more
subtle and far-reaching. As Miller (1992) observed, "the open door symbolizes and
demonstrates management's trust in the cooperativeness of the employees” (p. 197).
Because such acts are so manifestly predicated on trust in others, they tend to breed trust
in turn.
Another way in which rules foster trust is through their influence on individuals’
self-perceptions and their expectations about other organizational members. As March
(1995) observed in this regard, organizations function much like "stage managers" by
providing "prompts that evoke particular identities in particular situations” (p. 72). Rule-
based practices of this sort can exert subtle influences, not only on individuals’
expectations and beliefs about the trustworthiness and honesty of other organizational
members, but also their self-perceptions of their own honesty and trustworthiness as well.
As Miller notes in this regard, by eliminating time clocks and locks on equipment room
doors at Hewlett-Packard, the organization built a “shared expectation among all the
players that cooperation will most likely be reciprocated" creating "a shared 'common
knowledge' in the ability of the players to reach cooperative outcomes" (p. 197). By
institutionalizing trust through practices at the macro-organizational level, trust becomes
internalized at the micro level. Thus, rule-based trust becomes a potent form of
expectational asset (Knez & Camerer, 1994) that facilitates spontaneous coordination and
cooperation among organizational members.
Putting Paranoia in Perspective: Toward a Positive Theory of Doubt
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Up to this point, the analysis has emphasized almost exclusively the dysfunctional
or deleterious consequences of organizational paranoia. The paranoid perceiver has been
portrayed largely as a social misperceiver who exaggerates others' malevolence and
indifference, and who tends to overestimate their lack of trustworthiness. In certain
respects, this emphasis is appropriate. After all, to the extent that paranoid cognitions
represent systematic patterns of misperception in organizations, they obviously constitute
a maladaptive mode of social information processing and should be analyzed much like
other forms of social misperception found in social psychology (Kunda, 1999).
However, I would argue that the prevalence and ubitiquousness of such paranoia
invites contemplation of the possible functional or adaptive roles such cognitions might
play in organizational life. There are several observations that prompt consideration of
such roles. First, distrust and suspicion are not always irrational. In highly competitive or
political organizational environments, for example, an individual may have quite
legitimate cause for suspicion and concern about others’ trustworthiness. In such
environments, the costs of misplaced trust can be quite costly—and sometimes even
fatal--to one’s career. Thus, in ecologies populated by individuals who lack
trustworthiness, a propensity towards vigilance with respect to others’ lack of
trustworthiness may be quite prudent and adaptive (Bendor, Kramer, & Stout, 1991).
Even though the fears and suspicions of paranoid individuals may seem exaggerated or
inappropriate to others who are in more advantage positions, this does not mean that their
distrust is entirely misplaced or unwarranted. As Intel President and CEO Andrew Grove
(1996) likes to reminds his employees, “Only the paranoid survive” (p. 3). In
expounding on what he means by such adaptive paranoia, Grove notes,
Organizational Paranoia
“I believe in the value of paranoia. Business success contains the seeds of its own
destruction. The more successful you are, the more people want a chunk of your
business and then another chunk and then another until there is nothing left. I
believe that the prime responsibility of a manager is to guard against other
people’s attacks and to inculcate this guardian attitude in the people under his or
her management” (p. 3)
A better appreciation of the adaptive functions of even seemingly irrational forms
of distrust and suspicion might help us, moreover, “back into” a richer and more robust
theory of organizational trust. By understanding more completely the conditions that
give rise to such irrational forms of distrust and suspicion, and that render trust more
fragile, we may develop a better understanding of the requirements for building more
resilient systems of collective or reciprocal trust. Along these lines, the theory of
organizational paranoia developed in this chapter helps direct attention to the rather
mundane or banal “social information processing” origins of wariness of others and the
reluctance to give them the benefit of the doubt.
In commenting on the fragile and elusive character of trust in organizations,
March and Olsen (19xx) onced observed, “The greatest threat to innocence is the
awareness that not everyone else is innocent” (p. xx). As the results of the research
reviewed in this paper suggest, even the mere suspicion that others’ lack innocence may
be sufficient to tilt individuals preciptiously toward presumptive suspicion and wariness.
Organizational Paranoia
Footnotes
1. This comparative lack of attention to distrust as a distinct topic may reflect, at least in part, the assumption that trust and distrust are merely opposite poles of a single continuum and are symmetric (see, e.g., Gambetta, 1988 and Stzompka, 1999). This assumption has been questioned on a variety of theoretical and empirical grounds (see, e.g., Slovic, 1993).
2. More extensive treatments of these different forms of organizational paranoia can be found elsewhere. Interpersonal paranoia is discussed in Butler, Koopman, & Zimbardo, 1995. Discussions of intergroup paranoia can be found in Kramer & Messick, 1997 and Pruitt, 1987. Analyses of leader paranoia can be found in Kramer (2000) and Robins and Post (1997).
3. The emphasis placed upon intrapsychic dynamics in these early theories is not altogether surprising, given that these theories were based largely upon clinical observations made in institutional settings in which the ‘disturbed’ individual had been removed from the social contexts for which it may have represented some sort of psychological adaptation.
4. This is not to argue that clinical forms of paranoia are not indicative of any acute intra-psychic disturbance. Rather, it is to argue that extant clinical theories may underappreciate the extent to which ordinary or mundane social and situational factors contribute to the emergence and maintenance of such paranoia.
5. As recent studies have shown, autobiographical narratives of this sort are rich sources of naturalistic data and can provide important insights regarding how individuals construe different facets of their past experiences, as well as the significant lessons they extract from those experiences (see, e.g., Baumeister & Newman, 1994 and Baumeister, Stillwell, & Wotman, 1990).
6. Space does not permit a detailed explication of the behavioral manifestations and consequences of paranoid cognition. However, a general taxonomy of forms of self-defeating behavior can be found in Baumeister and Scher (1988), and their linkages to paranoid behavior found in Kramer (1995).
7. Experimental evidence for many of the specific theorized linkages in the model can be found elsewhere, including Buss and Scheier (1976). A review of this social cognitive evidence can be found in Kramer (1998).
8. This view is consonant with recent perspectives on the constructive consequences of mindful deliberation and mental self-control (Langer, 19; Taylor, Pham, Rivkin, & Armor, 1998; Wilson & Kraft, 1993; Wyer, 1996). In such environments, it may be far better to be safe than sorry.
Organizational Paranoia
9. Unfortunately, freeway driving also provides all too much time for the sort of hypervigilant scrutiny of other people, and dysphoric rumination about their lack of competence. For a variety of well-understood reasons, such individuals are likely to remain relatively oblivious to the possibility that their own reckless lane changes and frantic actions elicit more careful, defensive behavior from other drivers around them. Both the too fast driver and the too slow driver. The common positive illusion that one is a better than average driver insulates one further from any suspicion that it is one’s own location in a system of moving objects that generates the experience.
Organizational Paranoia
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Social Uncertainty
Induced Psychological States
Heightened Self-ConsciousnessHeightened Perceptions of Evaluative Scrutiny
Uncertainty about StatusReduced Perceptions of Psychological Safety
Cognitive Appraisal and Coping Responses
Hypervigilance Dysphoric Rumination
Trust-related Mental Accounting
Cognitive ElaborationOverly Personalistic Construal of Social Interactions
Sinister Attribution Bias
Heightened Concerns about Others’ Trustworthiness
Defensive Behaviors
Behavioral InhibitionSocial Withdrawal
Social Consequences
Paranoid Attribution BiasAvoidant Responses
Figure 1. A Social Auditing Model of Organizational Paranoia