1 Rethinking Trust by Roderick M. Kramer Despit.docx

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Rethinking Trust
by Roderick M. Kramer
Despite deceit, greed, and incompetence on a previously
unimaginable scale, people are still
trusting too much.
For the past two decades, trust has been touted as the all-
powerful lubricant that keeps the
economic wheels turning and greases the right connections—all
to our collective benefit. Popular
business books proclaim the power and virtue of trust.
Academics have enthusiastically piled up
study after study showing the varied benefits of trust, especially
when it is based on a clear track
record, credible expertise, and prominence in the right
networks.
Then along came Bernie. There was “something about this
person, pedigree, and reputation that
inspired trust,” mused one broker taken in by Bernard Madoff,
who confessed to a $65 billion

Ponzi scheme—one of the largest and most successful in
history. On the surface, Madoff
possessed all the bona fides—the record, the résumé, the
expertise, and the social connections.
But the fact that so many people, including some sophisticated
financial experts and business
leaders, were lulled into a false sense of security when dealing
with Madoff should give us
pause. Why are we so prone to trusting?
Madoff is hardly the first to pull the wool over so many eyes.
What about Enron, WorldCom,
Tyco, and all the other corporate scandals of the past decade? Is
there perhaps a problem with
how we trust?
I have been grappling with this question for most of my 30
years as a social psychologist,
exploring both the strengths and the weaknesses of trust. In the
wake of the recent massive and
pervasive abuses—and with evidence of more scandals surfacing
each day—I think it’s worth
taking another look at why we trust so readily, why we
sometimes trust poorly, and what we can
do about it. In the following pages, I present the thesis that

human beings are naturally
predisposed to trust—it’s in our genes and our childhood
learning—and by and large it’s a
survival mechanism that has served our species well. That said,
our willingness to trust often gets
us into trouble. Moreover, we sometimes have difficulty
distinguishing trustworthy people from
untrustworthy ones. At a species level, that doesn’t matter very
much so long as more people are
trustworthy than not. At the individual level, though, it can be a
real problem. To survive as
individuals, we’ll have to learn to trust wisely and well. That
kind of trust—I call it tempered
trust—doesn’t come easily, but if you diligently ask yourself
the right questions, you can
develop it.
Let’s begin by looking at why we’re so prone to trust.
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To Trust Is Human
It all starts with the brain. Thanks to our large brains, humans

are born physically premature and
highly dependent on caretakers. Because of this need, we enter
the world “hardwired” to make
social connections. The evidence is impressive: Within one hour
of birth, a human infant will
draw her head back to look into the eyes and face of the person
gazing at her. Within a few more
hours, the infant will orient her head in the direction of her
mother’s voice. And, unbelievable as
it may seem, it’s only a matter of hours before the infant can
actually mimic a caretaker’s
expressions. A baby’s mother, in turn, responds and mimics her
child’s expression and emotions
within seconds.
In short, we’re social beings from the get-go: We’re born to be
engaged and to engage others,
which is what trust is largely about. That has been an advantage
in our struggle for survival. As
social psychologist Shelley Taylor noted in her summary of the
scientific evidence, “Scientists
now consider the nurturant qualities of life—the parent-child
bond, cooperation, and other
benign social ties—to be critical attributes that drove brain
development...accounting for our

success as a species.” The tendency to trust made sense in our
evolutionary history.
Research has shown that the brain chemistry governing our
emotions also plays a role in trust.
Paul Zak, a researcher on the cutting edge of the new field of
neuroeconomics, has demonstrated,
for instance, that oxytocin, a powerful natural chemical found in
our bodies (which plays a role
in a mother’s labor and milk production) can boost both trust
and trustworthiness between people
playing experimental trust games. (Even a squirt of oxytocin-
laden nasal spray is enough to do
it.) Other research has also shown how intimately oxytocin is
connected with positive emotional
states and the creation of social connections. It’s well
documented that animals become calmer,
more sedate, and less anxious when injected with oxytocin.
Trust kicks in on remarkably simple cues. We’re far more
likely, for example, to trust people
who are similar to us in some dimension. Perhaps the most
compelling evidence of this comes
from a study by researcher Lisa DeBruine. She developed a
clever technique for creating an

image of another person that could be morphed to look more
and more (or less and less) like a
study participant’s face. The greater the similarity, DeBruine
found, the more the participant
trusted the person in the image. This tendency to trust people
who resemble us may be rooted in
the possibility that such people might be related to us. Other
studies have shown that we like and
trust people who are members of our own social group more
than we like outsiders or strangers.
This in-group effect is so powerful that even random assignment
into small groups is sufficient
to create a sense of solidarity.
As psychologist Dacher Keltner and others have shown,
physical touch also has a strong
connection to the experience of trust. In one experiment
involving a game widely used to study
decisions to trust, an experimenter made it a point, while
describing the task, to ever so lightly
touch the backs of individuals as they were about to play the
game. People who received a quick
and unobtrusive touch were more likely to cooperate with,
rather than compete against, their
partner. It’s no coincidence, Keltner noted, that greeting rituals

throughout the world involve
touching—witness the firm, all-American handshake.
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So what does all this research add up to? It shows that it often
doesn’t take much to tip us toward
trust. People may say they don’t have a lot of trust in others,
but their behavior tells a very
different story. In fact, in many ways, trust is our default
position; we trust routinely, reflexively,
and somewhat mindlessly across a broad range of social
situations. As clinical psychologist
Doris Brothers succinctly put it, “Trust rarely occupies the
foreground of conscious awareness.
We are no more likely to ask ourselves how trusting we are at
any given moment than to inquire
if gravity is still keeping the planets in orbit.” I call this
tendency presumptive trust to capture the
idea that we approach many situations without any suspicion.
Much of the time this

predisposition serves us well. Unless we’ve been unfortunate
enough to be victims of a major
violation of trust, most of us have had years of experiences that
affirm the basic trustworthiness
of the people and institutions around us by the time we become
adults. Things seldom go
catastrophically wrong when we trust, so it’s not entirely
irrational that we have a bias toward
trust.
But Our Judgment Is Sometimes Poor
If it’s human to trust, perhaps it’s just as human to err. Indeed,
a lot of research confirms it. Our
exquisitely adapted, cue-driven brains may help us forge trust
connections in the first place, but
they also make us vulnerable to exploitation. In particular, our
tendency to judge trustworthiness
on the basis of physical similarities and other surface cues can
prove disastrous when combined
with the way we process information.
One tendency that skews our judgment is our proclivity to see
what we want to see.
Psychologists call this the confirmation bias. Because of it we
pay more attention to, and

overweight in importance, evidence supporting our hypotheses
about the world, while
downplaying or discounting discrepancies or evidence to the
contrary. In one laboratory game I
conducted, individuals who were primed to expect a possible
abuse of trust looked more
carefully for signs of untrustworthy behavior from prospective
partners. In contrast, those primed
with more positive social expectations paid more attention to
evidence of others’ trustworthiness.
Most important, individuals’ subsequent decisions about how
much to trust the prospective
partners were swayed by those expectations.
A confirmation bias wouldn’t be so bad if we weren’t heavily
influenced by the social
stereotypes that most of us carry around in our heads. These
stereotypes reflect (often false)
beliefs that correlate observable cues (facial characteristics,
age, gender, race, and so on) with
underlying psychological traits (honesty, reliability, likability,
or trustworthiness). Psychologists
call these beliefs implicit theories, and the evidence is
overwhelming that we aren’t conscious of

how they affect our judgment. Most of the time our implicit
personality theories are pretty
harmless; they simply help us categorize people more quickly
and render social judgments more
swiftly. But they can cause us to overestimate someone’s
trustworthiness in situations where a
lot is at stake (for instance, our physical safety or financial
security).
To make matters worse, people tend to think their own judgment
is better than average—
including their judgment about whom to trust. In a negotiation
class I teach, I routinely find that
about 95% of MBA students place themselves in the upper half
of the distribution when it comes
to their ability to “size up” other people accurately, including
how trustworthy, reliable, honest,
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and fair their classmates are. In fact, more than 77% of my
students put themselves in the top
25% of their class, and about 20% put themselves in the top
10%. This inflated sense of our own
judgment makes us vulnerable to people who can fake outward
signs of trustworthiness.

It’s not just biases inside our heads that skew our judgment. We
often rely on trusted third parties
to verify the character or reliability of other people. These third
parties, in effect, help us “roll
over” our positive expectations from one known and trusted
party to another who is less known
and trusted. In such situations, trust becomes, quite literally,
transitive. Unfortunately, as the
Bernie Madoff case illustrates, transitive trust can lull people
into a false sense of security. The
evidence suggests that Madoff was a master at cultivating and
exploiting social connections. One
of his hunting grounds was the Orthodox Jewish community, a
tight-knit social group.
The biases described thus far contribute to errors in deciding
whom to trust. Unfortunately, the
wiring in our brains can also hinder our ability to make good
decisions about how much risk to
assume in our relationships. In particular, researchers have
identified two cognitive illusions that
increase our propensity to trust too readily, too much, and for
too long.
The first illusion causes us to underestimate the likelihood that
bad things will happen to us.

Research on this illusion of personal invulnerability has
demonstrated that we think we’re not
very likely to experience some of life’s misfortunes, even
though we realize objectively that such
risk exists. Thus, although we know intellectually that street
crime is a major problem in most
cities, we underestimate the chances that we will become
victims of it. One reason for this
illusion, it’s been argued, is the ease with which we engage in a
kind of compensatory calculus
and call up from memory all the steps we’ve taken to mitigate
such risks (for instance, avoiding
dark alleys or making it a habit to cross the street when we see
an ominous stranger
approaching). The second and closely related illusion is
unrealistic optimism. Numerous studies
have shown that people often overestimate the likelihood that
good things will happen to them—
that they will marry well, have a successful career, live a long
life, and so on. Even when people
are given accurate information regarding the true odds of such
outcomes, they still tend to think
they will do better than average.

As if all these biases and illusions weren’t enough, we also have
to contend with the fact that the
very simplicity of our trust cues leaves us vulnerable to abuse.
Unfortunately for us, virtually any
indicator of trustworthiness can be manipulated or faked. A
number of studies indicate that
detecting the cheaters among us is not as easy as one might
think. I have been studying deceptive
behavior in my lab experiments—and teach about it in my
business school courses on power and
negotiation. In one exercise, I instruct some participants to do
everything they can to “fake”
trustworthiness during an upcoming negotiation exercise. I tell
them to draw freely on all their
intuitive theories regarding behaviors that signal
trustworthiness. So what do these short-term
sociopaths say and do? Usually, they make it a point to smile a
lot; to maintain strong eye
contact; to occasionally touch the other person’s hand or arm
gently. (Women mention touching
as a strategy more than men do and, in their post-exercise
debriefs, also report using it more than
men do.) They engage in cheery banter to relax the other
person, and they feign openness during

their actual negotiation by saying things like “Let’s agree to be
honest and we can probably do
better at this exercise” and “I always like to put all my cards on
the table.”
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Their efforts turn out to be pretty successful. Most find it fairly
easy to get the other person to
think they are behaving in a trustworthy, open, cooperative
fashion (according to their
negotiation partners’ ratings of these traits). Additionally, even
when students on the other side
of the bargaining table were (secretly) forewarned that half the
students they might encounter
had been instructed to try to fool them and take advantage of
them, their ability to detect fakers
did not improve: They didn’t identify fakers any more
accurately than a coin flip would have.
Perhaps most interesting, those who had been forewarned
actually felt they’d done a better job of
detecting fakery than did the other students.
We’ve seen why we trust and also why we sometimes trust
poorly. Now it’s time to consider

how to get trust back on track. If we are to harvest its genuine
benefits, we need to trust more
prudently.
Temper Your Trust
We can never be certain of another’s motivations, intentions,
character, or future actions. We
simply have to choose between trust (opening ourselves to the
prospect of abuse if we’re dealing
with an exploiter) or distrust (which means missing out on all
the benefits if the other person
happens to be honest). The shadow of doubt lingers over every
decision to trust. That said, there
is much that you can do to reduce the doubt—in particular, by
adjusting your mind-set and
behavioral habits. Here are some preliminary rules for
tempering trust.
Rule 1 | Know yourself.
People generally fall into one of two buckets when it comes to
their disposition toward trust.
Some trust too much and too readily. They tend to take an
overly rosy view, assuming that most
people are decent and would never harm them. Thus they
disclose personal secrets too early in

relationships or share sensitive information in the workplace too
indiscriminately, before
prudent, incremental foundations of trust have been laid. They
talk too freely about their beliefs
and impressions of others, without determining whether the
person they’re conversing with is a
friend or a foe. Their overly trusting behavior sets them up for
potential grief. In the other bucket
are people who are too mistrustful when venturing into
relationships. They assume the worst
about other people’s motivations, intentions, and future actions
and thus hold back, avoiding
disclosing anything about themselves that might help create a
social connection. They’re
reluctant to reciprocate fully because they fear they’ll trust the
wrong people. They may make
fewer mistakes than their more trusting counterparts do, but
they have fewer positive experiences
because they keep others at a distance.
The first rule, therefore, is to figure out which of the buckets
you fall into, because that will
determine what you need to work on. If you’re good at trusting
but are prone to trust the wrong
people, you must get better at interpreting the cues that you

receive. If you’re good at
recognizing cues but have difficulty forging trusting
relationships, then you’ll have to expand
your repertoire of behaviors.
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Rule 2 | Start small.
Trust entails risk. There’s no way to avoid that. But you can
keep the risks sensible—and
sensible means small, especially in the early phases of a
relationship. Social psychologist David
Messick and I coined the term shallow trust to describe the
kinds of small but productive
behaviors through which we can communicate our own
willingness to trust.
A good example of this is a gesture made by Hewlett-Packard in
the 1980s. HP’s management
allowed engineers to take equipment home whenever they
needed to, including weekends,
without having to go through a lot of formal paperwork or red
tape. That sent a strong message
that the employees taking it off-site could be trusted. The fact

that the equipment was
subsequently returned validated that trust and, over time,
cemented it. Imaginative acts of trust of
this sort breed trustworthiness in return. They don’t involve
much risk, but they broadcast that
you’re willing to meet people halfway.
Salting your world with lots of small trusting acts sends a signal
to others who are themselves
interested in building good relationships, and decades of
research by social psychologist Svenn
Lindskold and others have proved that it leads to more positive
interactions. It works because it’s
incremental (and thus manages the risks intelligently) and
contingent (that is, tied to reciprocity).
By taking turns with gradually increasing risks, you build a
strong and tempered trust with the
other person.
Rule 3 | Write an escape clause.
In our study of trust dynamics in high-stakes situations, Debra
Meyerson, Karl Weick, and I
found that if people have a clearly articulated plan for
disengagement, they can engage more
fully and with more commitment. Hedging one’s bets in this

way may seem as if it would
undermine rather than reinforce trust. (After all, how can you
expect me to trust you completely
if I know you don’t trust me completely?) Yet, paradoxically,
hedges allow everyone in an
organization to trust more easily and comfortably—and even to
take larger risks. Because I know
your dependence on me is hedged a bit (you have a good backup
plan), I have more breathing
room as well. All of us know the system will survive the
occasional, unavoidable mistakes that
permeate any complex organization or social system.
A study I did of novice screenwriters trying to break into the
entertainment industry, a domain
where betrayals of trust are commonplace, provides a good
example of how this works. To get a
chance to develop their original ideas for movies or television
shows, screenwriters first have to
pitch them to agents, independent producers, and studio
executives. Once they’ve done so,
however, their ideas are out there—and always at risk of being
stolen. (And it’s a real prospect:
No less a writer than Art Buchwald had this experience when
pitching an idea for a movie about

an African prince visiting America—an idea that suddenly
showed up on the screen a few years
later as Coming to America, with Eddie Murphy in the starring
role. In 1988, Buchwald sued
Paramount, claiming the idea was his, and won.) One way to
hedge the risk is to write up the
treatment and register it first with the Writers Guild of America,
which prevents others from
claiming it as their own. A second important hedge in
Hollywood is to have an agent who can
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pitch the idea so widely that its authorship becomes well
known. Hollywood is a small world,
and making something common knowledge in a small world is a
good hedging strategy.
Rule 4 | Send strong signals.
To ensure that trust builds from small initial acts to deeper and
broader commitments, it’s
important to send loud, clear, and consistent signals. Some of
the social signals we send are too
subtle, though we don’t realize it. In one study I did exploring

perceptions of reciprocal trust, I
found that both managers and subordinates overestimated how
much they were trusted by the
people in the other category. This discrepancy in self-other
perception—a trust gap—has an
important implication: Most of us tend to underinvest in
communicating our trustworthiness to
others, because we take it for granted that they know or can
readily discern our wonderful
qualities of fairness, honesty, and integrity.
Sending strong and clear signals not only attracts other
tempered trusters but also deters potential
predators, who are on the lookout for easy victims sending weak
and inconsistent cues. That’s
why having a reputation for toughness is critical; reputation is
among the most powerful ways
we communicate who we are and what kinds of relationships we
seek. Robert Axelrod, a pioneer
in this stream of research, used the colorful term provocability
to capture this idea: In order to
keep your trust relations on an even keel, and the playing field
level, you have to be willing not
only to take chances by initially trusting a bit (signaling the
willingness to cooperate) but also to

retaliate strongly, quickly, and proportionately (signaling that
you will strike back when your
trust is abused). His research showed that you can be nice and
not finish last—but only if you are
firm and consistent with respect to punishing offenses.
Rule 5 | Recognize the other person’s dilemma.
It’s easy for our self-absorbed brains to fall into the trap of
thinking only from our own point of
view: After all, it’s our own trust dilemmas that we find so
anxiety provoking and attention
getting. (Whom should I invest my money with? Whom should I
allow to operate on me?) We
often forget that the people we’re dealing with confront their
own trust dilemmas and need
reassurance when wondering whether (or how much) they
should trust us. Some of the best trust
builders I’ve studied display great attention to, and empathy
for, the perspective of the other
party. They are good mind readers, know what steps to take to
reassure people, and proactively
allay the anxiety and concerns of others.
A good example is President John F. Kennedy in his famous
commencement address at

American University in 1963, in which he praised the admirable
qualities of the Soviet people
and declared his willingness to work toward mutual nuclear
disarmament with Soviet leaders.
We know from Soviet memoirs that Premier Nikita Khrushchev
was impressed, believing that
Kennedy was sincere in trying to break from the past and could
be trusted to work on this issue.
Rule 6 | Look at roles as well as people.
Many studies highlight the central importance of personal
connections in the trust-building
process—and appropriately so. This finding does not necessarily
mean, however, that your trust
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in leaders or persons of power must be based on a history of
sustained personal contact. Research
that Debra Meyerson, Karl Weick, and I did on what we call
swift trust showed that high levels
of trust often come from very depersonalized interactions; in
fact, personal relations sometimes

get in the way of trust.
An important element of swift trust is the presence of clear and
compelling roles. Deep trust in a
role, we found, can be a substitute for personal experience with
an individual. Role-based trust is
trust in the system that selects and trains the individual. Robyn
Dawes, a psychologist who
specializes in human judgment, once observed, “We trust
engineers because we trust engineering
and that engineers [as individuals] have been taught to apply
valid principles of engineering.”
Thus, the role is a proxy for personal experience and guarantees
expertise and motivation—in
short, trustworthiness.
Of course, role-based trust isn’t foolproof. People on Main
Street trusted people on Wall Street
for a long time precisely because the U.S. financial system
seemed to be producing reliable
results that were the envy of the rest of the world. But flawed or
not, in deciding whom to trust
we still need to take the roles people play into account.
Rule 7 | Remain vigilant and always question.

When we’re hungry, we think about food until we’ve satisfied
our hunger; then our minds move
on to the next task confronting us. Human beings seek closure—
and that’s true of our decisions
in trust dilemmas as well. We worry about the trustworthiness
of a prospective financial adviser,
so we do our due diligence. Once we’ve made a decision,
however, we tend not to revisit it so
long as nothing seems to have changed. That’s dangerous.
In analyzing accounts of formative trust experiences, I’ve found
that people whose trust was
abused were often in situations where they discovered—too
late—that the landscape had
changed, but they failed to notice because they thought they had
already long ago figured out the
situation. Despite the fact that a boss’s attitude toward them had
shifted or someone in the
organization was poisoning their reputation, they were living
with a false sense of security. They
let their vigilance lapse.
The Madoff scandal is a good example. Many people who
invested their life savings with Bernie
Madoff initially did their due diligence. But once they’d made
their decision, their attention

turned elsewhere. They were too busy making their money to
manage it—which they often
didn’t feel comfortable doing anyway, because they didn’t think
of themselves as financial
experts. As Holocaust survivor and Nobel Peace Prize winner
Elie Wiesel, one of Madoff’s
many victims, stated, “We checked the people who have
business with him, and they were
among the best minds on Wall Street, the geniuses of finance. I
teach philosophy and literature—
and so it happened.”
The challenge in revisiting trust is that it requires questioning
the people we trust, which is
psychologically uncomfortable. But when it comes to situations
in which our physical, mental, or
financial security is on the line, our trust must be tempered by a
sustained, disciplined
ambivalence.
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Our predisposition to trust has been an important survival skill
for young children and, indeed,

for us as a species. Recent evidence, moreover, shows that trust
plays a critical role in the
economic and social vitality of nations, further affirming its
fundamental value. But what helps
humanity survive doesn’t always help the human, and our
propensity to trust makes us
vulnerable as individuals. To safely reap the full benefits of
trust, therefore, we must learn to
temper it.
The seven rules I offer here by no means represent a complete
primer on how to trust judiciously.
The science of trust is also much less complete than we would
like, although it is growing
rapidly as neuroeconomists, behavioral economists, and
psychologists use powerful new
techniques such as brain imaging and agent modeling to
discover more about how we make
judgments about whom to trust and when. But for all their
shortcomings, these rules will help
you make a good start on what will be a lifelong process of
learning how to trust wisely and well.
HBR.org > June 2009
Highlights—and lowlights—in the public’s trust of business

Read the Executive Summary
People’s trust in business takes a hard hit during scandals and
financial crises; nevertheless, trust
hasn’t always been low. Government agencies, consumer
groups, and businesses themselves
have helped build confidence over time by acting as watchdogs
and establishing safeguards.
Still, the recent round of abuses reminds us that the system is
far from fail-proof and raises the
question: Are we trusting business too much?
—The HBR Editors
1907
A scheme to corner the market in the stock of United Copper
causes the collapse of
Knickerbocker Trust and a financial panic. At one point J.P.
Morgan locks leading bankers in a
room until they agree to bail out weaker institutions.
1909
Moody’s publishes an analysis of the stocks and bonds of U.S.
railroads, becoming the first to
rate public-market securities. The growth of credit-ratings
agencies fosters trust by helping

investors assess the riskiness of various assets.
1912
After the U.S. Attorney takes Coca-Cola to court for false
advertising, the ad industry falls into
public disfavor. A group of U.S. executives forms the National
Vigilance Committee to police
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truth in advertising. Its subsidiaries, which resolve cases at the
local level, become the Better
Business Bureaus.
1913
The U.S. Congress founds the Federal Reserve System, as the
fallout from the Panic of 1907
finally breaks the political resistance to creating a strong
central bank to avert monetary
shortages.
1922–1929
As confidence in the prospects of big industrial companies

rises, ordinary investors start
purchasing stocks, not just bonds. The U.S. stock market soars.
In October 1929, it crashes to
earth.
1930s
During the Great Depression, the Pecora Commission
investigates the causes of the crash,
uncovering a wide range of misdeeds in banking. The U.S.
government helps rebuild trust in
business, by establishing regulatory bodies such as the FDIC
and the SEC.
1941
Unprecedented government spending for World War II leads to
abuses by contractors, especially
in the United States. Harry Truman forms a special Senate
committee to investigate.
1950s
Mutual funds, developed in the 1920s, take off as investors
cautiously begin to give money to
large intermediaries in order to distribute and manage their
risks.
1960s

Ralph Nader’s Unsafe at Any Speed heightens awareness that
business and consumer interests
often clash. Congress passes a flurry of consumer safety and
environmental protection laws.
1970s
The U.S. government creates several regulatory agencies to
ensure that businesses act in the
public interest. Securitization of loans begins, allowing home
buyers to borrow from far-off
lenders.
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1978
Drexel Burnham Lambert uses risk-analysis tools to build a
market for junk bonds that finance
entrepreneurial companies and corporate takeovers. Junk bonds’
popularity dips after a trading
scandal but resurges in the 1990s. By 2000, the use of junk
bonds will become pervasive in
corporate finance.
1981
Western governments start a far-reaching program of

deregulation under Ronald Reagan and
other leaders as people start trusting business more than
government.
1983
The open-book management movement is born when Jack Stack,
the new CEO of Springfield
Remanufacturing Corporation, begins sharing financial
information with all 119 employees and
teaching them how to interpret it.
1984
A Union Carbide chemical gas spill in Bhopal, India, the worst
industrial disaster in history,
leads to greater skepticism about multinationals in developing
countries.
1990s
Executive pay soars as U.S. companies experience a resurgence
in competitiveness. The cult of
the CEO grows, and global companies increasingly imitate the
American approach to business.
1995
Excitement about the internet kicks off a period of ―irrational
exuberance,‖ in which

investors bid up the stock prices of dot-com companies that
have little or no profit.
1997
eBay institutes its feedback stars rating system, allowing buyers
to rate the trustworthiness of
sellers. The following year, its registered user base rises from
341,000 to 2.1 million.
2000
The technology heavy NASDAQ Composite Index reaches a
peak of 5048.62 in March—and
only a few weeks later falls 25%. The internet bubble bursts.
12
2001
Enron collapses into bankruptcy, followed by WorldCom and
other companies rife with fraud.
2006
Grameen Bank and its founder, Muhammad Yunus, jointly
receive the Nobel Peace Prize,
making Grameen Bank the first business awarded this honor.
2008
Excessive leveraging from securitization, combined with the

bursting of the housing
bubble, leads to a severe credit crunch, where banks stop
trusting companies with loans, and
investors stop trusting banks. The world plunges into a severe
recession.
2009
After suffering a historic loss, AIG uses its government
bailout—more than $170 billion—to
pay employees millions in bonuses. President Obama calls it an
“outrage” and asks the
Treasury Department to “pursue every single legal avenue” to
recoup the bonuses.
Copyright © 2009 Harvard Business School Publishing
Corporation. All rights reserved.
Written By
Roderick M. Kramer ([email protected]) is a social psychologist
and the William
R. Kimball Professor of Organizational Behavior at the Stanford
Graduate School of Business in
Palo Alto, California. His most recent books are Organizational
Trust (Oxford University Press,
2006) and, with Karen Cook, Trust and Distrust in
Organizations (Russell Sage Foundation,

2004).
mailto:[email protected]
http://search.barnesandnoble.com/Organizational-
Trust/Roderick-M-Kramer/e/9780199288496/?itm=8
http://search.barnesandnoble.com/Trust-and-Distrust-in-
Organizations/Roderick-M-Kramer/e/9780871544865/?itm=1
CHAPTER ONE
1.0 INTRODUCTION
1.1 Background
The many successes of ESOP companies may largely be
attributed to enhancement of employee productivity. These
productivity effects are becoming increasingly noticed across
the world. Many studies have found that ESOPs or similar plans
were associated with higher levels of productivity in US
companies (Kumbhakar and Dunbar, 1993; Hallock et al., 2004;
Robinson and Wilson, 2006; Sesil et al., 2007; Kramer, 2008;
Kim and Ouimet, 2009). Jones and Kato (1995) used panel data
to estimate production functions and reported the introduction
of employee ownership on average led to a 4-5% increase in
productivity in Japanese firms. Kruse et al. (2011) analyzed the
effects of employee ownership, profit and gain sharing, and
broad-based stock options (shared capitalism) on employee
attitudes, turnover, and performance among applicants to the
―100 Best Companies to Work For in America‖ competition,
and found shared capitalism has favorable effects on employee
intent to stay and raises firm performance.
Other studies showed no direct increase in productivity from
ESOPs (Dunbar and Kumbhakar, 1991; Pugh et al., 2000; Bakan
et al., 2004; Bryson and Freeman, 2004) and two studies found
that employee ownership’s effect on productivity is conditional.
Ohkusa and Ohtake (1997) found that ESOPs that do not take
into account employee performance, and ESOPs given as part of
a pension plan do not incentivize productivity to the same
extent as profit sharing ESOPs that reward productivity directly

in the short term; Bryson and Freeman (2004) found a similar
link between employee ownership and labor productivity only
when a profit-sharing scheme was in place, and further found
that this effect is proportional to the percentage of employees
covered by the profit sharing scheme. The above studies on
ESOPs and productivity have mainly been conducted in
developed countries. In the US and many other developed
countries, ESOPs serve as alternative pension plans and involve
complex governance issues and sometimes tax deductions, but
China’s ESOPs were introduced solely as employee incentive
schemes. China’s ESOPs are not tax deductible and employee
shareholders in China play no role in corporate restructuring
decisions and corporate governance. Due to China’s
institutional structure, the benefits of China’s ESOPs are not
mixed with or altered by the effects of tax legislation or ESOP
pension programs, so these results may be considered isolated,
pure results of the ESOPs themselves. This case study focuses
on the most famous ESOP in China, Huawei Investment &
Holding Co., Ltd, to analyze ESOP’s effects on productivity.
This paper seeks to contribute to the literature on the effects of
ESOPs on productivity in a developing country.
2.0 LITERATURE REVIEW
2.1 Introduction
This chapter will review the critical literature of current
knowledge including substantive findings, theoretical and
methodological contributions to the area of Employee Stock
Ownership Plan (ESOP) and the relevance of Employee Stock
Ownership Plan in productivity of any organization which has
been done by various researchers.
2.2 Employee Stock Ownership Plan (ESOP)
Of the three recognized categories of employee ownership
(producer cooperatives, joint partnerships, and ESOPs),

employee stock ownership plans (ESOPs) are the most widely
accepted in the U.S. business community. In many the countries
in United States the study founded that the employee stock
ownership plans are very common in the firms the national
center for employee ownership evaluates that there are 10500
private and public firms which are using employee stock
ownership plans and the NCEO also founded that there was 0.25
million participants in the employee stock ownership plans in
1975 and it increases to 5 million participants in 1990. And in
2007 it increases with 8 million and the total number of
participants become 13 million (hu & izumida, 2008).
ESOPs are a comparatively long period phenomena which did
not enjoy widespread approval by employers until the passage
of the Employee Retirement and Income Security Act (ERISA)
of 1974. This act, which prohibits any loan between a
sponsoring employer and its deferred employee compensation
plan, allows ESOPs to be exempted from this prohibition. In
essence, ERISA allows an employer to establish an ESOP as
part of its retirement program, then borrow capital from it.
This capacity of ESOPs to serve as a potential source of capital
is not the only incentive to interest employers. There are also
substantial tax savings to be harvested by companies offering
ESOPs. The Deficit Reduction Act of 1984 permits owners of
independent businesses to defer the taxation of gains made by
the sale of stock to an ESOP if the gains are reinvested within a
twelve-month period. It should be noted that in order for an
employer to be eligible for such tax savings, a minimum of 30%
of the company's ownership must be held by the ESOP.
ESOPs have also been used as a method for the management of
publicly-traded firms to discourage hostile takeovers. As an
example, when Freedom Savings of Florida was confronted with
an unwelcomed takeover, its management immediately sold
300,000 shares of newly issued stock to Freedom Saving's

newly created ESOP. This tactic promptly precluded the
investors who instigated the takeover from gaining controlling
interest. Although such methods are often draconian in terms of
ownership dilution, they are nonetheless a powerful anti-
takeover tool for management. Perhaps the most publicized use
of an ESOP in recent years has been its use as a means by which
employees can buy out companies which otherwise would have
closed.
ESOPs have also found a use in collective bargaining
agreements. During periods of retrenchment and severe
costcutting, employers have discovered that ESOPs (more
succinctly, shares of ownership in the firm) can be traded in
exchange for wage and benefit concessions from the employees.
This quid pro quo arrangement has been used to some extent in
the airline and automobile industries during the early 2000s. On
an ever increasing basis, academic and practitioner journals
have been presenting yet another incentive for employers to
initiate ESOPs—improved employee commitment. Commitment
can be broadly defined as the degree to which employees
identify with their organization and their willingness to exert
considerable effort on behalf of that organization. Employees
who are highly committed to the goals of their organizations
and have a positive attitude toward that organization, should
also have a strong desire to come to work and contribute toward
the attainment of those goals.
As a result of employee ownership allegedly improving
employee commitment, the advocates of employee stock
ownership contend that ESOPs can produce tangible benefits for
firms by increasing productivity, improving profitability,
enhancing employee loyalty, and reducing turnover. All of the
tangible benefits are ascribed to the expectation that ESOPs
lead to a better motivated and more efficient labor force. It is
this motivational use of ESOPs that is of primary interest to this
study. Particularly, this dissertation investigated whether or not

there was an association between employee stock ownership and
employee performance.
2.3 Types of Employee Ownership
There are three classifications of employee ownership: producer
cooperatives, joint partnerships, and ESOPs. Producer
cooperatives are by far the oldest and can be traced to medieval
times. Under this arrangement, the business is totally owned by
its employees, although the proportion of ownership may vary
widely from employee-owner to employee-owner. Each worker-
capitalist, regardless of the amount of his investment in the
cooperative, has an equal say in all decisions involving the
organization—one man, one vote.
The second form of employee ownership is the joint partnership.
It differs from producer cooperatives in that joint partnerships
are not 100% employee owned. The founder of the business still
retains a portion of the ownership in the organization. The ratio
of ownership between the founder and employees varies greatly
from firm to firm, as does the amount of control (voting rights)
enjoyed by the employees.
Finally, ESOPs are by far the most common and most complex
form of employee ownership. Their inception is generally dated
as 1958. This was the year, that Louis Kelso published The
Capitalist Manifesto which called for the revitalizing of
productivity in the United States through the creation of
employee stock ownership plans.
2.4 Relationship between ESOPs and Employee Productivity
O'Halloran (2012) confirmed the statistical significant
association between ESOPs and employees' turnover whereas
the earlier work of Curme and Stefanec (2007) opposed the
correlation between the above-mentioned variables.
Nevertheless, numerous authors confirmed that there is strong
positive linkage between ESOPs and the organizational
performance (Goddard, 2001; Bauer, 2004; and Brown and
Sessions, 2006). Interestingly, the Green and Heywood
confirmed that the employees' motivation is affected by the
ESOPs to some extent. However, this study was conducted in

the developed economy thus, there is no conclusive evidence
from the emerging economy (Pakistan)'s context. Additionally,
the earlier work of researchers confirmed positive association
between ESOPs and Job Commitment (Park and Seng, 1995) and
ESOPs and firm's profitability (Jensen and McCallney, 1976;
Modigliani and Miller, 1958). However, O'Halloran (2012)
argued that job commitment and job satisfaction are
significantly positively affected due to ESOPs. Conversely,
Freeman (1978) found negative correlation between job
commitment and ESOPs. Additionally, earlier authors argued
that profitability and productivity of the organization is
correlated with the ESOPs (Park and Seng, 1995; Krus and
Blaise, 1997). On the contrary, later researchers found no
correlation between ESOPs and productivity/profitability of the
organizations (Pugh et al. 2000; Blues and Krus (2003).
Nevertheless, these all studies have been limited to the
developed economies while there is still no conclusive evidence
from the emerging economies to explain the nature and strength
of the variables.
Interviewer information
Name
Sex
Education

Department
Working Year
SUN HUAQING
Male
Degree
Sales
2
LI RUMENG
Female
Degree
Finance
4
YA FUQINAG
Male
Masters
Human Resource Management
3
ZHOU JIAJIE
Female
Masters
Sales
2
DU HEZHENG
Male
Degree
R&D department
3
Interview question
1. How is Employee Stock Ownership Plan determined?
Employee Stock Ownership Plan's Operating Rules:
(1) Conditions of Implementation: From April to May each year,
cadres and department heads shall decide on the qualifications
and quantities of shares granted to employees according to their
positions, working years and results of the previous year's

performance appraisals.
(2) Incentive quotas: The maximum amount of shares held by
employees at each job level is the limit, that is, the full line of
shares.
(3) Incentive objects: All employees above the 13th level have
qualification of shares, and employees can choose whether or
not to purchase the company's shares voluntarily.
(4) Grant price: the net assets per share after the end of the
previous year after deducting the annual dividend value.
(5) Allocation of Equity: According to the operation of the
Company in the previous year, a resolution on the amount of
dividends paid by shareholders' general meeting shall be made.
(6) Transfer and recovery: The Company allows employees to
apply for withdrawal of shares, the shares can be transferred to
the company, the settlement price for the holding period of
more than 3 years according to the most recent net asset value
of the shares held within 3 years by the time of purchase price.
According to the staff performance appraisal, the company also
has the right to recover the shares held by employees.
2. What is the objective of Employee Stock Ownership Plan?
During the start-up period, Huawei needed large amounts of
funds due to market expansion and scale expansion. On the
other hand, Huawei needed a large amount of investment in
scientific research to suppress competitors. In addition, due to
the nature of private enterprises at that time, financing
difficulties arose. Therefore, Huawei prefers internal financing.
Internal financing does not need to pay interest, there is a lower
risk of financial distress, do not need to pay a higher rate of
return to external shareholders, and can inspire employees to
work hard.
In the era of the network economy bubble in 2000, the IT

industry was devastatingly affected, and financing was
unprecedentedly difficult. At the end of 2001, Huawei began to
implement the option reform called "Virtual Restricted Share".
Virtual stock refers to a virtual stock granted by the company to
the incentive object, so the incentive object can enjoy a certain
amount of dividend rights and stock price appreciation rights,
but it has no ownership, no voting rights, cannot be transferred
and sold, and automatically expires when leaving the enterprise.
The issuance of virtual shares maintains Huawei's management
control over the enterprise without causing a series of
management problems.
In 2003, Huawei, which had not survived the bubble economy,
suffered another hit with SRAS. Its export market was affected.
Meanwhile, Huawei's global lawsuit directly affects Cisco's
global market. Huawei internally called for more than mid-level
employees voluntarily submit "payroll applications", while
further implementation of the management buyout, and stabilize
the workforce.
In 2008, the global economic crisis triggered by the U.S.
subprime mortgage crisis caused heavy losses to the world
economic development. Faced with the impact of the current
economic crisis and the deterioration of the economic situation,
Huawei introduced a new round of equity incentive measures.
The process of equity incentive of Huawei shows that equity
incentive can closely connect the human capital of employees
with the future development of the enterprise and form a
virtuous circle system. Employee equity, participation in
company dividends, to achieve the company's development and
staff personal wealth added value, while equity financing and
internal financing simultaneously, can increase the company's
capital ratio, the company cash flow to buffer the tension.
Since Huawei did not go public, the early establishment of

restricted virtual shares can only be targeted at Chinese-owned
employees. As the proportion of foreign employees increases,
Huawei, a globalized company, must also consider long-term
incentives for "crooked kernel of benevolence" Therefore, we
need to find a way to operate in line with international
standards. To this end, Huawei introduced incentive plan (TUP)
is first used to solve the incentive problem of foreign
employees.
3. Are Employee Stock Ownership Plan available for
everyone?Fresh graduates just entered the company, there will
be no shares, and generally give them 5000 shares a year later.
Employees recruited through social recruitment are not the
same, they may give them 10000-20000 shares after working for
a year.
4. How will the employee fund payment for shares?
On March 31, 2012, the Huawei board secretariat made it clear
that after 2012, the restricted shares of the virtual limited
liability company can only be purchased through self-raised
funds. The bank will no longer provide the necessary loans to
purchase the shares.
5. Will the company provide financial assistance?
No, it wouldn’t. From 2001 to 2012, employees borrowed
money from the bank in the name of their own company.
6. Are the rewards allocated fairly and equally in your
organization? How?
The first is efficiency in Huawei, Huawei from the reporting
system into a share-based system. The most energetic
motivation is more work and more. In the premise of efficiency,
and then consider the fair.
7. Do you think that Employee Stock Ownership Plan is
efficient? (I.e. rewards are leading to wanted behaviour)

Huawei advocates combining the community of interests among
customers, employees and collaborators and strives to explore
the internal dynamics of distribution according to factors of
production.
Employee stock ownership plan, on the one hand, make a
positive return to good staff. On the other hand, will continue to
bring the most responsible and talented people into the
company's management.
8. Are the employees fully aware of what is requested from
them in order to receive a reward?
Yes, all employees know how to get rewarded. Generally based
on employee job rankings, quarterly performance, qualifications
and other factors to carry out the number of shares to be
distributed.
9. How does the rewarding policy differ from other
organizations?
Compared with ZTE (Zhongxing Telecom Equipment), Huawei
employees held shares only as a basis for dividends and almost
most employees have the opportunity to obtain such shares.
However, the main motivators for ZTE are outstanding
employees and R & D personnel.
10. In your opinion, do you think that Employee Stock
Ownership Plan could be improved in the future? If yes, how
improved the Employee Stock Ownership Plan?
1. Huawei can draw on the experience of other countries and
introduce tax concessions for the employee stock ownership
plan to ensure the effectiveness and diversity of employee stock
ownership.
2. Standardize employee stock ownership plan operation process
To exert the maximum incentive effect of the Employee Stock
Ownership Plan, the enterprise must formulate the process of
registration, management, bonus, repurchase and withdrawal of

employee stock ownership. Formulation of specific operational
procedures, such as the timing of acquisition of shares and the
public holding of shares;
3. The source of funding was abolished to open up new
financing channels. One of the reasons for the difficulty in
Huawei's shareholding scheme is that the employee's stock
purchase source cannot afford the huge capital needs of the
enterprise based solely on the employee's salary and dividends.
Project Title: The effect of Employee Stock Ownership Plan
(ESOP) on employee productivity - A Case Study of Huawei
Technologies Co. Ltd.
CHAPTER ONE
INTRODUCTION (about 900 words)
1.1 Background of the Study(400-500 words)
1.2 Objectives of the Study(50-70 words)
1.3Research Questions (20-40 words)
1.4 Significance of the Study
1.5 Delimitation/Scope of Study
1.6 Organization of the study
The study is divided into five main chapters. Chapter one
comprised the background of the study, statement of problem,
objectives of the study, research questions, significance of the
study, delimitation/scope of the study and the organization of
the research report. Chapter two reviewed various literatures in
connection with the effect of Employee Stock Ownership Plan
(ESOP) on employee Productivity. Chapter three indicates the
methodology used, (that is the research design, study

population, sample and sampling procedure, qualitative data
collection and analysis). Chapter four analysed the qualitative
data collected from respondents as to whether implementing
Employee Stock Ownership Plan (ESOP) will impact on
employee productivity. Chapter five presents the summary,
conclusion and recommendations of the study.
CHAPTER TWO
LITERATURE REVIEW (About 1200 words)
2.1 Introduction
2.2 Employee Stock Ownership Plan (ESOP)
2.3 Types of Employee Ownership
2.4 Empirical Research
2.5 Employee Productivity Research
2.6 Limitations of Previous Research
2.7 Relationship betweenESOPs and employee Productivity

CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Introduction

3.2 Research Design
3.3 Population and Sampling Design
3.4 Data Collection Methods
3.5 Research Procedures
3.6 Data Analysis Methods
CHAPTER FOUR
DATA ANALYSIS & DISCUSSION OF FINDINGS
4.1 Introduction
……………………….
CHAPTER FIVE
SUMMARY, CONCLUSION & RECOMMENDATIONS
5.1 Introduction
5.2 Summary of Findings
5.3 Conclusion
5.4 Recommendation
International Business Project
Generic Marking Grid for International Project
INTRODUCTION WEIGHTING 10/100
· Is there a clear question that your research means to

answer? Name and explain why this question matters.
· Make clear what discussion of academics and specific
area of business management research you collect data for. (For
a random example: not just “Marketing” but more specifically,
Brand Loyalty.)
· Be critical.
MARKING CRITERIA
GENERAL COMMENTS ON THIS SECTION
Is there a clear introduction that discusses the topic of research
and rationale (what you are doing and why)?
Are appropriate background information has been provided
including all special terms and definitions?
Are the aim and objectives, research questions (or hypothesis)
clear, relevant and achievable (testable)?
Do aims, objectives etc go beyond mere description i.e. do they
involve explanation, comparison, criticism or evaluation?
Does the introduction indicate the content of the other chapters?
OVERALL IMPRESSION: INTRODUCTION
70 - 100%
60 - 69%

50 - 59%
40 - 49%
20 - 39%
0 - 19%
· Comprehensive background information, definitions and
rationale.
· Clearly and explicitly identifies aim, objectives and
appropriate research questions / hypotheses.
· Has detailed critique of how they were arrived at and potential
issues.
· Detailed but succinct identification of content of remaining
chapters.
· Good background information, definitions and rationale.
· Clearly identifies aim, objectives and research questions /
hypotheses.
· Partial critique of aim, objectives and research
questions/hypotheses and potential issues.
· Adequate identification of content of remaining chapters.
· Some good background information but lacking in some
aspects.
· Identifies aim, objectives and research questions /hypotheses
but lacking detail in some aspects.
· Lacking a clear rationale of how they were derived.
· Adequate but not succinct identification of content of
remaining chapters.
· Background information has some relevance but is lacking in
some key aspects.
· Adequate identification of research area(s) but
questions/hypotheses not well articulated or poorly explained
· Limited explanation of how they were derived
· Some indication of content of remaining chapters.
· Does give some indication of research areas but very limited

background information.
· Lacks adequate identification of aim, objectives and research
questions / hypotheses
· Very limited explanation of how they were derived.
· Limited indication of content of further chapters
· Irrelevant or very limited background information.
· Does not identify aim and / or objectives and / or research
questions / hypotheses.
· No explanation of how they were derived.
· No indication of content of the remaining chapters.
LITERATURE REVIEW WEIGHTING 25/100
Appropriate depth and sufficient reading?
· Really focussed to be useful for the later analysis?
MARKING CRITERIA
Has a comprehensive range of relevant literature, pertinent to
the aim and RQs of the dissertation or is the impression given
that almost everything read on or around the problem has been
included?
Are the key themes and issues surrounding the research
questions clearly drawn from the literature?
Does it attempt to compare and contrast a number of relevant
concepts, models or theories in a critical manner or is it merely
descriptive?
Are these used in an effective manner?
Are the sources used up to date, where appropriate and do they

have sufficient academic weight?
Have sources been acknowledged and referenced fairly and
properly?
Is the bibliography at the end of the dissertation complete and
in the appropriate version of the Harvard System?
OVERALL IMPRESSION: LITERATURE REVIEW
70 - 100%
60 - 69%
50 – 59%
40 - 49%
20 - 39%
0 - 19%
· Comprehensive appraisal of relevant literature.
· Critical appraisal of relevant literature.
· Clear relation to research questions.
· Citations are correct and appropriate
· Bibliography wide ranging and correct in all aspects.
· Comprehensive appraisal of relevant literature
· High level of critical appraisal.
· Related to research questions.
· Citations mainly correct.
· Bibliography wide ranging but with minor errors.
· Adequate appraisal of mostly relevant literature
· Some critical appraisal.
· Not always relevant to research questions.
· Citations correct but some errors.
· Bibliography wide ranging but with some errors.
· Adequate discussion of some relevant literature
· Tends towards the descriptive with very limited critical

appraisal.
· Some relevance to research questions.
· Some citations correct but a number of errors.
· Bibliography limited and with some errors.
· Literature is limited in scope or irrelevant.
· Little appraisal and very descriptive.
· Limited relevance to research questions.
· A large number of citation errors.
· Bibliography limited with many errors.
· Poor and limited use of literature.
· Vague understanding of relevance of literature.
· Student appears to have relied heavily on too few texts.
· No or very few citations used.
· Bibliography very limited and does not adhere to the Harvard
System.
METHODOLOGY WEIGHTING 20/100
MARKING CRITERIA
Is there a clear rationale for methodology i.e. is student aware
of nature and types of research e.g. are distinctions between
qualitative and quantitative, positivist and interpretative
methods addressed?
Have the alternatives been discussed and have the advantages
and disadvantages of chosen methods been evaluated? Has this
understanding informed their choice of approach?
Is the methodology described appropriate for the data required?
Is the research methodology described fully so that it could be
replicated? I.e.

Are the research instruments well designed with all questions
etc relevant to research aims?
Has a pilot study been evaluated?
Were research instruments approved by supervisor before
implementation?
Are sampling methods described in detail in relation to
sampling theory i.e. who are the respondents; how many are
there; why and how were they selected?
Is there evidence of care and accuracy in the data collection
process?
Are data analysis methods discussed?
Are reliability and validity issues addressed?
Has the methodology been evaluated in retrospect with
suggestions for improvement if the research were to be
undertaken again?
OVERALL IMPRESSION: METHODOLOGY
70 - 100%
60 - 69%
50 - 59%
40 - 49%
20 - 39%
0 - 19%
· Has a very clear and well articulated academic rationale for
methodology and research approach.
· Methods highly relevant to purpose with evidence of exploring
alternative methods and choices well justified.
· Sampling correct in all aspects and clearly explained.
· Critical evaluation
· Overall approach very well planned and executed.
· Has clear academic rationale for methodology and research

approach but perhaps not always well articulated?
· Methods largely relevant to purpose with evidence of
exploring alternative methods but incomplete justification.
· All elements of sampling theory addressed with some being
well done.
· Evaluation may lack a critical approach in some aspects
· Generally well planned and executed.
· Some academic rationale for methodology/ approach but
lacking detail in areas.
· Methods not relevant to purpose in all aspects but has some
good aspects. Justification for choice is limited.
· All elements of sampling theory adequately addressed
· Evaluation has been attempted but is limited in terms of a
critical approach.
· There may be shortcomings in the planning and execution.
· Limited methodological rationale.
· Methods have some relevance to purpose but have been
insufficiently planned and executed. Justification for choice is
very limited.
· Sampling theory addressed but limited with omissions.
· Evaluation is attempted and applied but is poor.
· Overall planning and execution weak.
· Basic rationale for methodology.
· Methods are mainly irrelevant to purpose or are poorly
explained and difficult to understand.
· Sampling theory extremely weak and lacking detail.
· Limited evaluation with very little actual application.
· Poorly planned and executed.
· No attempt at rationale for methodology.
· Describes processes that do not relate to the purpose.
· No sampling theory discussed.
· No or very limited and vague evaluation.
· Execution fails to achieve minimum standard required.

ANALYSIS & DISCUSSION OF FINDINGS
WEIGHTING 25/100
MARKING CRITERIA
Is the data presented relevant to aims and objectives?
Does any statistical presentation make the most of the data
collected?
Is any qualitative data categorised and presented
systematically?
Is there any secondary data doe this study?
Are the findings presented clearly and interestingly for the
reader to follow? i.e. is diagrammatic representation of data
e.g. tables, charts etc embedded in the text?
Are the appendices used appropriately for bulky and/or less
interesting/essential data?
FOR QUESTIONNAIRES Do the appendices contain a data
summary sheet, a summary questionnaire and details of
statistical analysis undertaken?
FOR INTERVIEWS Do the appendices contain data collected
and analysed such as interview transcripts?
FOR OBSERVATIONS Do the appendices contain back up data
on observations carried out?
FOR SECONDARY DATA do the appendices contain sources
where data collected and how they have been analysed?
Is the most relevant data clearly summarised, discussed and
evaluated?
Have patterns in the data been identified and/or key variables

compared and relationships highlighted?
Are all statements discussed in context and supported by the
data?
Have the findings of the primary research been compared and
contrasted with findings, theories, models or concepts derived
from the literature review?
OVERALL IMPRESSION: ANALYSIS & DISCUSSION OF
FINDINGS
70 - 100%
60 - 69%
50 - 59%
40 - 49%
20 - 39%
0 - 19%
· Clear and unambiguous presentation of data.
· Relevant, rigorous and thorough analysis.
· Excellent discussion and evaluation of findings.
· Excellent linkage to the literature.
· Clear presentation of data with few errors.
· Relevant and thorough analysis.
· Good discussion and evaluation of findings.
· Good linkage to the literature but some omissions.
· Generally clear presentation of data but some errors.
· Relevant analysis but lacks thorough approach.
· Discussion and evaluation of findings lacks rigour but some
useful findings.
· Clear but partial linkage to the literature but many omissions.

· Presentation of data is limited or lacks clarity.
· Analysis is basic and pedantic in many areas.
· Discussion and evaluation is superficial or relies on
unsupported assertions.
· Attempts linkage to the literature but not in a clear manner.
· Unclear or confusing presentation of data.
· Analysis is basic and pedantic in all areas.
· Discussion and evaluation very limited or shows lack of
understanding of evidence collected.
· Minimal linkage to the literature.
· Much or all of the data has been presented in an unclear
manner.
· No analysis or trivial.
· No or very limited discussion of findings.
· No or very weak linkage to the literature.
CONCLUSION AND RECOMMENDATIONS
WEIGHTING 10/100
MARKING CRITERIA
Do the conclusions follow on from the findings? Are the
conclusions well grounded in the evidence and arguments
presented?
Have the aim, objectives and research questions been clearly
reviewed and addressed?
Are the conclusions discussed in context and are they applicable
to a wider scenario?

For work based dissertation are recommendations given and are
they consistent with the findings and conclusion?
OVERALL IMPRESSION: CONCLUSION
70 - 100%
60 - 69%
50 - 59%
40 - 49%
20 - 39%
0 - 19%
· Conclusions valid and consistent with analysis.
· Comprehensive reference to aim, objectives and research
questions.
· Conclusions discussed in detail and context and recognised
applicable to wider scenario.
· For work based dissertation recommendations are consistent
with findings and conclusions.
· Conclusions valid and generally consistent with analysis.
· Good reference to aim, objectives and research questions.
· Conclusions discussed in context and recognised briefly that
applicable to a wider.
· For work based dissertation some logical recommendations.
· Conclusions generally valid and partially consistent with
analysis.
· Some reference to aim, objectives and research questions.
· Conclusions discussed in context and some recognition of
wider application.
· For work based dissertation some recommendations but may
be questionable based on findings and conclusions.
· Some valid conclusions but generally inconsistent with
analysis.

· Limited reference to aim, objectives and research questions.
· Conclusions briefly discussed in context and wider context.
· For work based dissertation limited recommendations.
· No obvious conclusions drawn or they are inconsistent with
analysis.
· Very little attention to aim, objectives and research questions.
· Conclusions very briefly discussed in context.
· For work based dissertation very few appropriate
recommendations.
· Conclusions do not relate to purpose.
· No attention to aim, objectives and the research questions.
· Conclusions not discussed in context.
· For work based dissertation no recommendations
COHERENCE AND PRESENTATION WEIGHTING
10/100
This section considers the overall holistic nature of the
dissertation. Marks should be awarded according to the
descriptors below recognising the overall consistency,
compliance with presentation requirements and coherence of the
dissertation.
MARKING CRITERIA
YES (or few errors)
NO (or many errors)
Is the overall style and presentation in accordance with that
specified in the MSG?
Standard title page
Length 8000 – 10000 words
Word count given
White A4 paper
Loose spiral binder
Correct pagination
Correct margins
Double spacing for text

Single spacing for indented quotes and references
Chapter and section headings
Tables and figures numbered correctly
Appropriate font/bolding and italics
Is the abstract a concise (1 page) summary of the aim,
methodology and findings/conclusion?
Is the contents page clear, concise and logically numbered?
Are appendices, tables and figures listed and appropriately
referred to?
Has the dissertation been spell and grammar checked?
Does the dissertation have an overall coherence?
OVERALL IMPRESSION: COHERENCE
70 - 100%
60 - 69%
50 - 59%
40 - 49%
20 - 39%
0 - 19%
· Fulfils all requirements and follows an acceptable style in a
correct manner.
· Easy to read and leads the reader along a well argued path.
· Has an overall coherence.

· Fulfils most requirements and follows an acceptable style in a
generally correct manner.
· Presented so that it is easy for reader to follow.
· Is generally coherent although it may lack coherence in parts.
· Attempts to follow an acceptable style and fulfils most of the
requirements.
· Not presented with maximum clarity and sometimes difficult
to follow the argument.
· Some evidence of coherence.
· Generally attempts to conform to requirements and adequately
executed.
· Some aspects of presentation unclear.
· Has limited coherence.
· Does not meet some of the key requirements.
· Fails to follow an acceptable style and some aspects unclear.
· Very little coherence.
· Does not meet many of the key requirements
· Fails to follow an acceptable style and often unclear an untidy.
· No coherence

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