Trusted Business System ModelUsing Context Sensitiveness

Chandrasekaran SubramaniamDepartment of Computer Science

Anna University, Chennai,India

chandrasekaran s@msn.com

Sankarbharathy PonnusamyDepartment of Technology Management

NYU- Poly, New YorkUSA

sankar@isis.poly.edu

Agilan Ravi, Hanumanth Praveen RavindranDepartment of Computer Science

NYU- Poly, New YorkUSA

{aravi01, hravin01}@students.poly.edu

Abstract—The objective of the paper is to propose apredictable context sensitive trust model for a business system.A business system can be imagined with four basic entitiesbetween which there is a mutual trust of different nature exists.A formal model, which encompasses the trust between thestack-holders is proposed where the context sensitive featuresof the multi variate trust issues are addressed. The impactof both the legal environment and the interoperability factorson various entities involved in the trust issues are focused inthe work. The key dimensions of the trust i.e. integrity andloyalty are determined through acceptable uncertainties ofvarious components in the proposed model the proposed contextsensitive trust model for business systems. The model whichrepresents the various trusts in a context sensitive businesssystem is verified using a numerical simulation tool and theinferences are drawn with a scenario

Keywords- Context Sensitive, Trust, Business System, Ac-ceptable Uncertainty and Integrity

I. INTRODUCTION

The trust prevailing in the business system is not only de-pending on the concepts for product development and servicesincluding marketing and sales but also on the material suppli-ers and the working employees of the company. Basically trustis a positive expectation that an entity will not act opportunis-tically against the other entity.The trust being a belief, whichis a more fragile relationship between any two or more entitiesand the violation of this belief, may destroy all the entities. Inorder to sustain the business activity the company must try tomaintain good relationship in all business dimensions betweenvarious stakeholders. Assuming the initial trust between anytwo entities such as suppliers and the enterprise, the trustrelationship starts increasing or decreasing depending uponthe consistency and competence of the company in running thebusiness. Meanwhile, if the company is not loyal or honest tothe funding agencies even with considerable amounts of sharesin the market, then the trust relationship deteriorates. Hence,a dependable system contributes toward raising and assuringtrust in business relationships and services. It is clear that thetrust encompasses larger issues than simply dependability of acomputing or communication infrastructure which necessitiesa frame work for that business. In recent e-business, the termtrust is usually used to characterize the more general relianceof business actors and consumers on other actors or systems

within the Information Society [1]. In running a successfulbusiness the clear difference between a simple absence oftrust, and positive mistrust has to be properly understood. Theabsence of trust basically implies that there are no previousinteractions between the entities pertaining to that businessenvironment however, the mistrust is supposedly a conse-quence of past actions. The mistrust is often a consequenceof a complex set of beliefs, perceptions, associations andinterpretations. Were as, trust is a multidimensional conceptand defined as the perceived benevolence and integrity of aparticipating party in the transaction [2]. The most effectiveway to build trust in the workplace is to work together.There are no magic gimmicks or other simple solutions. Trustcannot be created by excessive wages, great company picnicsor wonderful working conditions; it can only be generatedthrough teamwork, honesty and fairness. Although trust andproductivity are complex issues and represent only part of thetotal fabric of interpersonal relationships in small businesses,there are some attributes that have positive effect on trustin successful small businesses. In the earlier works, Zanddefined trust as the conscious regulation of ones dependencean another that will vary with the task, the situation, and theperson and emphasized the vulnerability aspect of trust [3].The main issue in building business trust is lack of ethicalguidelines in the business organizational framework. Generallymoney-making is an informed risk-taking, and when ethics arelifted out, it will not only affects the lives of thousands ofemployees but also ruin the financial conditions of the bankwhich funded the business. The company savings should beclean and green in the name of Socially Responsible Investing(SRI).

The paper is organized as follows; Section II Illustrates thetrust issues in a business system with a help of a used casediagram and Section III describes the interdependency betweendifferent types of trust with in the organization and out sideof it, leading to a generic trust including all the entities withinformation and legal supports systems. In section IV givesa different perception of trust as acceptable uncertainty anda formal equation for the actual uncertainty which may beconsidered as a trust index for the customers with a scenario.Section V brings out simulated results for the end to end trustbased on the uncertainty values of the constituent elements

involved in the business to reach an acceptable uncertaintylevel thus verifying the proposed trust model.

II. TRUSTED BUSINESS MODEL

The trust issues in any business system starts from behaviorof the management to look after the employees welfare in-cluding their salaries and health care covering their retirementlife. The employees first trust their organization in such a waythat one is mutually exists for each other. The interpersonalcommunications develop a cordial relationship between thevarious categories of workers in the company. To establishthe business in the correct path, the rights for the employeesto openly comment on the management decision towardsthe product promotion and marketing techniques may beencouraged. The customers will trust the enterprise only whenthere is a systematic and regular monitoring of the fulfillmentof their grievances towards complaints.

Each and every individuals in the company must knowthe real business targets and social responsibilities of theirproducts in building a healthy and strong industry in the longrun.The executives must politely listen to the grievances of theworkers if any and attempt to rectify them as early as possibleto build the trust from the workers on the business. Theexpert committee may recommend early and feasible solutionsto some pitfalls of the decisions taken in urgent times. Thefinancing agency and the sponsors may also come forward todetect the problems arising in various phases of the business.

The main objective of any company is to make money byselling products to the customers. Raw materials are suppliedby the vendors, production of goods can be done utilizing rawmaterials. Also, employees are responsible for the productionof the goods. Above all, to start a company, basic fund isnecessary and this could be obtained from the bankers. Banksare the financial assets of any company. Trust between all theseactors results in healthier function of the company. The legalenvironment is where a number of legal principles are framedfor maintaining trusted relationship between individuals andthe company. The various actors playing different roles in atrusted enterprise is shown as a use case diagram in Fig. 1.

Financier

Supplier

Employee

Trusted Enterprise

Funds

Supplies

Buys

Works LegalAuthority

Customer

Appeals

Trust on Money

Trust on Material

Trust on Welfare

Trust on Product

Trust on Law

Fig. 1. Use Case Model of a Trusted Business

III. CONTEXT SENSITIVE TRUSTED BUSINESS MODEL

There are many constraints in running a small business within a complex legal environment. The interpersonal relation-ships starts from selection, recruitment, and promotion phasesmay affect the honesty and fairness within the administration.But business laws may enforce certain actions on the companywhich inturn diminish the trust value of the affected persons.Every personnel system must consider the statutes relating tothese issues in order to establish mutual positive trust andminimize the mistrust. The trust results from the combinationof personal experience and perceptions of honest, ethical busi-ness practices, the expert recommendations but finally the mostimportant is the relationship the people have with the companyor the brand. The basic features of such a context sensitivetrust involved in a business system are proposed as COM 4(Competitive, Compliance, Compliance and Comprehensive)model and discussed below:

A. Comparative

In order to establish trust on the produced items by thecustomers is possible only by comparing the similar itemsfrom the competitors and bring out the salient features of theother manufacturers of the same item. However, the businessmay be lost or the trustworthiness may be increased.

B. Competitive

The trust between the enterprise and the suppliers will beenhanced only through offering a competitive price for thematerials and regular payments for them. Here the mutual trustbetween the parties and the dynamic trust concepts based onthe business nature are to be exercised.

C. Compliance

The trust between the legal authorities and the employeescan be developed only by accepting and fulfilling the compul-sory requirement by the enterprise through legal procedures.The most contentious aspect of SarbanesOxley Act (SOX)is section 404, which requires management and the externalauditor to report on the adequacy of the company’s internalcontrol over financial reporting (ICFR). This is the mostcostly aspect of the legislation for companies to implement,as documenting and testing important financial manual andautomated controls requires enormous effort

D. Comprehensive

The trust between the funding agency and the employeesshould be very comprehensive i.e. the enterprise should nothave minimum or maximum number of employees other thenthe requirement for the consistent manufacturing and deliveryof goods.The trust with above features should exist not only within the organization but also with the external parties. Thecustomers are not directly associated with the enterprise, sothe level of certainty between the customer and the enterpriseis low. Similarly the procured product is from a third partysupplier and so the certainty between the procurement and the

enterprise is also low.The quality of the finished product isdirectly dependent on the quality of the procured materials,which is not from the same organization. Hence the levelof certainty between the finished product and procurementis low, while the certainty between the finished product andpacking is high. There exists a high degree of trust betweenthe enterprise and workers, procurement and manufacturing,finished product and packing as they are part of the sameorganization and are directly related to one another as shownin Fig. 2. The solid lines represent the relationship of lowlevel of uncertainty and the dotted lines denote the relationshipof high level of uncertainty. The workers, manufacturing and

Enterprise Workers

Procurement Manufacture

Finished Product Packing

Customer

Product

Lega

l Env

ironm

ent

Info

rmat

ion

Serv

ices

Indirect Trust Direct Trust

Fig. 2. Interrelated trust flow

packing units have direct trust on the legal environment and theinformation services as all fall under the same organization,which gives a direct trust on the product. So the trust betweenthe customer and the final product can be determined asthe sum of the product of the trust between the enterpriseand the workers, procurement and manufacturer, and finishedproduct and packing. The various business entities and theirrelationship as a binary variable is shown in Table I.

TABLE IBUSINESS ENTITY AND RELATIONSHIP

BusinessEntities

Relationin thebusiness

Custom-er

Finance Vendor Employ-ee

Items

Customer Buysandbelieves

Yes No No Yes Yes

Finance Moneyandsupports

No Yes Yes Yes Yes

Vendor SuppliesandStocks

No Yes Yes No Yes

Employee WorksandCollabo-rates

Yes Yes No Yes Yes

Items Producesandsales

Yes Yes Yes Yes Yes

Let the equation for the generic trust between end to endi.e. customer to finished goods be represented as in equationbelow:

Tcg=(tce*tew) + (tep*tsm) + (tcp*tcs)+ (tel*tci) (1)

where, Tcg = the total trust of the customer on thepurchased goods over a period of time,tce= the trust of the customer on the enterprise based on thereputation,tew= the trust of enterprise on the workers based on theircompetence and loyalty,tep= the trust of enterprise on the third party packagingcompany based on its quality,tsm= the trust of suppliers on the manufacturers based ontimely payment,tcp= the trust of the customer on the manufacturing processesbased on industrial standards,tcs= the trust of the customer on the supplier on the supplierbased on the quality of raw materials,tel= the trust of enterprise on legal auditing based on antitrustpolicy andtci= the trust of the customer on the information systemsbased on privacy and security policies over the same period

IV. TRUST AND ANTITRUST POLICY IN BUSINESSCONTEXT

Trust is basically considered to be a degree of acceptableuncertainty. Generally a trust can either be a absence of trust,distrust, mistrust and zero trust. Where mistrust is defined aslack of trust, zero trust is defined as null trust, absence trust isdefined as loss of trust and trust is defined as positive belief.Total acceptable uncertainty in business system is the weightedsum of individual uncertainty of various processes in thatbusiness. For example processes like procurement, manufac-turing, marketing, auditing and business meeting the industrystandards as per the laws and regulations. In a business toemployee context, the employees do not discuss or exchangeinformation with actual or potential competitors regardingthe individual company prices, price changes, price differen-tials, mark-ups, discounts, warranties, allowances, credit terms,costs, production levels, capacity, sales, etc. The company hasto limit their sales to particular territories, customers or classesof customers. In the context of M-commerce the securitypolicies should define how and which mobile devices can beuse in a mobile business application. Enforcement of policiesmakes use of certificates, defined for users and devices, whichdetermine delegable application tasks and trustworthiness ofdevices [4]. In a business to legal context,the InternationalProfessional Compliance Association (ICPA), the membersshall not engage in any discussion or agreement concerningparticular representatives, distributors, other customers, or sup-pliers involving decisions to deny, limit or terminate businessrelations between any ICPA member and such firms. sell toor purchase from, or termination or modification of sales orpurchase arrangements with representatives, distributors, orother third parties, or prices or terms of sale or resale by cus-tomers [6]. In a business to business context, the Sherman Actprohibits ”contracts, combinations or conspiracies in restraint

of trade or commerce.” That is the contract, combination orconspiracy requirement has been found to exist where there issome form of agreement between two or more parties [5]. Suchagreements may be explicit, e.g., taking the form of a contractor other oral or written communication, or implicit, e.g.,implied by the conduct of the parties and construed to indicatean agreement was formed. In most cases, the prohibitions ofthe Sherman Act extend only to transactions that are foundto be unreasonable restrictions on competition. Under theantitrust laws, ”price fixing” includes much more than anagreement to set prices at a particular level, within a specificrange, or in accordance with a particular formula. It potentiallyincludes any agreement that tends to raise, fix, stabilize orotherwise affect price. Thus, even if the parties permit theprice to vary somewhat under the agreement, the agreement isillegal if it has the effect of stabilizing the price among thoseparticipating in the conspiracy. Similarly, price fixing includesagreements to control other factors that directly or indirectlyaffect price, such as establishing production levels, settinguniform discounts, credit or warranty terms, or agreeing onmatters relating to costs, especially when those costs accountfor a substantial percentage of the final price. For an enterpriseto be successful there are major roles to be played by some keyplayers like employee, vendors, bank financiers and customers.From Table II, it can be seen that there are various formsof trust which the enterprise keeps on the key players whichchanges the outcome of the entire business system. There arevarious forms of trust based on their values namely zero trust,absence of trust, mistrust, distrust and trust. When the trust ina relationship breaks, it is defined as zero trust. The absenceof trust indicates that the entities are not dedicated to the jobsassigned to them while the mistrust is the act of believing thata particular party has a hidden agenda or ulterior motive. Thedistrust is a formal way of not trusting any one in a situationof grave risk or deep doubt. That is the distrust implies astrust but verify approach. If a detailed evaluation is done thenit shows from the Table II that the enterprise keeps trust onthe employees then a quality product can emerge . Likewiseif the enterprise keeps trust on the other key players then thematerial flow normalizes across the enterprise, excess fund andprofit for the enterprise. If the enterprise doesnt have trust onthe key players then it results like high turnover, deficit, debtand loss. The results may also of different nature if the trustlevel varies from one value to another and the impact will bereadily realized on each and every process of the business.

In a business system the uncertainties can be divided intotwo categories. They are the uncertainties due to inside factorswithin and the uncertainties due to outside factors of theorganization. The uncertainties due to the inside factors of anorganization can be represented in an equation as given below.

Uin(Uncertainties due to inside factors) = K11U1

+K12U2

+ . . .

TABLE IITRUST AND CONSEQUENCE

Enterprise Employee(Insid-ers)

Vendors(Part-ners)

Bank(Exter-nal)

Customers (Par-ties)

TrustIf Quality

ProductMaterialFlow

ExcessFund

Profit

If Not Highturnover*

Deficit Debt Loss

Absence of TrustIf No

dedica-tion

lowma-terialflow

HighInterest

No loss

If Not Involved Averageflow

Low in-terest

Lowprofit

DistrustIf Work

underpres-sure

Supplywithdoubt

Suspicion Reducedsales

If Not Freewill

Supplyondemand

Hasslefree

Moderatesales

MistrustIf Low

qualityproduct

No ma-terialflow

Debt Loss

If Not Lowturnover*

Excess Fund Sales

Zero TrustIf Broken

rela-tion-ship

Materialshort-age

Fundcease

Reputati-on loss

If Not Goodrela-tion-ship

Materialsupply

Fundap-proval

Goodreputa-tion

*employee turnover

+K1nUn

where,U1 = Uncertainty in the procurement process of buying rawmaterialsU2 = Marketing uncertainty due to lack of trainingU3 = Uncertainty due to Employees competitive knowledgein the manufacturing and managementand similarly there may be n uncertainty factors outside theorganizationAll Ks are Empirical constants depending upon the nature ofthe business, number of workers and the amount of averageturnover of the business.

The uncertainties due to the outside factors of an organizationcan be represented in an equation as given below.

Uout(Uncertainties due to outside factors) = K21V1

+K22V2

+ . . .

+K2mVm

where,V1 = Uncertainty in the legal standards and maintenanceV2 = Uncertainty in the compliance standards towards safetyand securityV3 = Uncertainty in the information services focusing thee-marketing and e-advertising methodsand similarly there may be m uncertainty factors within theorganizationAll Ks are Empirical constants depending upon the nature ofthe business, number of workers and the amount of averageturnover of the business.

From the above two equations it is possible to predictthe total uncertainty which plays a major role in maintainingtrust in the business system. The equation for the totaluncertainty is given below.

Total Uncertainty =

n∑i=1

KiVi +

m∑j=1

KjVj

The total uncertainty is used to predict the acceptableuncertainty which the indicator of trust in the overall businesssystem. The equation to calculate the actual uncertainty whichis inversely proportional to the number of competitors for thesame product during the given period of time is given below.

ActualUncertainty =Total Uncertainty

Nc

where,Nc = Number of CompetitorsThe acceptable uncertainty which is called the overall businesstrust should lie between the minimum and maximum valuesof the total uncertainty in the business system, due to variousprocesses involving a number of internal and external entities.

V. SCENARIO

The scenario which emphasizes the impact of trust issueson the success of a business is explained below; A strategyfollowed by company X which is a small scale detergentindustry against company Y which is the biggest player indetergent with 40% market shares. The company X’s lowcost strategy helped them to competed against the companyY and acquired more market share in short span of time.The major advantage which made company X to be dominantover Y was due to the fact that they had more trust on theirlabors and suppliers. Even the marketing strategy of X wastotally different, they were more direct and they also hadthe policy to return the money back if the customer wasnot satisfied with the product which started to create a trustbetween the enterprise and the customers. So these interlinks

of trust helped the small enterprise X to overtake the largeenterprise Y which eventually failed due to lack of trustwith the customers even though the finance agencies trustedY much.The other major advantage in X’s success was theuse of raw materials which contains no hazardous chemicals.They also, relied on their own workers who worked as ateam in packing the final products and delivering them. Without having any legal environment to govern the activities ofcompany X, it gained 100% trust from the common public toits own competitors. The company X trusted their employesby looking after their grievances through simple and directcommunication strategy. The behavior of the employes and theorganization was such that they were ready to appreciate theircompetitors technology and experiences. As a cottage industrythe company X’s marketing strategy was through door todoor campaigning with out having any advanced e-advertisingand e-business systems.Their logistic system was so simplewith out expensive fleet of trucks for product deliveries andsupplies. When an organization stops delivering on its promiseon integrity, people lose trust and eventually business fails. Sothe trust and integrity translate to wealth through relationships.This scenario clearly illustrates that the relationship betweena company and its customers starts through simple and singletransaction. If the company provides something of value to itscustomer, which engenders trust and so the customer continuesto return, the benefit of each single transaction is multipliedfor the company in revenue and future growth.In Fig. 3 the X axis represents individual uncertainties dueto inside factors whereas the Y axis represents the totaluncertainties due to same factors of the business system forvarious process constants K. In Fig. 4 the X axis representsindividual uncertainties due to inside factors for increasedempirical constants which are factors covering the annualinvestment, number of employees and vacation packages andthe Y axis represents the total uncertainties due to samefactors. The individual factors are incremented by a very smallquantity then the corresponding uncertainty values are shownin the Y axis as shown in Fig. 5 and Fig. 6.

Tota

l Unc

erta

inty

Uncertainty due to factors outside the organization

Ki = Constant

Fig. 3. Variation of Acceptable Uncertainty due to inside factors

Tota

l Unc

erta

inty

Uncertainty due to factors within the organization

Ki = Incremented

Fig. 4. Variation of Acceptable Uncertainty due to outside factors

VI. CONCLUSION

A context sensitive trust model for a business system isproposed and formally specified. The various factors within thebusiness organization and outside the organization which areresponsible for the trust issues are discussed. The interrelatedtrust flow of all the entities are considered to predict the trustof the customers on the finished product. The generic approachfor the prediction of the consumer trust on the finished goods isgiven in terms of the individual trust on each entity. The scopeof the work has assumed that there is no security violation andprivacy overlooks within the business organization consideringthe trust relationship between man to machine and machineto systems in different context the trust factor varies due tomicro level inter personal relationship between the employeesand the macro levels inter organizational relationship betweenestablishments like banks and legal authorities. The work maybe further improvised by considering the distributed nature ofthe business and the trust policies of various intercontinental

Tota

l Unc

erta

inty

Uncertainty due to factors outside the organization

Kj = Constant

Fig. 5. Variation of Acceptable Uncertainty due to inside factors withincreased empirical constants

Tota

l Unc

erta

inty

Uncertainty due to factors within the organization

Kj = Incremented

Fig. 6. Variation of Acceptable Uncertainty due to outside factors withincreased empirical constants

trust standards and their compliance policies in the case ofsoftware businesses.

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[3] A. Kini and J. Choobineh Trust in Electronic Commerce: Definition andTheoretical Considerations , IEEE Xplore, 1998, pp. 1-11.

[4] T. Walter, L. Bussard, P. Robinson, Y. Roudier Security and Trust Issues inUbiquitous Environments - The Business-to-Employee Dimension , IEEEXplore, 2004, pp. 696.

[5] Antitrust Division Manual Antitrust Division , Department of JusticeChapter II July 2009

[6] ICPA International Professional Compliance Association ,http://icpainc.org/icpa-info/legal/anti-trust-policy