Here is an excerpt from an article written by Paul J. Zak for Harvard Business Review and the HBR Blog Network. To read the complete article, check out the wealth of free resources, obtain subscription information, and receive HBR email alerts, please click here.

*      *      *

Trust is the enabler of global business — without it, most market transactions would be impossible. It is also a hallmark of high-performing organizations. Employees in high-trust companies are more productive, are more satisfied with their jobs, put in greater discretionary effort, are less likely to search for new jobs, and even are healthier than those working in low-trust companies. Businesses that build trust among their customers are rewarded with greater loyalty and higher sales. And negotiators who build trust with each other are more likely to find value-creating deals.

Despite the primacy of trust in commerce, its neurobiological underpinnings were not well understood until recently. Over the past 20 years, research has revealed why we trust strangers, which leadership behaviors lead to the breakdown of trust, and how insights from neuroscience can help colleagues build trust with each other — and help boost a company’s bottom line.

The Biology of Trust

Human brains have two neurological idiosyncrasies that allow us to trust and collaborate with people outside our immediate social group (something no other animal is capable of doing). The first involves our hypertrophied cortex, the brain’s outer surface, where insight, planning, and abstract thought largely occur. Parts of the cortex let us do an amazing trick: transport ourselves into someone else’s mind. Called theory of mind by psychologists, it’s essentially our ability to think, “If I were her, I would do this.” It lets us forecast others’ actions so that we can coordinate our behavior with theirs.

The second idiosyncrasy is empathy, our ability to share people’s emotions. Copious research, initially out of my lab and replicated by others, shows that empathy is enhanced when the brain releases the neurochemical oxytocin. Humans have a high density of oxytocin receptors in the frontal cortex — higher than any other animal — which means our social nature is anatomically inscribed in our brains. As a result, we absorb social information and understand others’ motivations with unconscious ease.

Oxytocin has two other primary effects on human beings. First, it reduces the anxiety we naturally have when around other people. Second, it motivates us to cooperate with and help each other. That’s because oxytocin also modulates dopamine, the brain’s “do this more” reinforcement chemical. Dopamine makes it feel good to collaborate and connect with others, which means that working together is something we evolved to enjoy.

To trust someone, especially someone unfamiliar to us, our brains build a model of what the person is likely to do and why. In other words, we use both theory of mind and empathy during every collaborative endeavor. And the other person intuitively does this about us, too. That means humans are constantly engaged in a two-sided trust game: Should I trust you? and How much do you trust me?

At work the trust game has an additional factor, which is the example set by leaders. As social creatures, we naturally follow leaders and model our behavior on theirs. The influence they have means they can easily sabotage trust in two key ways: by stoking fear and wielding dominance.

Fear and Domination

Fear is a great motivator in the short term but a poor one in the long term. If your boss occasionally pressures you on a deadline, it can push you to get the work done on time. However, if you know your boss will berate, threaten, or punish you no matter what, it ceases to affect your performance. This leads to learned helplessness: Employees cannot control or predict the boss’s tirades, so they avoid the fearmonger whenever possible and stay invisible by doing the minimum.

Dominant behavior, on the other hand, literally hurts the people who are targeted. When the boss struts around and mistreats underlings, not only are people demotivated now, but the effects are lasting. Neuroscience studies have shown that humans process social rejection in the brain’s pain matrix, and the signature of social pain lasts even longer than that of physical pain, such as a punch in the gut. Dominant behavior also leads to stress, which, by inhibiting the brain’s production of oxytocin, reduces the desire to work with others and put in discretionary effort to further the organization’s goals.

While it is easy to blame aggressive behavior on a boss’s personality, science shows that when people are the center of attention, their testosterone rises — and this is true of both men and women. Even a relatively calm, cerebral situation — winning a chess match, for example — increases testosterone, so imagine the hormonal surge when the boss closes a multimillion-dollar deal. To study these kinds of effects, my lab administered synthetic testosterone to participants in order to turn them into alpha males. We found that, when participants were alphas, they demanded more from and gave less to others than they did when on a placebo. They also greatly exaggerated their abilities and were quick to punish those who crossed them.

Why did they act this way? High testosterone convinces the brain that others find you desirable and socially powerful. It also inhibits the brain’s release of oxytocin, reducing empathy and the desire to collaborate. What’s more, testosterone’s aggression is contagious, inhibiting oxytocin and trust in team members. Dominant behaviors are particularly acute in men, who have five to 10 times more testosterone than women, but they arise in female leaders as well. While I’m not suggesting that a leader’s natural rise in testosterone is necessarily bad, or that you should get yours checked as part of your leadership development, it is worth recognizing that testosterone can produce inappropriate work behaviors. The solution? Resist impulsive actions by taking a breath and considering the implications of what you are about to say or do.

*      *      *

Here is a direct link to the complete article.

Paul J. Zak is the founding director of the Center for Neuroeconomics Studies and a professor of economics, psychology, and management at Claremont Graduate University, and the CEO of Immersion Neuroscience. He is the author of Trust Factor: The Science of Creating High-Performance Companies.