Trust Relationships in Employment Relationships: the Role of Trust for Firm Profitability

Brandl, Bernd

Abstract

Trust between actors in firms per se as well as in the employment relationship, i.e. between the representatives of employees and the management, is usually seen in the literature to affect firm performance positively, yet to date there has been no systematic analysis of the effect of different forms of trust, including mutual trust, on firms’ financial performance. In this article we argue that only mutual trust, rather than all forms of trust, is sufficient to systematically constitute an advantage for firms and ultimately materialize in firms’ profitability increases. We test our hypotheses on the basis of a representative and matched employee/employer side data set of firms in the member states of the European Union. Our analysis confirms our hypothesis that only strong mutual trust is able to systematically impact increases in firm profitability positively and weaker forms of trust and unilateral trust do not suffice.

Citation

Brandl, B. (2020). Trust Relationships in Employment Relationships: the Role of Trust for Firm Profitability. International Journal of the Economics of Business, 28(1), 139-161. https://doi.org/10.1080/13571516.2020.1802213

• Journal Article Type: Article
• Acceptance Date: Jul 24, 2020
• Online Publication Date: Aug 6, 2020
• Publication Date: 2020
• Deposit Date: Aug 20, 2020
• Publicly Available Date: Feb 6, 2022
• Journal: International Journal of the Economics of Business
• Print ISSN: 1357-1516
• Electronic ISSN: 1466-1829
• Publisher: Taylor and Francis Group
• Peer Reviewed: Peer Reviewed
• Volume: 28
• Issue: 1
• Pages: 139-161
• DOI: https://doi.org/10.1080/13571516.2020.1802213
• Public URL: https://durham-repository.worktribe.com/output/1294258