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

Brandl, Bernd

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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 Mar 29, 2024
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

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