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Is confidence in major companies rooted in generalized social trust, or regulatory quality, or both?

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  • Leibrecht, Markus
  • Pitlik, Hans

Abstract

While confidence in the business sector is crucial for well-functioning markets, there is surprisingly little empirical work on its sources. Available research recognizes generalized social trust and macroeconomic performance (especially unemployment and economic growth) as major forces explaining confidence in institutions and organizations in general. By assuming that confidence in companies hinges on rules, formal procedures, and practices that shape how organizations function, economic regulation is frequently advocated to foster confidence in companies, not least as it is supposed to reduce the scope for opportunistic behavior. Based on individual-level data from World Values Survey/European Values studies and economic regulation data from the Economic Freedom of the World project we investigate statistical associations of confidence in major companies with generalized social trust and macroeconomic performance as well as the intensity and quality of business regulation. From an economic policy perspective our findings suggest that confidence in the business sector can be facilitated by an implicit guarantee from governments of fair and impartial treatment.

Suggested Citation

  • Leibrecht, Markus & Pitlik, Hans, 2020. "Is confidence in major companies rooted in generalized social trust, or regulatory quality, or both?," Journal of Institutional Economics, Cambridge University Press, vol. 16(3), pages 287-303, June.
    • Handle: RePEc:cup:jinsec:v:16:y:2020:i:3:p:287-303_3
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    Cited by:

    1. Chiara Franco & Giovanni Marin & Filomena Pietrovito, 2023. "Exposure to FDI and attitudes towards multinational enterprises: Do M&A matter?," The World Economy, Wiley Blackwell, vol. 46(6), pages 1648-1669, June.
    2. Franco, Chiara & Marin, Giovanni & Pietrovito, Filomena, 2022. "Exposure to FDI and attitudes towards multinational enterprises: do M&A impact?," Economics & Statistics Discussion Papers esdp22085, University of Molise, Department of Economics.
    3. Thomas Url, 2020. "Robust Growth in Non-life Insurance Secures 2019 Premium Growth in Private Insurance," WIFO Bulletin, WIFO, vol. 25(9), pages 75-86, November.
    4. Pál Czeglédi, 2022. "Why does the confidence in companies, but not the confidence in the government, affect the demand for regulation differently across countries?," Public Choice, Springer, vol. 193(3), pages 211-231, December.
    5. Cha, Moon-Kyung & Lee, Hee-Jung, 2022. "Does social trust always explain the active use of sharing-based programs?: A cross-national comparison of Indian and U.S. rideshare consumers," Journal of Retailing and Consumer Services, Elsevier, vol. 65(C).
    6. Sakib, Md Nazmus & Hasan, Fuad & Al-Emran, Md & Felix, Reto, 2023. "A cross-cultural analysis of ridesharing intentions and compliance with COVID-19 health guidelines: The roles of social trust, fear of COVID-19, and trust-in-God," Journal of Retailing and Consumer Services, Elsevier, vol. 71(C).

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