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Is Higher Level of Trust in Organizations Always Positively Correlated with Higher Economic Results? Evidence from Estonian Farms

In: Eurasian Business Perspectives

Author

Listed:
  • Mare Kurvits

    (Estonian Entrepreneurship University of Applied Sciences)

  • Angela Jarvis

    (Estonian Entrepreneurship University of Applied Sciences)

Abstract

Social capital and economic performance, especially the connection between social capital and economic success, has been a challenging subject since the 1980s. The researchers mostly agree that a high level of social capital impacts the economy positively. According to the OECD study (OECD, 2015), it is suggested that an increase in social capital can be the driver of economic growth in Estonia. Trust is considered an essential factor of both social capital and organizational success. The objective of the study was to investigate the relationship of trust and organizational performance as well as the financial results of the organizations based on Estonian farms. A sample of 89 farms was studied. To investigate trust and organizational performance, the instrument with three parts, management trust (MT), organizational trust (OT), and organizational performance (OP), was used. The measures of MT, OT, and OP integrated a Likert-type scale. The data of annual reports were used as indicators of economic results. Both MT and OT positively contributed to organizational performance, but no positive correlation was found between trust indices and economic indicators. The additional study was carried out among the farmers of 32 companies to indicate the possible reasons for no correlation. The main causes pointed out were connected with external conditions like weather, political events (sanctions to Russia), and price level at the stock market.

Suggested Citation

  • Mare Kurvits & Angela Jarvis, 2021. "Is Higher Level of Trust in Organizations Always Positively Correlated with Higher Economic Results? Evidence from Estonian Farms," Eurasian Studies in Business and Economics, in: Mehmet Huseyin Bilgin & Hakan Danis & Ender Demir & Sofia Vale (ed.), Eurasian Business Perspectives, pages 153-164, Springer.
    • Handle: RePEc:spr:eurchp:978-3-030-65085-8_10
    DOI: 10.1007/978-3-030-65085-8_10
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