The Effect of Integrative Trust and Innovation on Financial Performance in a Disruptive Era

Oláh, Judit and Hidayat, Yusmar Ardhi and Lakner, Zoltán and Kovács, Sándor (2020) The Effect of Integrative Trust and Innovation on Financial Performance in a Disruptive Era. ECONOMICS AND SOCIOLOGY. pp. 1-32. ISSN 2071-789X (print); 2306-3459 (online) (In Press)

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Abstract

This study hopes to contribute to understanding how integrated trust and innovation affects financial performance. Our objectives can therefore be stated as follows. The first is to examine the influence of institutional trust on interpersonal trust and inter organisational trust. Subsequently, the study investigates the effect of interpersonal trust on enhancing inter-organisational trust. The third purpose is to study the influence of inter-organisational trust on financial performance through innovation as a mediating variable. The study implemented 103 samples of ICT Companies in Hungary. The Partial Least Square (PLS) – Structural Equation Model verified the hypotheses in the research model. The results show that there appears to be a positive association between institutional trust and interpersonal trust. Institutional trust has a positive influence on inter-organizational trust, thus interpersonal trust positively affects inter-organizational trust. This study also claims that the effects of inter-organizational trust and innovation are particularly prominent and noticeable, with significant consequences for financial performance. Here we present tests that showed that interpersonal trust performed a complementary role, but innovation failed as a mediating variable. The primary suggestion we make concerns strategies to manage interpersonal trust and a favorable sense of confidence within a company. The company should also assertively maintain trust in customers and suppliers.

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