Original scientific paper
https://doi.org/10.1080/1331677X.2022.2142255
Trust and firms’ performance in Western Balkan countries
Valentina Vučković
Lorena Škuflić
Jasmina Mangafić
Abstract
The purpose of the paper is to analyse the effects of interpersonal trust
in business relations (proxied by trade credit) and institutional trust
(proxied by firms’ trust in courts) on firms’ performance. The analysis is
performed on a specific sample of 1298 firms in Western Balkan countries
which are usually characterized by negative social capital that is
considered to hinder economic and social development at all levels.
The methodological approach is based on the propensity score matching
method and the obtained results show that firms’ perception of
courts as fair, impartial and uncorrupted, is connected with lower costs
and with positive expectations of an increase in sales in the upcoming
period. On the other side, trade credit as a trust variable has a statistically
significant and positive effect on firm productivity measured as
sales per employee and on expectations of an increase in sales in the
upcoming period. The paper contributes to the existing literature in
terms of the choice of the post-socialist groups of countries for the analysis,
the method that is used (treatment-effects estimation), and in
terms of performing firm-level analysis of the effects of two types of
trust on selected variables of firm performance
Keywords
Transition; Western Balkan; trust; firm performance; costs; productivity
Hrčak ID:
306718
URI
Publication date:
30.4.2023.
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