Skip to main content Accessibility help

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

  • Markus Leibrecht (a1) and Hans Pitlik (a1)


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.


Corresponding author

*Corresponding author. Email:


Hide All
Adams, J. E., Highhouse, S., and Zickar, J. M. (2010), ‘Understanding General Distrust of Corporations’, Corporate Reputation Review, 13(1): 3851.
Aghion, P., Algan, Y., Cahuc, P. and Shleifer, A. (2010), ‘Regulation and Distrust’, Quarterly Journal of Economics, 125(3): 10151049.
Anania, G. and Nisticò, R. (2004), ‘Public Regulation as a Substitute for Trust in Quality Food Markets: What if the Trust Substitute Cannot be Fully Trusted?’, Journal of Institutional and Theoretical Economics, 160(4): 681701.
Baumol, W. J. (2016), ‘On the Appropriate Social Responsibilities of Successful Entrepreneurs’, Business and Society, 55(1): 1422.
Berggren, N. and Bjørnskov, C. (2017), ‘The Market-Promoting and Market-Preserving Role of Social Trust in Reforms of Policies and Institutions’, Southern Economic Journal, 84(1): 325.
Berggren, N. and Jordahl, H. (2006), ‘Free to trust: Economic Freedom and Social Capital’, Kyklos, 59(2): 141169.
Bjørnskov, C. (2007), ‘Determinants of Generalized Trust. A Cross-Country Comparison’, Public Choice, 130(1–2): 121.
Bowler, S. and Karp, J. A. (2004), ‘Politicians, Scandals, and Trust in Government’, Political Behavior, 26(3): 271-287.
Camussi, S. and Mancini, A. (2019), ‘Individual Trust: Does Quality of Local Institutions Matter?Journal of Institutional Economics, 15(3): 117.
Carlin, B. I., Dorobantu, F. and Viswanathan, S. (2009), ‘Public Trust, the Law, and Financial Investment’, Journal of Financial Economics, 92(3): 321341.
Chan, H-C., Lam, K.-C. and Liu, P.-W. (2011), ‘The Structure of Trust in China and the US’, Journal of Business Ethics, 100(4): 553566.
Clausen, B., Kraay, A. and Nyiri, Z. (2011), ‘Corruption and Confidence in Public Institutions: Evidence from a Global Survey’, World Bank Economic Review, 25(2): 212249.
Cohen, M. A. (2016), ‘The Question of Public Trust in Business’. Comments on Harris, J. D., Moriart, B. T. and Wicks, A. C. (eds), ‘Public Trust in Business’, Journal of Trust Research, 6(1): 96103.
Dimitrova-Grajzl, V., Grajzl, P. and Guse, A. J. (2012), ‘Trust, Perceptions of Corruption, and Demand for Regulation: Evidence from Post-Socialist Countries’, Journal of Socio-Economics, 41(3): 292303.
Di Tella, R. and MacCulloch, R. (2009), ‘Why Doesn't Capitalism Flow to Poor Countries?Brookings Papers on Economic Activity, 40(1): 285321.
Edelman (2016), Edelman Trust Barometer 2016 – Trust in Business, available at (accessed 30 September).
Glazer, A., Kanniainen, V. and Poutvaara, P. (2010), ‘Firms’ Ethics, Consumer Boycotts, and Signalling’, European Journal of Political Economy, 26(3): 340350.
Grönlund, K. and Setälä, M. (2012), ‘In Honest Officials We Trust: Institutional Confidence in Europe’, American Review of Public Administration, 42(5): 523-542.
Guiso, L., Sapienza, P. and Zingales, L. (2003), ‘People's Opium? Religion and Economic Attitudes’, Journal of Monetary Economics, 50(1): 225282.
Gwartney, J., Lawson, R., Hall, J. and Murphy, R. (2018), Economic Freedom of the World: 2018 Annual Report. Vancouver: Fraser Institute.
Hadenius, A. and Teorell, J. (2007), ‘Pathways from Authoritarianism’, Journal of Democracy, 18(1): 143157.
Harms, P. and Schwab, J. (2019), ‘Like It or Not? How the Economic and Institutional Environment Shapes Individual Attitudes toward Multinational Enterprises’, World Economy, 42(3): 636679.
Helliwell, J. F., Wang, S. and Xu, J. (2016), ‘How Durable are Social Norms? Immigrant Trust and Generosity in 132 Countries’, Social Indicators Research, 128(1): 201-219.
Hodgson, G. M. (2019), ‘Taxonomic Definitions in Social Science, with Firms, Markets and Institutions as Case Studies’, Journal of Institutional Economics, 15(2): 207-233.
Huck, S., Lünser, G. K. and Tyran, J-R. (2012), ‘Competition Fosters Trust’, Games and Economic Behavior, 76(1): 195209.
Jalilian, H., Kirkpatrick, C. and Parker, D. (2007), ‘The Impact of Regulation on Economic Growth in Developing Countries: A Cross-Country Analysis’, World Development 35(1): 87103.
Jensen, N. M., Johnston, N. P., Lee, C. Y. and Sahin, H. (2019), ‘Crisis and Contract Breach: The Domestic and International Determinants of Expropriation’, Review of International Organizations, available at (accessed 30 September 2019).
Kenworthy, L. and Owens, L. (2011), ‘How do Economic Recessions Influence Public Opinion?’ in Grusky, D. B., Western, B. and Wimer, C. C. (eds), The Great Recession, New York: Russell Sage, pp. 196219.
Kim, H. H. (2012), ‘Determinants of Individual Trust in Global Institutions: The Role of Social Capital and Transnational Identity’, Sociology Mind, 2(3): 272281.
Landier, A., Thesmar, D. and Thoenig, M. (2008), ‘Investigating Capitalism Aversion’, Economic Policy, 23(55): 465497.
Lewis-Beck, M. S. and Stegmaier, M. (2013), ‘The VP-function Revisited: A Survey of the Literature on Vote and Popularity Functions after Over 40 Years’, Public Choice, 157(3–4): 367385.
McCannon, B., Asaad, C. and Wilson, M. (2018), ‘Contracts and Trust: Complements or Substitutes?Journal of Institutional Economics, 14(5): 811832.
Mishler, W. and Rose, R. (2001), ‘What are the Origins of Political Trust? Testing Institutional and Cultural Theories in Post-Communist Societies’, Comparative Political Studies, 34(1): 3062.
Monfardini, C. and Radice, R. (2008), ‘Testing Exogeneity in the Bivariate Probit Model: A Monte Carlo Study’, Oxford Bulletin of Economics and Statistics, 70(2): 271282.
Nannestad, P. and Paldam, M. (1994), ‘The VP-function: A Survey of the Literature on Vote and Popularity Functions after 25 Years’, Public Choice, 79(3): 213245.
Newton, K. (2007), ‘Social and Political Trust’, in Russell, D. J. and Klingemann, H-D. (eds), The Oxford Handbook of Political Behavior, New York: Oxford University Press, pp. 342370.
Newton, K., Stolle, D. and Zmerli, S. (2018), ‘Social and Political Trust’, in Uslaner, E. M. (ed.): The Oxford Handbook of Social and Political Trust, New York: Oxford University Press, pp. 3756.
North, D. C. (1990), Institutions, Institutional Change and Economic Performance, Cambridge and New York: Cambridge University Press.
Nunn, N. and Qian, N. (2014), ‘US Food Aid and Civil Conflict’, American Economic Review, 104(6): 16301666.
Pinotti, P. (2012), ‘Trust, Regulation, and Market Failures’, Review of Economics and Statistics, 94(3): 650658.
Pirson, M., Martin, K. and Parmar, B. (2019), ‘Public Trust in Business and its Determinants’, Business and Society, 58(1): 132166.
Pitlik, H. and Kouba, L. (2015), ‘Does Social Distrust Always Lead to a Stronger Support for Government Intervention?’, Public Choice, 163(3–4): 355377.
Rothstein, B. and Stolle, D. (2008), ‘Political Institutions and Generalized Trust’ in Castiglione, D., van Deth, J. W. and Wolleb, G. (eds), The Handbook of Social Capital, Oxford: Oxford University Press, pp. 273-302.
Roussey, L. and Deffains, B. (2012), ‘Trust in Judicial Institutions: An Empirical Approach’, Journal of Institutional Economics, 8(3): 351369.
Shleifer, A. (2004), ‘Does Competition Destroy Ethical Behavior?American Economic Review, 94(2): 414418.
Sønderskov, K. M. and Dinesen, P. T. (2016), ‘Trusting the State, Trusting Each Other? The Effect of Institutional Trust on Social Trust’, Political Behavior, 38(1): 179-202.
Stevenson, B. and Wolfers, J. (2011), ‘Trust in Public Institutions over the Business Cycle’, American Economic Review, 101(3): 281287.
Stolle, D. (2002), ‘Trusting Strangers – The Concept of Generalized Trust in Perspective’, Österreichische Zeitschrift für Politik, 31(4): 397412.
Uslaner, E. M. (2008), ‘Where You Stand Depends on Where Your Grandparents Sat: The Inheritability of Generalized Trust’, Public Opinion Quarterly, 72(4): 725-740.
Uslaner, E. M. (2010), ‘Trust and the Economic Crisis of 2008’, Corporate Reputation Review, 13(2): 110123.
Uslaner, E. M. (2015), ‘Measuring Generalized Trust: In Defense of the “Standard” Question’ in Lyon, F., Moellering, G., Sanders, M. and Hatzakis, T. (eds), Handbook of Research Methods on Trust, Cheltenham: Edward Elgar, pp. 97107.
van de Walle, S. and Bouckaert, G. (2003), ‘Public Service Performance and Trust in Government: The Problem of Causality’, International Journal of Public Administration, 26(8–9): 891913.
Voigt, S., Gutmann, J. and Feld, L. P. (2015), ‘Economic Growth and Judicial Independence, a Dozen Years on: Cross-Country Evidence Using an Updated Set of Indicators’, European Journal of Political Economy, 38(C): 197211.
Williams, R. (2016), ‘Understanding and Interpreting Generalized Ordered Logit Models’, Journal of Mathematical Sociology, 40(1): 720.
Wooldridge, J. M. (2010), Econometric Analysis of Cross Section and Panel Data (2nd edn), Cambridge, MA: MIT Press.


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

  • Markus Leibrecht (a1) and Hans Pitlik (a1)


Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed