Integrative trust and innovation on financial performance in disruptive era

Abstract

This study aims to contribute to understanding how integrated trust and innovation affect 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-organizational trust. Subsequently, the study investigates the effect of interpersonal trust on enhancing inter-organizational trust. The third purpose is to study the influence of inter-organizational trust on financial performance through innovation as a mediating variable. The study sample consists of 103 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 the tests that show 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 create a favorable sense of confidence within a company. The company should also assertively maintain trust in customers and suppliers.