Business freedom, corruption and the performance of trusting cooperation partners: empirical findings from six European countries

Abstract

In this study we investigate the impact of trust on the performance of cooperating firms, taking into account two core aspects: First, we look at environmental uncertainty, which shows in the degree of change there is in business freedom. Second, we account for behavioral uncertainty—captured as the average level of freedom from corruption in a country. Based on survey data from 791 firms engaged in national cooperation in Austria, the Czech Republic, Finland, Hungary, Slovakia and Slovenia, we find that behavioral coordination based on trust impacts on cooperating firms’ performance positively in dynamic and negatively in stable contexts. Freedom from corruption enhances firm performance in dynamic contexts but is not a significant predictor in stable contexts. Further, we find the trust–performance relationship to be moderated by freedom from corruption in dynamic but not in stable contexts. The findings contribute to a more contextualized research on trust and interorganizational cooperation, as has been called for recently.