Trust and earn more? The Impact of Trust on Corporate Performance

In this article we investigate the impact of personal and organizational trust on the financial performance of companies over a period of time. The effect of trust on various economic and managerial transactions is being researched extensively over the last two decades but previous research did not led to empirical proof that the overall trust level of a company actually increases the financial profitability of firms over a longer period of time. Drawing on a sample of 291 German industrial firms over a period of six years we observe that both personal and organizational trust have a positive influence on the return on assets of a firm. Furthermore we proof that trust is driving profitability in certain conditions and environments differently. By analysing the relationship and characteristics between trust and profitability, this study brings a concrete illustration of what was implicitly known by many scholars and has important implications for future research and management practice.