Trust, innovation, and financial performance of information and communication technology companies in a disruptive era

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This research had three purposes. First was to analyze the direction of institutional trust to interpersonal trust and inter-organizational trust. Second, this study observed the effect of interpersonal trust to empower inter-organizational trust. The final goal was to examine inter-organizational trust's direction to financial performance through innovation as a mediating variable. This research investigated several questions related to the primary purposes. This study raised three questions regarding the association of institutional trust, interpersonal trust, inter-organizational trust, innovation, and business performance. This research obtained 149 samples from 250 questionnaires. Then, this study excluded outliers from previous samples, and it finally used 103 sample size. This research also utilized the financial statement to evaluate the profitability ratio. Then, PLS-SEM was used to examine the hypotheses. This study confirmed that the first hypothesis was accepted, implied a positive association between institutional trust and interpersonal trust. This finding highlighted the idea that trust in institutions boosted interpersonal trust. The second proposed hypothesis was admitted. This outcome revealed that trust in institutions reinforced trust between the company and business partners and straightforward the business partnership. This study accepted the positive relationship between interpersonal trust and inter-organizational trust, as propositioned in the third hypothesis. This result emphasized the positive relationship between interpersonal trust and trust in business partners. The fourth hypothesis was admitted; therefore, this result supported the positive association between inter-organizational trust and financial performance. Later, this study failed to confirm the positive relationship between trust in business partners and innovation. Finally, the direction between innovation and financial performance was accepted. This study recognized a robust, positive connection among institutional trust and interpersonal trust, strengthening the point of view of institutional trust as an assurance and prime mover of a corporation's internal business climate. Institutional trust abridges the internal management and collaboration between the manager and workers intended for mutual advantage. Institutional trust discovered merely about three percent variability in interpersonal trust. Consequently, this research considered that there are other factors further than institutional rust that are critical to encouraging interpersonal trust. For instance, scholars revealed that frequent interactions, partner affiliates' behave, and social responsibility behaviors of associate subordinates, dyadic connection, manners of personal initiative, job promotion system and fair assessment, and adequate remuneration in work reward clarified interpersonal trust. This study indicated that institutional trust backed trust between the companies and their partners through simplifying business cooperation. This finding indicated that the government’s policies stimulated inter-organizational trust, then improved cooperation. This research then revealed the significance of interpersonal trust to improve trust in business partners. This result indicated the interpersonal trust affected cooperation procedures. Undeniably, trust between the corporates and their business partners enhanced the flexibility of mutual relationships. Inter-organizational trust also reduces adaptation time, develops product and process excellence, decreases the cost of harmonization activities, reduces the insecurity of cooperation, and notably diminishes interaction costs. Likewise, this research emphasized that institutional trust and interpersonal trust strengthened inter-organizational trust at about 15%. It was noteworthy confidence in a country with a low extent of trust as Hungary. This study collapsed to answer how the influential role of inter-organizational trust stimulates innovation. As an extensive debate, this research assumed that other factors affect innovation directly besides trust in partners, namely, budget on research and development, inter-functional coordination and human resource practices, instant reaction to evidence from the market, knowledge, and expertise. This research revealed that innovation was significantly correlated with financial performance. In addition to innovation, this study concluded that strategic application, involvement in the network, quality improvement and cost efficiency significantly influence financial performance. ICT companies should set up their resources, processes, and values to confront their competitors. ICT firms should innovate to develop products or services to obtain potential profit then sustain in a disruptive era. Ultimately, this study recommended three essential suggestions. The first recommendation was to build interpersonal trust and improve the trust level in a conducive situation to sustain work effectiveness in the internal organization. The subsequent suggestion, the company should retain and cultivate trust in customers as the most critical resources. The company should also concern nurturing trust in suppliers because of specific resource access. Conclusively, this research advised that trust in business partners and innovation boosted profitability.

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institutional trust, interpersonal trust, financial performance, innovation
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