Social trust and corporate innovation: An informal institution perspective

Xiaoliang Lyu, Jiameng Ma and Xiaochen Zhang

The North American Journal of Economics and Finance, 2023, vol. 64, issue C

Abstract: We examine the effect of social trust on corporate innovation. We find a positive relation between social trust and corporate innovation. This association survives a series of robustness checks concerning alternative measures, omitted variable issues, instrumental variable regressions, difference-in-differences tests, placebo tests, etc. We also identify that social trust promotes corporate innovation through the following three economic channels: motivating managers in the long term, mitigating financial constraints, and promoting cooperative culture. Moreover, we show the positive effect of social trust on a more comprehensive text-based measure of innovation (Bellstam et al., 2021) and that innovative business practices strengthen the association between social trust and innovation.

Keywords: Social trust; Corporate innovation; Informal institution (search for similar items in EconPapers)
JEL-codes: G34 O31 Z13 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:64:y:2023:i:c:s1062940822001644

DOI: 10.1016/j.najef.2022.101829

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