Trust and Workplace Performance

Using European Company Survey data, this article explores the relationship between trust and establishment performance under works councils, on the one hand, and union bodies on the other. Trust is initially measured using the individual survey respondent's assessment of the 'contribution' of the other side. Although the rating of the employee representative is favoured over that of management as less subject to feedback from performance, the potential endogeneity of employee trust in management is also modelled. Next, a preferred inverse measure of trust (or dissonance) is constructed from the discrepancy between the assessments of the two sides of the quality of workplace industrial relations. Employee trust is associated throughout with improved establishment performance, and conversely for the dissonance counterpart. In their presence, neither type of workplace representation is superior to the other.