“Economists have been paying increasing attention to the role that culture plays in a firm’s overall performance. This paper focuses on how trust—a key cultural factor—affects firms’ decision-making process, size, and productivity. Research was conducted by Nicholas Bloom of Stanford University, Rafaella Sadun of the Harvard Business School, and John Van Reenen of the London School of Economics. Key concepts include:

If a firm is headquartered in a country where trust is prevalent (such as Sweden), it is much more likely to decentralize its decision making than if it is headquartered in a country in which trust is rarer (such as India). In short, higher trust leads to more decentralization.
Trust also enables a firm to hire a large number of plant managers, because the CEO will feel comfortable delegating decisions to their direct reports without spending too much time on supervision. Thus, higher trust increases firm size.
Higher trust increases the marginal value of information technology’s effect on productivity.”