Trust and Organizational Design: Explaining Cross-National Differences in Work Autonomy

We open the black box of what goes on within firms in terms of how they organize and manage their operations. Work autonomy is a key aspect of firm organization and in this note we test the hypothesis that societal trust affects the level of autonomy that firms grant to their employees. Analysis of up to 189,213 individuals from 30 countries shows that trust is indeed highly conducive to work autonomy. This result is robust to controlling for a wide range of other features of countries’ institutional environment, including measures of labor regulations and quality of formal institutions. Our findings highlight the importance of societal trust in shaping economic activity.