The Double Molotov Cocktail of Brexit and COVID-19: Can Contact Intensity Help Explain Levels of Trust and Belief in the Future between Companies?

Abstract

Can contact intensity help explain levels of trust and belief in the future among companies? This question is particularly important in times of exogenous shocks such as Brexit and COVID-19 when various sectors frequently experience a contraction of business activity. Putnam’s theory can help explain cooperation and long-term resilience among companies when business conditions radically change. Trustworthy companies can be named ‘hard-riders’, as they are good at creating social relationships and rewarding their trading partners through social recognition and continued cooperation. With their capacity for contact intensity, hard riders receive an extra social benefit to reinforce trust-based cooperation. Survey responses from 193 participants in our new database (DanComTrust) on British and Danish small and medium-sized enterprises (SMEs) show that there is a significant effect from both contact intensity and trust intensity on belief in the future when tested individually in logit models. However, when both variables are included, all effects from contact intensity disappear and only trust intensity remains significant, indicating that the effect from contact intensity works through trust. These results suggest that a high level of contact intensity will increase the trust between cooperating companies, resulting in a greater belief in the future. This insight is relevant for maintaining and building future resilience between companies and their trading partners within and outside the EU.