The Effect Of Trust On Financial Performance; Mediated By Innovation

Abstract

This study aims to examine the effect of trust on financial performance, examine the effect of trust on innovation, examine the effect of innovation on financial performance and examine the role of innovation in mediating the effect of trust on financial performance. The research population is a manufacturing company listed on the Indonesia Stock Exchange. The size of the sample was determined using a purposive sampling method, thus the research sample totaled 42 companies for five years or as many as 210 observations. The data collection method uses secondary data in the form of the company's financial statements for 2017 – 2021. The research model is structural because there are latent variables and data testing is carried out to determine direct and mediating effects, thus the research data is analyzed using smart PLS version 3. The results showed that: trust has a positive and significant effect on financial performance, trust has a positive and significant effect on innovation, innovation has a positive and significant effect on financial performance and innovation plays a positive and significant role in mediating the effect of trust on financial performance. Thus, the mediating nature of the innovation variable is partial mediation.