The Role of Social Trust on Property Right Protection: Physical Property Versus Intellectual Property

Abstract

While there have been numerous papers analyzing the political, economic and social effects of trust, there is little evidence on how social trust has an impact on property rights protection which is fundamental for promoting economic development. This study aims to investigate how trust value is related to property rights protection, focusing on the comparison of the effect on intellectual property rights versus physical property rights. Analyzing the data on property rights protection in 2015 from the Property Right Alliance organization and trust value from the World Value Survey from 1999 to 2014, we find that social trust has a direct effect only on intellectual property rights protection but less consistent on physical property rights protection. However, trust value has indirect effect on both forms of property rights protection via formal institutions. Our study, thus, adds to the literature by clarifying the context through which trust value affects cheating behaviors.

KEYWORDS:

• Trust
• intellectual property right protection
• physical property right protection
• social capital
• formal institutions

Disclosure statement

No potential conflict of interest was reported by the author(s).

Correction Statement

This article has been corrected with minor changes. These changes do not impact the academic content of the article.

Notes

1 The survey from 1999 to 2004 consists of 39 countries and over 59,000 responses. The survey from 2005 to 2009 consists of 58 countries and nearly 84,000 responses. The survey from 2010 to 2014 consists of 60 countries and over 86,000 responses.

2 We report 2SLS results first in order to report the relevant and exogenous tests for instruments. IVtobit estimation is used in case in the second stage, the dependent variable is censored data.

3 There is no available model for three-stage regressions using Tobit model. As results from Tobit and IVtobit are qualitative similar to those of OLS and 2SLS and hence we use 3SLS regressions for three-stage regressions.

4 We do not estimate the direct and indirect effect for Physical as we find that trust does not have direct impact on physical property rights protection.

5 It is also noted that the effect of trust can also be transmitted through other factors such as economic development and education (see Bjørnskov & Méon, 2013), and thus the magnitude of direct effect may be overestimated in this model.

6 This measure is one of three elements to create the intellectual property rights protection (Intellectual) referred in Section 3.1 by World Economic Forum.

Additional information

Notes on contributors

Thuy T. Nguyen

Thuy T. Nguyen is a lecturer at University of Economics, The University of Danang, Vietnam. She has a PhD at University of New South Wales, Australia and is currently Dean of International Business Faculty, University of Economics,The University of Danang, Vietnam.

Tien H. Duong

Tien H. Duong is a lecturer at University of Economics, The University of Danang, Vietnam.

My T. T. Dinh

My T. T. Dinh is a lecturer at University of Economics, The University of Danang, Vietnam.

Thu T. M. Truong

Thu T. M. Truong is a lecturer at University of Economics, The University of Danang, Vietnam.

Tram H. H. Pham

Tram H. H. Pham is a lecturer at University of Economics, The University of Danang, Vietnam.