2.1 Institutional performance and social trust

Trust in public institutions manifests itself when citizens assess public institutions as promise-keeping, accountable, efficient, competent, caring, predictable, open, transparent, fair and honest (Hooghe et al., Reference Hooghe, Zmerli, Zmerli and Hooghe2015; van der Meer and Hakhverdian, Reference van der Meer and Hakhverdian2017). Hence, individuals judge how their institutions act in the citizens' interest (Miller and Listhaug, Reference Miller and Listhaug1990) and produce outcomes aligned with their expectations (Hetherington, Reference Hetherington2005). To date, institutional trust has mainly been explained, directly or indirectly, through the institutional performance approach and social trust approach.

According to the institutional performance approach, institutional trust is a consequence of institutional performance (Berg and Hjerm, Reference Berg and Hjerm2010; Lühiste, Reference Lühiste2006). Both administrative effectiveness and government's ability to boost economic performance are emphasised (Stoyan et al., Reference Stoyan, Niedzwiecki, Morgan, Hartly and Espinal2016; Suh et al., Reference Suh, Chang and Lim2012). However, explaining institutional trust only through actual performance has received much criticism because of ignoring citizens' assessment of this performance (Hooghe and Zmerli, Reference Hooghe, Dassonneville and Marien2011). As Berg and Hjerm (Reference Berg and Hjerm2010) note, both the actual performance and the evaluations individuals make are relevant. Hence, institutional trust is often explained as an evaluation of and response to the perception of design, performance and outputs of institutions (Godefroidt et al., Reference Godefroidt, Langer and Meuleman2017; Mishler and Rose, Reference Mishler and Rose2001; Suh et al., Reference Suh, Chang and Lim2012). Citizens' evaluation also extends to their perception of public officials behaving ethically with integrity and loyalty and placing public interests before personal interests (Wang and Wan Wart, Reference Wang and Wan Wart2007), including corruption perception.

Empirical works have confirmed that individual-level evaluation of institutional performance (Berg and Hjerm, Reference Berg and Hjerm2010; Dong and Kübler, Reference Dong and Kübler2018; Godefroidt et al., Reference Godefroidt, Langer and Meuleman2017; Hadarics, Reference Hadarics2016; Stoyan et al., Reference Stoyan, Niedzwiecki, Morgan, Hartly and Espinal2016; Yang and Tang, Reference Yang and Tang2010; Zhai, Reference Zhai2018) and society-level indicators of good governance (Hooghe et al., Reference Hooghe, Marien and Oser2017; Newton and Zmerli, Reference Newton and Zmerli2011) are positively related to different indicators of institutional trust. Some empirical studies have reported that institutional trust is negatively related to individual-level corruption perception (Anderson and Tverdova, Reference Anderson and Tverdova2003; Habibov et al., Reference Habibov, Afand and Cheung2017; Lühiste, Reference Lühiste2006; Mishler and Rose, Reference Mishler and Rose2001, Reference Mishler and Rose2005).

The social trust approach explains institutional trust as an extension of the trust individuals have towards others: interpersonal trust or social (generalised) trust (Berg and Hjerm, Reference Berg and Hjerm2010; Godefroidt et al., Reference Godefroidt, Langer and Meuleman2017; Lühiste, Reference Lühiste2006; Suh et al., Reference Suh, Chang and Lim2012). This general propensity to trust others ‘spills over’, creating institutional trust through civic associations (Mishler and Rose, Reference Mishler and Rose2001, Reference Mishler and Rose2005; Suh et al., Reference Suh, Chang and Lim2012). Social relations and cooperation among citizens promote trust and a sense of civic engagement, which are important for institutional trust (Guiso et al., Reference Guiso, Sapienza and Zingales2004; Putnam et al., Reference Putnam, Leonardi and Nanetti1993) and institutional compliance (Tabellini, Reference Tabellini2008).

Empirical evidence has indicated that institutional trust is positively related to individual-level social trust (Hadarics, Reference Hadarics2016; Hakhverdian and Mayne, Reference Hakhverdian and Mayne2012; Newton and Zmerli, Reference Newton and Zmerli2011; Zmerli, Reference Zmerli, Gabriel and Keil2012) or interpersonal trust (Godefroidt et al., Reference Godefroidt, Langer and Meuleman2017; Lühiste, Reference Lühiste2006; Mishler and Rose, Reference Mishler and Rose2001).

2.2 Cultural context

The cultural environment around individuals is an important factor to consider. Culture can be defined as a set of personal values, beliefs and behaviours shared by a group of people, be it a country or a region (Hofstede, Reference Hofstede1980; Schwartz, Reference Schwartz, van de Vijver, Chasiotis and Breugelmans2011). In general, culture is seen as something different from personality, which is an individual-level concept. Culture is a societal-level concept and a group phenomenon.

From a narrower perspective, it can be expected that an individual's institutional trust is influenced by the cultural-level institutional trust of the people surrounding this individual. This agrees with social influence theory (Kelman, Reference Kelman1958, Reference Kelman1961) and has also been referred to as endogenous social effects (Manski, Reference Manski1993) or group effects (Firebaugh, Reference Firebaugh1978). Not all citizens have first-hand experience with public institutions (Hooghe and Zmerli, Reference Hooghe, Dassonneville and Marien2011; Roussey and Deffains, Reference Roussey and Deffains2012); therefore, they have to rely on something else, such as others' opinions. Even when individuals do have experiences with institutions, they might still be influenced by the attitudes of others due to the perception that the majority must be right or because of social desirability. The role of cultural orientation in shaping individual attitudes has often been shown (Adamczyk, Reference Adamczyk2013; Boyd and Chung, Reference Boyd and Chung2012; Inglehart and Baker, Reference Inglehart and Baker2000), and it has been suggested to aggregate individual-level measures to capture group-level characteristics when examining ecological and individual hypotheses in multilevel studies (Blakely and Woodward, Reference Blakely and Woodward2000; Hayes and Boyd, Reference Hayes and Boyd2017). It can be assumed that the average attitudes of a region towards a particular institution or institutions in general might influence the attitudes of an individual living in that region. The indicators of average and individual attitudes describe two different phenomena herein; i.e. while an individual indicator characterises an individual, an aggregated or average indicator describes the environment where this individual acts. They can correspond, but they might be different. It is possible that, for example, in a region generally supportive of the parliament, there are individuals who have negative attitudes towards the parliament.

From a wider perspective, the whole cultural environment surrounding the individual is important for individual institutional trust. There are different ways to describe cultures.

One option is to examine certain phenomena, such as the level of corruption perceived in a society or society-level social trust. Concerning society-level corruption perception, it is possible that not all citizens have their own experiences; hence, the general perception in a society might prove relevant. Empirical studies have reported that institutional trust is negatively related to the society-level indicator of corruption perception (Dong and Kübler, Reference Dong and Kübler2018; Hakhverdian and Mayne, Reference Hakhverdian and Mayne2012; Newton and Zmerli, Reference Newton and Zmerli2011; van der Meer and Hakhverdian, Reference van der Meer and Hakhverdian2017). Regarding society-level social trust, it can be assumed that the spillover effect mentioned previously also works at the societal level and that a person living in a more trusting environment also has higher trust in institutions. However, society-level social trust has rarely been included in the analysis of individual-level institutional trust, and the results are mixed. Newton and Zmerli (Reference Newton and Zmerli2011) analysed data from the World Values Survey and found that society-level general trust was positively related to political trust. Zmerli (Reference Zmerli, Gabriel and Keil2012) analysed data from the ESS and found that aggregated social trust was not significantly related to trust in political institutions but was positively related to trust in regulative institutions.

Another option is to cover a variety of values, beliefs and attitudes based on a well-known theory offering a set of cultural dimensions characterising the mindset prevalent in a society. Such theories are based on the assumption that it is possible to describe cultures through different dimensions so that every culture can be shown as one point in a multidimensional space. The literature offers many different sets of cultural dimensions (Hofstede, Reference Hofstede1980; House et al., Reference House, Javidan, Hanges and Dorfman2002; Inglehart and Baker, Reference Inglehart and Baker2000; Schwartz, Reference Schwartz, Kim, Triandis, Kagitçibasi, Choi and Yoon1994). Our analysis is based on the concept of Hofstede (Reference Hofstede1980). Although his approach has often been criticised (see Chiang, Reference Chiang2005; Gooderham and Nordhaug, Reference Gooderham and Nordhaug2001; McSweeney, Reference McSweeney2002), much of this criticism tends to address the measurement problems. Hofstede's dimensions have been used extensively during recent decades in both the theoretical and empirical literature in different fields of social sciences and can be regarded as a grounded approach for describing culture (Grimmelikhuijsen and Meijer, Reference Grimmelikhuijsen and Meijer2014). Next, Hofstede's cultural dimensions are introduced and discussed in the context of institutional trust.

First, power distance indicates the extent to which an unequal distribution of power and hierarchical relations are accepted in a society without further justification. In cultures with larger power distance, more centralised decision structures and formal rules are regarded as normal. This means that people perceive governmental structures to be far from them with fewer opportunities to be involved in decision-making processes. People might hold more fatalistic views, waiting for authorities to act and make decisions for them and not trying to engage in social processes (Kaasa, Reference Kaasa2015). As institutional trust can be expected to be promoted by contacts between citizens and institutions (Mahmud, Reference Mahmud2017), institutional trust can be assumed to be lower with a large power distance. At the same time, in cultures with smaller power distance, inequality and hierarchy are less accepted, and one could argue that people could then be more critical of the rulers. Hence, power distance might influence an individual's institutional trust in both directions. Empirical evidence, unfortunately, is scarce. Kaasa (Reference Kaasa2015) showed that regional-level institutional trust in Europe was negatively related to power distance. Mahmud (Reference Mahmud2017) found different indicators of power distance related to institutional trust. However, it is expected that the results are different for authoritarian regimes. Yang and Tang (Reference Yang and Tang2010) showed that traditional hierarchical values, Dong and Kübler (Reference Dong and Kübler2018) and Baniamin et al. (Reference Baniamin, Jamil and Askvik2020) showed that authoritarian values, and Zhai (Reference Zhai2018) showed that traditional values (e.g. blind loyalty and paternalism) were positively related to institutional trust in China. Grimmelikhuijsen and Meijer (Reference Grimmelikhuijsen and Meijer2014) demonstrated that the effect of transparency on institutional trust is less positive in South Korea than in the Netherlands due to the larger power distance in the former country compared to the latter.

Uncertainty avoidance describes how people cope with unfamiliar and uncomfortable situations. In the case of low uncertainty avoidance, ambiguous situations and conflicts are regarded as natural and constructive and vice versa. In uncertainty-avoidant cultures, people are less trusting, and rules play an important role in offering assurance (Kaasa, Reference Kaasa2015). There might be a higher need for order and structure (Hadarics, Reference Hadarics2016), and formalisation is favoured over deregulation (Mahmud, Reference Mahmud2017). Hence, in the case of higher uncertainty avoidance, institutions can be more supported (Hadarics, Reference Hadarics2016; Mahmud, Reference Mahmud2017). The empirical evidence is mixed in this regard. The studies of Kaasa (Reference Kaasa2015) and Mahmud (Reference Mahmud2017) showed no relationship between institutional trust and uncertainty avoidance. Hadarics (Reference Hadarics2016), however, found the subjective importance of adherence to norms and personal security to be positively related to institutional trust.

The cultural dimensions of power distance and uncertainty avoidance may also better capture the formation of an individual's institutional trust in post-communist contexts than the classical simple dummy variable. A communist background is inevitably an important culture-related aspect in the relationship between public institutions and citizens. An individual's preferences are claimed to be shaped by the political regime (Alesina and Fuchs-Schündeln, Reference Alesina and Fuchs-Schündeln2007). Institutional trust has been shown to be much lower in countries with a communist past (Habibov et al., Reference Habibov, Afand and Cheung2017). The main argument is that a transition time is required for individuals to adapt, also cognitively, to institutional changes and to trust new kinds of institutions. Communist societies have strict rules, restrictions and sanctions to suppress initiative. However, at the same time, jobs or accommodations are ensured by the institutional system (Kaasa, Reference Kaasa2015), thereby promoting a fatalistic view captured by power distance. Similarly, it has been noted that in post-communist societies, people regard corruption as something that is unavoidable (Habibov et al., Reference Habibov, Afand and Cheung2017). For instance, in such contexts, cautious attitudes, caused by the danger of being punished for certain behaviour when reported, have been found (Kaasa, Reference Kaasa2015; Kaasa et al., Reference Kaasa, Parts, Kaldaru, Carayannis, Varblane and Roolaht2011; Sztompka, Reference Sztompka2000). This, again, can be captured by the uncertainty avoidance dimension.

Masculinity(–femininity) reveals to what degree values such as achievement, assertiveness and competition, called masculine by Hofstede, dominate over feminine values such as tolerance, modesty and solidarity. In feminine societies, good relations are valued, and, thus, more cooperation can be expected. That, in turn, might engender more trust in institutions through civic associations. Jones et al. (Reference Jones, Bayulgen, Ladewig and McDermott2018) showed that feminine values promote institutional trust. The regional-level study of Kaasa (Reference Kaasa2015) indicated that masculinity is negatively related to institutional trust.

Individualism(–collectivism) demonstrates whether people prefer to act as individuals or as group members. In individualist societies, individual freedom and autonomy are valued, and people are expected to take care of themselves. In collectivist societies, high levels of group loyalty are expected. It can be assumed that in collectivist societies, people are more motivated to cooperate, which in turn might enhance institutional trust (Halman and Luijkx, Reference Halman and Luijkx2006; Kaasa, Reference Kaasa2015). However, individualism has also been claimed to support political trust (Barni et al., Reference Barni, Vieno and Roccato2016). In individualist societies, people might feel freer from social pressure; this might encourage them to express their opinions, engage in social processes (Allik and Realo, Reference Allik and Realo2004; Kaasa, Reference Kaasa2015) and thus have more trust in institutions. The analysis of Kaasa (Reference Kaasa2015) showed that individualism is positively related to regional-level institutional trust.

3.1 Data

All individual-level data used in this study came from the ESS (2008, 2010), which includes questions about many different fields and has been repeated every other year since 2002. The number of European countries involved ranges from 21 to 29 for different waves, and the countries involved also vary to some extent. Information about the region where the interviews took place enables us to analyse data not only by countries, but also by within-country regions. In this article, regions at the NUTS1 level were used as society-level units. The NUTS (Nomenclature of Territorial Units for Statistics) classification subdivides each country into one or more NUTS1 regions (European Commission, 2018). The selection of years included was determined by two limitations. First, questions approximating corruption perception were available only in the waves of 2004, 2008 and 2010. Second, data about regional institutional quality that would be close enough to 2004 were not available. Hence, regression analysis was performed for two datasets pertaining to the individual-level data for 2008 and for 2010 with 47,485 and 45,637 respondents from 85 and 81 regions, respectively.

3.1.1 Institutional trust

The variable of institutional trust is composed of four indicators, including ‘Trust in country's parliament’, ‘Trust in the legal system’, ‘Trust in the police’ and ‘Trust in political parties’ (scale 0–10), through confirmatory factor analysis (here and hereinafter the principal components method). The factor loadings, percentages of the total variance explained by the factor and the Kaiser-Meyer-Olkin (KMO) measures indicating the appropriateness of the factor model for this and following factor models are presented in Table 1. Here and hereinafter, the shares of the total variance explained and the KMO measures can be viewed as acceptable (KMO measures larger than 0.6 or 0.5 are usually considered acceptable, although in the case of only two indicators, the value is always 0.5 because of the formula used for calculating the KMO measure). The factor scores with mean = 0 and st. deviation = 1 were saved as variables. We assume this variable to describe the overall trust in institutions in general with all indicators strongly correlated (factor loadings ranging from 0.80 to 0.88). Regarding the possible division of trust towards political and administrative/legal institutions (Dahlberg and Holmberg, Reference Dahlberg and Holmberg2016), there was no sign that the indicators of trust in the parliament and political parties and the indicators of trust in the legal system and the police would load into two separate factors. The correlations between those four indicators are all in the same range; therefore, it was not justified to group them pairwise. Our results of the additional regression analysis show that it is rather reasonable to analyse all four institutional trust indicators separately along with the generalised institutional trust factor.

Table 1. Results of the confirmatory factor analysis, 2008 and 2010

3.1.4 Additional socioeconomic variables

As control variables, GDP at current market prices in the purchasing power standard per inhabitant and the percentage of the population aged 25–64 with tertiary education were used. Both indicators were drawn from Eurostat (2018). To capture the possible impact of a communist past, a corresponding indicator was added. Additionally, standard socioeconomic variables such as gender, age in years, whether the person was born in the country, years of full-time education and the household's total net income from all sources (scale 1–10) were included as control variables.

The descriptive statistics of all variables used in the regression analysis are presented in Table 2.

Table 2. Descriptive statistics, 2008 and 2010

3.1.5 Variability across within-country regions

To investigate whether the division into within-country regions is justified, we calculated the mean absolute deviations of our key variables in a standardised form (to enable comparability) across countries and within-country regions for those countries divided into regions at the NUTS1 level. The mean absolute deviation describes the variability of a particular indicator within that particular group, such as the regions of a country or countries included in the study. This robust measure was chosen because it is more resilient to outliers than, for instance, standard deviation where the distances from the mean are squared, causing large deviations to have larger weights. Usually, the mean absolute deviation is calculated as a mean of the absolute values of the deviations from the group mean. However, when calculating the mean absolute deviations inside one country, we used the value of that particular indicator for the whole country instead. The results are presented in Table 3.

Table 3. Mean absolute deviations of used variables (in standardised form), 2008 and 2010

Although variability across all countries is generally larger than that inside countries, the variability within countries is of a comparable extent for some variables and countries, e.g. institutional quality in Belgium or cultural dimensions in Germany. The within-country variability tends to be smaller for institutional and social trust and corruption perception, but for every cultural dimension, there are two to six countries where the mean absolute deviation forms at least one-third of that across the countries. Hence, considerable variability can be found within countries, which could also have an impact on institutional trust.

3.2 Methodology

We used multilevel modelling as our dataset has a hierarchical structure in which individuals represent level one, regions represent level two, and the dependent variable can be explained by both the individual-level and group-level variables. In line with Raudenbush and Bryk (Reference Raudenbush and Bryk2002), we standardised all variables as this translates all the results to the same scale so that they can be compared. Multilevel regression analysis (mixed model with fixed intercept, random intercept and fixed slopes) was conducted simultaneously for 2008 and 2010. We tested whether the choice of multilevel modelling was justified. We started with an intercept-only model and found that the random intercepts (region group effects) were statistically significant. The intraclass correlations (ICCs) for the model with only random region effects included are 0.188 and 0.190 for 2008 and 2010, respectively. It is suggested that multilevel modelling is used when ICC values exceed 0.05 (Hayes, Reference Hayes2006) and ICC values exceeding 0.15 are considered large (Hox, Reference Hox2010). Hence, we accepted the multilevel approach at the individual and regional levels. To investigate the potential multicollinearity, variance inflation factors were calculated; and for the models presented later, they were all below the conventional level of 10.

Our random intercept model is specified in a generalised form as follows:

$$Inst.\;trust{\kern 1pt} _{ij} = \beta _0 + \sum\limits_{k = 1}^n {\beta _k} ind.\;level\;indicator{\kern 1pt} _{kij} + \sum\limits_{l = 1}^m {\beta _l} reg.\;level\;indicator{\kern 1pt} _{ij} + u_j + \varepsilon _{ij}$$

where $Inst.\;trust _{ij}$ is our institutional trust variable created from four initial indicators, the subscript kij represents the effect of the kth individual-level variable, the subscript lj represents the effect of the lth regional-level variable, u _j represents the random intercept in the equation, and ɛ _ij the individual-level residuals. Regarding potential endogeneity, we acknowledge the possibility that an individual's institutional trust might have an impact on this individual's general social trust or perception of corruption, but we believe that the causal direction is rather from general to more specific and from experience to attitude. We do not expect the institutional trust of a particular individual to influence the cultural context as culture is shaped throughout a longer period of time and thus is quite stable.