This article focuses on how institutions matter in generating relationships of trust in an environment of unequal power. Trust is seen as the truster's expectation that the trustee will act trustworthily out of moral commitment and/or interest in continuing the relationship. Using cross-sectional data from a survey conducted in 2006 on Swedish employment relations the authors show that perceived power asymmetries between an employee and his or her superior have a negative impact on trust. However, perceptions about the enforcement and fairness of institutional constraints — rules for dismissal, conflict resolution, wage setting, and promotion — have conditioning effects. When the respondents perceive the rules as fair, trust is less influenced by increasing power asymmetries between an employee and his or her superior. The results have important implications. By designing institutions that are considered fair, distrust may be mitigated even in situations characterized by extensive power asymmetries.
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