On September 9, 2024, Mario Draghi presented his highly anticipated report on the future competitiveness of the continent to the President of the European Commission, Ursula von der Leyen. This comprehensive document outlined the steps Europe needs to take to catch up with China and the United States. The report included recommendations such as reducing vulnerabilities in strategic materials, massive investments funded by common debt, and reforming competition law. In total, Draghi made 170 recommendations, with nearly a third focused on innovation. Surprisingly, the crucial concept of trust was only mentioned once in the 400-page document, despite its key role in a country’s ability to create and develop new technologies.
“Economic interactions and activities are influenced by trust,” explained economist and HEC professor Yann Algan. Trust affects how companies are organized, as higher trust levels allow for more centralized decision-making. Innovation processes rely on firsthand information, and opportunities are not solely identified from a top-down approach.
Conversely, low levels of trust hinder innovation. “In companies, individuals who feel insecure in their jobs tend to prioritize short-term research with quick results over more fundamental and risky work,” stated Gilbert Cette, an economics professor at NEOMA Business School. The fear of failure is also heightened in environments with low trust, as it can be perceived as a direct threat.
