Reputation and Trust in The Russian Public Procurement System

Abstract

In this paper, based on a massive online survey of public procurers and suppliers, we analyzed the features of building trust in new counterparties in the Russian public procurement system. Despite the widespread opinion about the low level of trust in Russia, the analysis showed that trust in new counterparties is characteristic of a significant share of public procurers and suppliers. To identify positive and negative factors that form trust in new counterparties, regression models were built both for procurers and for suppliers. Focus on the corporate reputation of the counterparty turned out to be the most significant factor influencing the level of trust in new counterparties. The importance of corporate reputation for direct participants of the procurement process confirms the relevance of issues related to the development and implementation of tools for recording reputation in public procurement. At the same time, previous conflicts with counterparties, as well as problems in the implementation of contracts common in the industry, have a negative impact on trust in new counterparties. For Russian public procurers and suppliers, the willingness to trust new counterparties was positively associated with a higher assessment of procurement efficiency at the micro level, which confirms the importance of strengthening the “culture of trust” in the Russian public procurement system, developing an institutional environment that promotes the formation of trust between direct market participants.