Inter-firm Trust Research Articles

Characteristics and Outcomes of Entrepreneurial Collaborations

Increasingly, companies are using alliances and joint ventures to pursue entrepreneurial opportunities. These collaborations are voluntary arrangements between two or more firms that exchange, share, bundle, and create resources in pursuit of entrepreneurial opportunities. This paper proposes that the innovativeness and risk characteristics of these entrepreneurial collaborations significantly influence the outcomes that partner firms realize. Furthermore, interfirm trust works to moderate the effects of these characteristics and allows partners to effectively manage these arrangements. Using data from a sample of alliances and joint ventures engaged in new product development in the telecommunications, medical, and electronics industries, we empirically test the effects of these characteristics on partner satisfaction and partnership success.

Trust and Transaction Costs

In this paper, the influence of interfirm trust relationships on the level of transaction costs of economic exchanges is analysed. In many cases, it is argued, trust appears to be either neutral in respect of transaction costs or even augmenting them. The lowering of transaction costs can be explained by virtue of different attendant institutions, like reputation or contract securities, rather than owing to trust per se. Mutual correlation between trust and transaction costs, including knowledge accumulation in interfirm alliances, property rights protection within joint innovation projects and social capital formation in business groups, is considered.

Technology Trust in Internet-Based Interorganizational Electronic Commerce

Trust in Internet-based Business-to-Business (B2B) e-commerce is an important issue for both practicioners and academicians. Whereas the traditional notion of dyadic interfirm trust primarily focuses on trust in a trading partner firm, trust in e-commerce also implicitly incorporates the notion of trust in the transaction infrastructure and underlying control mechanisms (technology trust), which deals with transaction integrity, authentication, confidentliality, non-repudiation, and best business practices. This researcch explicitely examines this new institutional character of trust in B2B e-commerce, arguing that business value realization is heavily dependent on the dimension of technology trust, captured as perceived benefits and actual organizational performance, even after controlling for the positive effects of partner trust. Given the absense of adequate metrics to capture the notion of technology trust in B2B e-commerce, this research develops and validates a measure for technology trust and tests its effec on benefits and performance. This paper contributes to theory by bridging the gap between technological solutions (technology trust) from an institutional trust perspective, trading partner trust (relationship trust) and business value (perceived benefits and organizational performance). The proposed theoretical model is tested in organizations actively involved in B2B e-commerce using survey methodology. The findings from 288 firms validated the importance of technology trust for organizational success in B2B e-commerce.

Trust in Transition: Cross-Country and Firm Evidence

This paper uses data from a large survey of firms across 26 transition countries to examine the determinants of trust in the transition process. We first introduce a new measure of trust between firms: the level of prepayment demanded by suppliers from their customers in advance of delivery. Using this new measure, we confirm earlier findings that trust is higher where firms have confidence in third party enforcement through the legal system. However, the fairness and honesty of the courts are more important determinants of inter-firm trust than the courts' efficiency or ability to enforce decisions. We then examine the role of business networks in building trust and find that networks based around personal ties - family and friends - and business associations actively promote the development of trust, while business networks based on enterprise insiders and government agencies do not. Finally, we find that country-level effects are significantly more important determinants of inter-firm trust than firm-level effects.

Variations in relationship strength and its impact on performance and satisfaction in business relationships

Develops a summary construct, relationship strength, composed of interfirm trust, relationship commitment, and relationalism and supports the role of relationship strength in achieving positive relational outcomes, like relationship satisfaction and performance. The survey sample comes from a national population of hospital material managers who make decisions regarding purchases from a small group of large medical/surgical supply firms. Structural models support improved fit provided by relationship strength over a model containing the individual constructs comprising relationship strength. Managerial and academic implications of relationship strength include improved strategic planning and actionable information on improving relational outcomes.

Trust in Japanese Interfirm Relations: Institutional Sanctions Matter

Trust is a critical component of interfirm relations, and scholars have pointed to Japan as an environment where trusting business relationships flourish. Rather than viewing trust as an inherent and driving force in Japanese interfirm relations, we propose that a combination of institutional and societal sanctioning mechanisms is largely responsible for the apparently trust-induced cooperation there. Our examination of buyer-supplier relations in the Japanese auto industry demonstrates the important role of these sanctions. We recommend focusing on sanctions in further explorations of interfirm trust.

Trust in Japanese Interfirm Relations: Institutional Sanctions Matter

Trust is a critical component of interfirm relations, and scholars have pointed to Japan as an environment where trusting relationships flourish. In looking for environmental characteristics important for enabling and sustaining trust in Japan, we propose that a critical role is played by a combination of institutional and societal sanctions. Examination of Japanese subcontracting practices allows an elaboration of these sanctions and their interplay. We recommend further focus on sanctions in exploring interfirm trust issues.

Trust or Hierarchy? Changing Relationships Between Large and Small Firms in France

An influential position in the contemporary study of industrial reorganisation discusses the construction of inter-firm trust as a way to adjust the organisation of firms to the flexibility required by the market. The conventional picture of the relation between large firms in France and small firms who supply them, suggests that it is very hard for them to construct such trust-based networks. Instead, it is one of atomised sub-contracting: the large firm gives very detailed specifications for the job that needs to be done, and the subcontractor executes. In recent years, however, several accounts have suggested that this arms-length relationship between larger firms and suppliers is changing.

Does Familiarity Breed Trust? The Implications of Repeated Ties for Contractual Choice in Alliances

Exploring the factors that explain the choice of governance structures in interfirm alliances, this study challenges the use of a singular emphasis on transaction costs. Such an approach erroneously treats each transaction as independent and ignores the role of interfirm trust that emerges from repeated alliances between the same partners. Comprehensive multiindustry data on alliances made between 1970 and 1989 support the importance of such trust. Although support emerged for the transaction cost claim that alliances that encompass shared research and development are likely to be equity based, there is also strong evidence that repeated alliances between two partners are less likely than other alliances to be organized using equity.

DOES FAMILIARITY BREED TRUST? THE IMPLICATIONS OF REPEATED TIES FOR CONTRACTUAL CHOICE IN ALLIANCES.

Exploring the factors that explain the choice of governance structures in interfirm alliances, this study challenges the use of a singular emphasis on transaction costs. Such an approach erroneously treats each transaction as independent and ignores the role of interfirm trust that emerges from repeated alliances between the same partners. Comprehensive multiindustry data on alliances made between 1970 and 1989 support the importance of such trust. Although support emerged for the transaction cost claim that alliances that encompass shared research and development are likely to be equity based, there is also strong evidence that repeated alliances between two partners are less likely than other alliances to be organized using equity.

Determinants of Pharmacists' Satisfaction with Drug Wholesalers: A National Study

ABSTRACTA trend toward broad, vital pharmacy-drug wholesaler relationships makes the satisfaction with a drug wholesaler essential to a pharmacy. Using a political economy framework, we conceptualized the constructs that are related to pharmacists' satisfaction with a drug wholesaler. Hypothesized relationships were tested using measures obtained from a random sample of 600 pharmacies in 5 states. A total of 334 responses were analyzed using stepwise multiple regression. Constructs significantly related to pharmacist satisfaction were interfirm trust, transaction structure, resolution of conflict, and customer service levels.