| Making and acting upon trustworthiness assessments in buyer - supplier relations |
| | Allison, David W. | U. of Michigan | dallison@umich.edu | (734) 975-9939 |
| | This paper seeks to answer the call for more empirical research into the effects of trust in
buyer-supplier relations. Using qualitative, survey and accounting data collected during a
two-year research project with a medium-sized German electrical component
manufacturing firm, I explore what drives positive trust assessments on both sides of the
firm's customer and supplier relations. This paper in particular explores how the firm's
sales team members and their customers define interpersonal trust and how they
understand its formation and impact on their business transactions. I follow this up with
a direct examination of how the sales team members' positive assessments of customer
trustworthiness independently act to reduce the use of contracts as well as to reduce
the prices charged to those trusted customers. |
| | Keywords: Trust; Buyer - supplier relations; Germany |
| The Structuration of Interfirm Ties: The Case of Stick Versus Switch Decisions |
| | Uzzi, Brian | Northwestern U. | uzzi@nwu.edu | (847) 491-8072 |
| | Sacks, Michael Alan | Northwestern U. | mas915@lulu.acns.nwu.edu | (847) 467-1195 |
| | We highlight how transaction value can be maximized through an integration of transaction cost
and embeddedness frameworks. Specifically, we investigate firms' decisions to maintain repeated
ties in market exchange, a choice that we call the "stick or switch decision." Transaction cost
approaches have argued that longer term ties cause firms to "switch" partners, since small-
numbers bargaining, asset-specificity, and uncertainty make repeated ties inefficient. In contrast,
the embeddedness argument predicts that repeated ties increase the likelihood that firms will
"stick" with their trading partners, as trust and interdependence contribute to long-term pareto-
improved outcomes. We argue that firms maximize transaction value by combining the benefits of
long term, specialized ties, with a willingness to sever relationships when trust cannot be
maintained. Using a random effect probit model, we empirically test these arguments on 10 years
of manufacturer-contractor data on apparel firms. Results generally support features of the
embeddedness argument, yet transaction cost implications affect the strength of the findings.
We conclude by discussing how an integration of transaction cost economics and the
embeddedness approach can provide a new avenue of research for the study of repeated ties. |
| | Keywords: repeated ties; embeddedness; transaction cost economics |
| Two Faces of Trust: Professional Client Relations in Knowledge Work |
| | Sharma, Anurag | U. of Massachusetts, Amherst | shrmn@som.umass.edu | 413-545-5682 |
| | In this essay, we explore the notion of trust in professional-client relations, where lay clients are
dependent on knowledgeable professionals for intangible expert services. After a brief overview of the
literature on professions, we examine trust using economic theory and argue that the emphasis in
economic models is more on discouraging opportunism than on encouraging trust. We then delve into
the sociology of work and related writings in the management literature to offer an alternative
perspective on trust in professional-client relations. We argue that this alternative explanation of
trustworthiness in exchange is rooted in the nature of professional work. Having presented the two
views of trust, we then make explicit theoretical assumptions underlying the capitalist and
professional ideals implicit in the preceding discussion. We propose that the two ideals represent
and inform two markedly different perspectives on trust, and we call for organization theory that
incorporates the complementary strengths of both economic theory and professionalism.
We end the essay with theoretical and empirical implications for ideas presented herein. |
| | Keywords: Knowledge; Professions; Trust |
| Sales-Interactions as the Building Blocks of Industrial Markets: Towards a Study of the Micro-Foundations of Exchange Among Firms |
| | Darr, Asaf | U. of Haifa | darr@soc.haifa.ac.il | 972-4-8249639 |
| | This paper is critical of existing studies of industrial markets that impose either an organizational or an occupational perspective on exchange involving interdependent social actors from diverse occupational and organizational backgrounds. The paper also claims thar the network-organization approach is overly structural. As an alternative I offer the sales-interaction approach as a new theoretical framrwork which meshes together structure and agency. Thia approach constitutes sales interactions as the bulding blocks of industrial markets, and sales networks as a new unit of analysis. The results of an exploratory study of two sales networks constructed under contrasting distributions of knowledge about products and their application are presented. Discussion centers on the implications of the sales-network approach for future studies of industrial markets. |
| | Keywords: Industrial-markets; Sales; Networks |