How managers can build trust in strategic alliances: a meta-analysis on the central trust-building mechanisms

Trust is an important driver of superior alliance performance. Alliance managers are influential in this regard because trust requires active involvement, commitment and the dedicated support of the key actors involved in the strategic alliance. Despite the importance of trust for explaining alliance performance, little effort has been made to systematically investigate the mechanisms that managers can use to purposefully create trust in strategic alliances. We use Parkhe’s (1998b) theoretical framework to derive nine hypotheses that distinguish between process-based, characteristic-based and institutional-based trust-building mechanisms. Our meta-analysis of 64 empirical studies shows that trust is strongly related to alliance performance. Process-based mechanisms are more important for building trust than characteristic- and institutional-based mechanisms. The effects of prior ties and asset specificity are not as strong as expected and the impact of safeguards on trust is not well understood. Overall, theoretical trust research has outpaced empirical research by far and promising opportunities for future empirical research exist

Trade, Trust and Institutions

To investigate the relation between trust and formal institutions, we analyze bilateral trade patterns in a sample of 16 European countries between 1996-2009. Trust in trading partners has a significant positive effect on bilateral trade. However, our results suggest that trust and formal institutions are substitutes, as the positive effect of trust on trade is conditional on the quality of formal institutions. When the institutional quality of the importing country increases, the effect of trust on trade decreases, and eventually becomes insignificant. The decline in the effect of trust on trade is less when the exporting country’s institutional quality improves.trust, international trade, institutional quality

The Impact of Trust on Reforms

In a constantly changing economic environment a country's ability to undertake institutional reforms is crucial to maintain economic growth and to promote the welfare of its citizens. A wide range of determinants for institutional reforms have been identified. However, the impact of trust on reforms has so far never been addressed. We provide theoretical arguments why trust should influence institutional changes and test the relationship empirically. We find a significant positive relation between trust and reforms with regard to government size, the legal system, and deregulation of private businesses and the labor market. The results in other policy fields are ambiguous. --Trust,Economic Freedom,Policy Reforms

Utopia becoming dystopia? Analyzing political trust among immigrants in Sweden

This paper aims to increase our knowledge on the political trust of immigrants’ in established democracies. Utilising Swedish survey data, based on a large oversample of respondents with a foreign background, we show that immigrants from countries more plagued by corruption place significantly higher trust in political institutions in Sweden in comparison with both immigrants from more auspicious institutional settings and with the native population. However, we also find that an initially bright view of the Swedish institutional qualities tend to attenuate over time, as immigrants from countries of high corruption develop more critical viewpoints. In con-trast to reasonable expectations, we nonetheless find that this decrease in trust is not explained by experiences of discrimination. Overall, the hypotheses elaborated and tested in this paper may be regarded as a more general contribution to a theory on how political trust is related to experiences and expectations of political institutions.political trust of immigrants’; Swedish survey data; experiences and expectations of political institutions

The Vanishing Barter Economy in Russia: A Test of the Virtual Economy Hypothesis? Reply to Barry Ickes

This paper is a reply to Barry Ickes' critique of my paper “Trust versus Illusion: What is Driving Demonetization in Russia?” in which I show that the data reject Barry Ickes' Virtual Economy explanation of barter in Russia in favor of an institutional explanation based on the lack of trust

Communal and Institutional Trust: Authority in Religion and Politics

Linda Zagzebski’s book on epistemic authority is an impressive and stimulating treatment of an important topic. 1 I admire the way she manages to combine imagination, originality and argumentative control. Her work has the further considerable merit of bringing analytic thinking and abstract theory to bear upon areas of concrete human concern, such as the attitudes one should have towards moral and religious authority. The book is stimulating in a way good philosophy should be -- provoking both disagreement and emulation. I agree with much of what she says, and have been instructed by it, but it will be of more interest and relevance here if I concentrate upon areas of disagreement. Perhaps they are better seen as areas, at least some of them, where her emphases suggest a position that seems to me untenable, but that she may not really intend. In that event, I will be happy to have provoked a clarification or the dispelling of my misunderstanding. My focus will be upon problems in her account of communal authority and autonomy, especially with respect to religious and political authority. Here my worry is that she places too much trust in trust and not enough in what I call selective mistrust

Trust, Reciprocity and Institutional Design: Lessons from Behavioural Economics

Trust and reciprocity are the bond of society (Locke), but economic agents are both self-interested and intrinsically untrustworthy. These assumptions impair severely economists' accounts of social relationships. The paper examines strategies to escape this paradox by enlarging our conception of rationality: the assumptions of self-interest and consequentialism are critically discussed as well as relational behavioural principles (e.g. trust and reciprocity). The implications of this enlarged kind of rationality are particularly important for agency theory. The paper analyses, within this framework, the working of two different kinds of incentive mechanisms, namely intra-personal and interpersonal, and discusses experimental results that emphasise the empirical relevance of the latter. Besides providing a more descriptively adequate picture of agency, such mechanisms have important normative implications. In this respect some of the conditions that affect the process of accumulation and erosion of trust and social capital are explored. The tension between rules and trust turns out to be not inescapable, though it calls for a changing in the designing logic of institutions and contracts. I shall discuss what are the changes needed in order to implement a trust-enhancing activity of institutional design.Incentives; reciprocity; trust; crowding-out; institutional design

Network Triads: Transitivity, Referral and Venture Capital Decisions in China and Russia

This article examines effects of dyadic ties and interpersonal trust on referrals and investment decisions of venture capitalists in the Chinese and Russian contexts. The study uses the postulate of transitivity of social network theory as a conceptual framework. The findings reveal that referee-venture capitalist tie, referee-entrepreneur tie, and interpersonal trust between referee and venture capitalist have positive effects on referrals and investment decisions of venture capitalists. The institutional, social and cultural differences between China and Russia have minimal effects on referrals. Interpersonal trust has positive effects on investment decisions in Russia.http://deepblue.lib.umich.edu/bitstream/2027.42/40138/3/wp752.pd

Trust as Societal Capital: Economic Growth in European Regions.

The neo-institutional approach to economic phenomena has forwarded the institutional framework within a society as a fundamental determinant of economic performance. Cultural characteristics, also referred to as "societal capital", have gained specific attention in this respect. Basically, a culture that is characterised by trust is increasingly considered as a competitive advantage. This paper fits in this neo-institutional perspective. We outline an integrated conceptual framework that articulates the direct and indirect channels through which a culture may influence the economic record. Confining to economic growth as an indicator of economic performance and using data from the European Value Study, we subsequently investigate empirically the link between cultural values and economic performance, hereby focusing on a European sample that includes regions as units of observation. This empirical evidence indeed seems to confirm the trust-growth hypothesis. Building on this result, we finally consider a number of possible policy implications. We hereby envisage the government as the main designer of the formal institutional framework within which economic agents interact. In addition, we emphasise the government’s exemplary role as a visible emanation of societal values.

Trust and Experience in Online Auctions

This paper aims to shed light on the complexities and difficulties in predicting the effects of trust and the experience of online auction participants on bid levels in online auctions. To provide some insights into learning by bidders, a field study was conducted first to examine auction and bidder characteristics from eBay auctions of rare coins. We proposed that such learning is partly because of institutional-based trust. Data were then gathered from 453 participants in an online experiment and survey, and a structural equation model was used to analyze the results. This paper reveals that experience has a nonmonotonic effect on the levels of online auction bids. Contrary to previous research on traditional auctions, as online auction bidders gain more experience, their level of institutional-based trust increases and leads to higher bid levels. Data also show that both a bidder’s selling and bidding experiences increase bid levels, with the selling experience having a somewhat stronger effect. This paper offers an in-depth study that examines the effects of experience and learning and bid levels in online auctions. We postulate this learning is because of institutional-based trust. Although personal trust in sellers has received a significant amount of research attention, this paper addresses an important gap in the literature by focusing on institutional-based trust