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Cited by 1,542

The DOI matches its Crossref record; 6 of the 6 references it cites were found in a registry or an index.

The Role of Trustworthiness in Reducing Transaction Costs and Improving Performance: Empirical Evidence from the United States, Japan, and Korea

Dyer, Jeffrey H., Chu, Wujin·2003·Organization Science
DOI 10.1287/orsc.14.1.57.12806
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Abstract

In this paper we investigate the relationship between supplier trust in the buyer and transaction costs and information sharing in a sample of 344 supplier-automaker exchange relationships in the United States, Japan, and Korea. Our findings indicate that perceived trustworthiness reduces transaction costs and is correlated with greater information sharing in supplier-buyer relationships. Moreover, the findings suggest that the value created for transactors, in terms of lower transaction costs, may be substantial. In particular, we found that the least-trusted automaker spent significantly more of its face-to-face interaction time with suppliers on contracting and haggling when compared to the most trusted automaker. This translated into procurement (transaction) costs that were five times higher for the least trusted automaker. Finally, we argue that trust is unique as a governance mechanism because it not only minimizes transaction costs, but also has a mutually causal relationship with information sharing, which also creates value in the exchange relationship. Other governance mechanisms (e.g., contracts, financial hostages) are necessary costs incurred to prevent opportunistic behavior, but do not create value beyond transaction cost minimization. Our findings provide empirical evidence that trustworthiness lowers transaction costs and may be an important source of competitive advantage.

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Show all 6 references

Research works printed but not linked: 36

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Cited by

Metadata

Authors
Dyer, J. H., & Chu, W.
Venue
Organization Science
Publisher
Institute for Operations Research and the Management Sciences (INFORMS)
Published
2003-02
Volume
14
Issue
1
Pages
57-68
ISSN
  • 1047-7039 (ISSN-L)
  • 1526-5455
DOI
10.1287/orsc.14.1.57.12806
OpenAlex
W2014435970
Cited by
1,542
References
6
FWCI
52.63
Type
journal article
Language
en
Open access
closed

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