Adaptive Build-up and Breakdown of Trust: An Agent Based Computational Approach

This article employs Agent-Based Computational Economics (ACE) to investigate whether, and under what conditions, trust is viable in markets. The emergence and breakdown of trust is modeled in a context of multiple buyers and suppliers. Agents develop trust in a partner as a function of observed loyalty. They select partners on the basis of their trust in the partner and potential profit, with adaptive weights. On the basis of realized profits, they adapt the weight they attach to trust relative to profitability, and their own trustworthiness, modeled as a threshold of defection. Trust and loyalty turn out to be viable under fairly general conditions.     

Determinants of Perceived Interfirm Dependence in Industrial Supplier Relations

Studies of industrial buyer-supplier relations mostly focus on structural characteristics of the transactions between parties, and assume a direct relation between these factors and characteristics of the relationships. This paper focuses on the psychological dimension of transaction relations, reflected in perceptions of dependence, from the perspective of an industrial supplier. In the first step of the analysis, three groups of structural determinants of perceived supplier dependence are explored: factors related to goal mediation, factors related to relation-specific assets, and factors related to network embeddedness. After that, the influence of these structural factors and of perceived supplier dependence on the ordering of buyer-supplier relations is investigated. Data come from a study of the micro-electronics assembly industry in the Netherlands. The findings show that sales to a particular buyer as a percentage of the total sales of the supplier and the growth of sales to a particular buyer (two forms of goal mediation) are important determinants of perceived supplier dependence. Human asset specificity is also related to perceived supplier dependence. Network embeddedness variables play only a minor role in explaining perceived supplier and buyer dependence in this study. The data further show that perceived dependence has an effect on the degree of ordering in the relationship, next to structural factors like the extendedness of the relationship beyond the focal transaction and physical asset specificity. The effects of human asset specificity and dedicated assets on ordering are contrary to what was expected on the basis of the literature.     

Learning by Interaction: Absorptive Capacity, Cognitive Distance and Governance

This article analyses problems and solutions in thegovernance of knowledge exchange and joint knowledgeproduction. The analysis is based on a theory whichcombines elements of transaction cost economics,social exchange theory and theory of knowledge. Thetheory of knowledge yields an analysis of absorptivecapacity, communicative capacity and learning byinteraction. In that setting, the paper analysesproblems of governance: hold-up problems as a resultof specific investments in setting up knowledgeexchange, spill-over problems, a trade-off betweenstability and change of exchange relations, and atrade-off between novelty and understandability(`cognitive distance'). A survey is given ofcontingencies that affect the size of problems and theefficacy of instruments for their governance.