Trust in buyer-supplier relationships: a small and medium sized enterprises perspective

Abstract

The investigation of salience of trust in economic life was the main issue that was dealt with in this study. For this research, the antecedents of trust in interorganizational business relationships in small-scale enterprises were taken under scrutiny. The choice of small-scale businesses as the subject matter of this study was derived from the perceived need to investigate the potentials of these enterprises. Trust being a multifaceted concept, which could be said to be a mixture of feelings, rational thinking and cultural factors, has implications for all relationships ranging from day-to-day interactions to continuation of a reasonable amount of social capital in a society. In this study, the enterprise owners' (n=412) perceptions about their key suppliers trustworthiness were assessed with the developed questionnaire in 10 sectors from both service and manufacturing, in addition to a number of predictor variables. The purposes were two-fold: investigating the antecedents of trust production in dyadic buyer-supplier relationships, and the level of trust in characteristically different institutional contexts of conventional and novel sectors. The analyses showed that the owners' perceptions about the strength of their sectoral sanctions, the length of buyer-supplier relationship and buyer's propensity to trust were the main sources of trust production, but written contracts were not considered as a trust alternative. More importantly, the analyses showed that there were differences between the owners from the conventional and the novel sectors both in terms of the sources of their trustworthiness perceptions, and the institutionalized ways of making business and dealing with misconduct. In the light of these findings, an outline for a deliberate attempt to expand the radius of trust and effectiveness in business relationships through networks of small enterprises was prepared.