Analysis reveals governance affects trust in buyer-seller relationships, suggesting trust is built through mutual investments and goal congruence.
What influence does governance have on the development of trust in buyer-seller relationships? In this paper, a transaction cost argument is used to advance our understanding of this important yet under-researched area by studying the effect that various modes of governance has on trust building in buyer-seller relationships. We tested our proposed governance-trust model on a sample of purchasing agents and managers from the National Association of Purchasing Managers (NAPM). The results provide initial support for our hypothesized relationships and demonstrate the important role that mutual investments and goal congruence plays in the growth of trust between buying and selling firms.
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O'Donnell et al. (2008) studied this question.
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