Trust as a Governance Mechanism in Inter-Firm Relations: Conceptual Considerations

Evolutionary and Institutional Economics Review, Vol. 3 No. 1, pp. 89-108 (2006)

Posted: 31 May 2013

See all articles by Teemu Kautonen

Teemu Kautonen

Aalto University School of Business; Anglia Ruskin University

Date Written: 2006

Abstract

Although there is general agreement in the literature of trust being a transaction-cost efficient means of governance, scholars are far less harmonious as to what trust actually is. This analysis examines and provides clarity to the concept and to the role of trust as a governance mechanism in the specific context of inter-firm relations by addressing three central aspects in the current debate: firstly, whether trust is a calculative decision or habitual behaviour; secondly, where the limits of trust are compared to alternative governance mechanisms; and thirdly, whether trust is based on self-interest or altruism.

Keywords: trust, governance, inter-firm relations, transaction cost economics

JEL Classification: B52, L14, Z13

Suggested Citation

Kautonen, Teemu, Trust as a Governance Mechanism in Inter-Firm Relations: Conceptual Considerations (2006). Evolutionary and Institutional Economics Review, Vol. 3 No. 1, pp. 89-108 (2006), Available at SSRN: https://ssrn.com/abstract=2271631

Teemu Kautonen (Contact Author)

Aalto University School of Business ( email )

P.O. Box 21210
AALTO, FI-00076
Finland

Anglia Ruskin University ( email )

East Road
Cambridge CB1 1PT
United Kingdom

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