Information Cost, Learning, and Trust Lessons from Co-operation and Higher-order Capabilities Amongst Geographically Proximate Firms

Mark Lorenzen

No 98-21, DRUID Working Papers from DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies

Abstract: In this short paper, I put forward an argument about trust based upon an information cost perspective. I argue that, in different contexts, different origins of trust come to dominate. This is so, because different possible origins of trust have a different information cost, and different contexts have different information availability. Agents learn about this, and place their trust accordingly. I provide an empirical example, and list some traits of information availability between geographically proximate firms. The information cost argument explains why a particular way of trusting is prevalent in some proximate ‘communities’ of agents.

Keywords: Trust; governance; information cost; organisational learning; industrial districts (search for similar items in EconPapers)
JEL-codes: D23 O18 R39 (search for similar items in EconPapers)
Date: 1998
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Citations: View citations in EconPapers (9)

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