Relational Contracts and Trust in a High-Tech Industry

Giacomo Calzolari, Leonardo Felli, Johannes Koenen (), Giancarlo Spagnolo and Konrad O. Stahl

Janeway Institute Working Papers from Faculty of Economics, University of Cambridge

Abstract: We study how informal buyer-supplier relationships in the German automotive industry affect procurement. Using unique data from a survey focusing on these, we show that more trust, the belief that the trading partner acts to maintain the mutual relationship, is associated with both higher quality of the automotive parts and more competition among suppliers. Yet both effects hold only for parts involving unsophisticated technology, not when technology is sophisticated. We rationalize these findings within a relational contracting model that critically focuses on changes in the bargaining power, due to differences in the costs of switching suppliers.

Keywords: Relational Contracts; Hold-up; Buyer-Supplier Contracts; Bargaining Power (search for similar items in EconPapers)
JEL-codes: D86 L14 L62 O34 (search for similar items in EconPapers)
Date: 2021-08-02
New Economics Papers: this item is included in nep-com, nep-hrm, nep-reg and nep-soc
Note: lf454
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Working Paper: Relational Contracts and Trust in a High-Tech Industry (2021)
Working Paper: Relational Contracts and Trust in a High-Tech Industry (2021)
Working Paper: Relational Contracts and Trust in a High-Tech Industry (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camjip:2101

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