The Value of Relationships: Evidence from a Supply Shock to Kenyan Rose Exports

Rocco Macchiavello and Ameet Morjaria

No 9531, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper provides evidence on the importance of reputation, intended as beliefs buyers hold about seller's reliability, in the context of the Kenyan rose export sector. A model of reputation and relational contracting is developed and tested. We show that 1) the value of the relationship increases with the age of the relationship; 2) during an exogenous negative supply shock sellers prioritize relationships consistently with the predictions of the model; and 3) reliability at the time of the shock positively correlates with future survival and relationship value. Models exclusively focusing on enforcement or insurance considerations cannot account for the evidence.

Keywords: Relational contracts; Reputation; Exports (search for similar items in EconPapers)
JEL-codes: C73 D23 L14 O12 (search for similar items in EconPapers)
Date: 2013-06
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Citations: View citations in EconPapers (24)

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Related works:
Journal Article: The Value of Relationships: Evidence from a Supply Shock to Kenyan Rose Exports (2015)
Working Paper: The value of relationships: evidence from a supply shock to Kenyan rose exports (2015)
Working Paper: The Value of Relationships: Evidence from a Supply Shock to Kenyan Rose Exports (2013)
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