The Dynamic Interplay of Contracts and Trust: Untangling Between- and Within-Dyad Effects
2017-11-24 08:55:23
by Liwen Wang, the University of Hong Kong

Wednesday, November 29, 2017 | 2:00pm-3:30pm | Room 335, HSBC Business School Building


By differentiating between- from within-dyad effects, this study argues that when comparing between buyer–supplier dyads, contracts and trust complement each other, reflecting varying levels of exchange complexity; but in within-dyad comparisons, contracts and trust substitute for each other over time, due to partner-specific learning. To validate these arguments, the authors examine boundary conditions at the exchange level, namely, exchange product customization and prior exchange history. Product customization reduces the complementary between-dyad effects of trust and contracts; exchange history makes the within-dyad substitution effects more salient. The results, based on survey data from 250 buyer–supplier relationships collected over two time periods, provide strong support for the propositions and thereby establish a more refined understanding of the dynamic contract–trust relationship.