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Trustworthiness as an Economic Asset

183


firm has a focal point that does not require supporting governance mechanisms to
reduce uncertainty in the exchange. Exchange partners are trustworthy because of
who they are and the business values they share. Parties to a transaction look after
the best interests of each other.

Barney and Hansen (1994) speculated that strong-form trust may be rare in the
economy and, therefore, represents a source of strategic advantage for businesses
successful in locating other strong-form trust partners:

While the number of strong form trustworthy exchange partners in a particular segment
of the economy is ultimately an empirical question, it seems like a reasonable guess
that strong form trustworthiness in at least some segments of the economy is probably
rare, and thus (assuming exchanges with other strong form trustworthy exchange
partners are developed) at least a source of temporary competitive advantage for strong
form trustworthy individuals and firms. p. 186)

Other authors have not chosen to “guess” about the empirical importance of
trust relationships in business. Ottati (1994) found that trustworthiness was an
important part of personal capital in industrial districts where trust substituted for
financial collateral in loan applications. Burchell and Wilkinson, (1997) quanti-
tatively and qualitatively evaluated the role of trust in 60 firms in Britain,
Germany, and Italy. They found evidence to support Arrow’s (1974) claim that
trust is an important social lubricant across businesses in these three countries. We
now explore the empirical reality behind Barney and Hansen’s (1994) “reasonable
guess.”

Research Design: A Multiple Case Experiment

As agricultural businesses consolidate and industrialize, case study research
becomes an increasingly useful tool for exploring the “black box” of organiza-
tional structure and managerial decision making within the firm (Sterns et al.,
1998). Analysis of human interaction where and when identity matters is
facilitated by the case study method.

Yin (1994) noted that case studies are analogous to experiments in the physical
sciences. Experiments are helpful in testing existing theory and developing new
theory. Case studies, according to Yin (1994), are not capable of producing
generalizable results to populations of business firms. Rather, case studies
improve our understanding of theory. In this experimental vein, we proceed to test
Barney and Hansen’s (1994) conceptual model of trust relationships in business.

We selected six relatively small agribusiness firms in Pima and Pinal Counties
in southern Arizona as experiments. The first firm is a retail supplier of high
quality plant material to homeowners and apartment residents in urban Tucson.
The second firm, a wholesale plant nursery, grows and distributes plant material
to retail nurseries and landscape contractors throughout Pima County. The third



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