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International Food and Agribusiness Management Review Vol. 2/No. 2/1999
Table 1. Trust Categories for the Agribusiness Firm (Adapted from
Barney and Hansen, 1994)
Trust
Weak trust
Semistrong trust
Strong trust
The confidence that any vulnerabilities you might have in a market exchange
will not be exploited by the other party. The certainty that you will not be
taken advantage of by the other business or individual.
Exchanges where there is limited opportunity for one party to exploit the other.
Neither party is vulnerable; the quality of the goods and services can be
evaluated at low cost, and no money or time needs to be invested in
contracts. For example, highly competitive product markets will be a form of
weak trust where both parties win in an exchange. Examples would be buying
gasoline for your car; buying office supplies; and hiring minimum-wage,
temporary workers.
Exchanges where vulnerabilities exist but you are protected by a formal or
informal contract, by your power to leverage the other party’s reputation if he
or she fails to comply, or by membership in a governing organization that will
enforce compliance. For example, you may sign a contract or verbalize a
contract to deliver a certain amount of product to a customer or accept
delivery of a product from a supplier. Or your dominant economic position in
the industry may be a threat to a supplier or buyer if they fail to comply with
an agreement—you could destroy their reputation in the industry. Or an
organization guarantees compliance with agreements by alerting members to
businesses in default or arrears, and in some cases, fining these ‘‘cheater’’
firms.
Exchanges where vulnerabilities exist but you are protected by a set of values,
principles, and standards of the other party that have been internalized by that
individual or firm. Any exploitation of your vulnerabilities would be against
the values, principles, and standards of behavior of the other party. Although
there is opportunity for cheating, business is conducted irrespective of the
existence or nonexistence of any contract, enforcement mechanism, or
policing organization. For example, loyal employees in responsible
management positions look after the best economic interests of the business
even when there may be some personal incentive to behave otherwise. Or a
supplier tells you about price discounts even if it may not be in his best
economic interests to do so. Or a buyer helps you by taking excess inventory
off your hands.
firm, a rural dairy farm, milks 1,550 cows two times a day, supplying milk to the
Phoenix metropolitan area. A 2,000-acre cotton farm was the fourth business
selected. Fertilizer, insecticide, and herbicide are the principle products sold to
local farmers by the fifth firm, a chemical supply business. Finally, our sixth firm,
a beef cattle feedlot, purchases dairy calves and raises them to be sold as
replacement heifers or veal calves. The feedlot averages 1,800 animals in
inventory during the year.
The research design focused on the one-way trust relationship between the
owner/operator of the business and the firm’s employees, customers, and
suppliers.
Interviews were scheduled, and Table 1 was mailed to the owner/operator 1
week in advance of the interview. The owner/operator of each business was
interviewed for a minimum of 1 hr, with some interviews running over 2 hr. We