The role of interpersonal trust for
entrepreneurial exchange in a
Tatiana S. Manolova
Bentley College, Waltham, Massachusetts, USA
Bojidar S. Gyoshev
International Business School, Botevgrad, Bulgaria, and
Ivan M. Manev
Maine Business School, University of Maine, Orono, Maine, USA
Purpose – While trust is widely recognized as central to the establishment of an effective market
economy, research on transition economies has not examined sufﬁciently its role in promulgating
economic development. This study seeks to ascertain the links between supplier trust, asset speciﬁcity,
and uncertainty reduction in the context of a transition economy, and to validate a measure of trust
developed in a Western developed market economy in the conditions of a transition economy.
Design/methodology/approach – A conﬁrmatory factor analysis of trust, asset speciﬁcity and
uncertainty reduction was performed with a sample of Bulgarian small business owners.
Findings – Commensurate with expectations, supplier trust is signiﬁcantly and positively associated
with both asset speciﬁcity and uncertainty reduction. The six-item measure of supplier trust is a valid
measure for new and small ventures in the context of a transition economy.
Originality/value – This paper demonstrates that private entrepreneurs in transition economies
compensate for the lack of institutional support through embeddedness in their relational exchange
Keywords Trust, Assets management, Uncertainty management
Paper type Research paper
Organizational researchers have devoted considerable attention to understanding the
signiﬁcance of trust for organizations and economic activities (McEvily et al., 2003a).
Trust, or “the mutual conﬁdence that no party in an exchange will exploit another’s
vulnerabilities” (Barney and Hansen, 1994), is an important non-market governance
mechanism, which facilitates long-term relationships between ﬁrms and is an
important component in the success of strategic alliances (Gulati, 1995). In more
uncertain environments trust lowers transaction costs in inter-ﬁrm collaborations,
thereby providing ﬁrms with a source of competitive advantage (Barney and Hansen,
1994). Trust is increasingly considered to be not only an organizing principle providing
the logic by which work is coordinated and information is gathered, disseminated, and
processed within and between organizations (Zander and Kogut, 1995; McEvily et al.,
2003b), but also a valuable contributor to economic exchange (Doney et al., 1998).
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A previous version of this paper was presented at the Academy of Management Annual Meeting
in Honolulu, August, 2005.
International Journal of Emerging
Vol. 2 No. 2, 2007
q Emerald Group Publishing Limited