This study examines the determinants of inter-organisational trust by using survey data from just over 1000 suppliers in the automotive industry. We define trust and derive a model of its determinants from transaction cost economics, game theory and sociological exchange theory.Regression analysis results indicate that determinants of trust are different from determinants of opportunism. US-Japanese differences are found in three respects: (i) the way trust is conceptualised by suppliers is richer in Japan than in the US; (ii) the level of trust is higher in Japan than in the US; and (iii) the factors facilitating trust and those attenuating opportunism differ in the US and Japan. JIL Classification Codes: L14, L22, L23, L62

This paper starts from the observation that firms are increasingly engaging in collaborations with their suppliers, even as they are reducing the extent to which they are vertically integrated with those suppliers. This fact seems incompatible with traditional theories of the firm, which argue that integration is necessary to avoid the potential for hold-ups created when non-contractible investments are made. Our view is that pragmatist mechanisms such as benchmarking, simultaneous engineering and 'root cause' error detection and correction make possible 'learning by monitoring'-a relationship in which firms and their collaborators continuously improve their joint products and processes without the need for a clear division of property rights. We argue that pragmatic collaborations based on 'learning by monitoring' both advance knowledge and control opportunism and thus align interests between the collaborators.

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The purchasing strategies of the dominant U.S. automakers form a topic neglected by both economists and business historians. The following article examines the automakers' changing relations with their suppliers throughout the twentieth century. Using the exit/voice paradigm, it establishes a framework that can account for both current and past strategies, even when they seem to contradict the logic of economic theory.

While cooperative buyer-supplier relations are an important source of sustainable competitive advantage, noncooperative behavior persists widely. This paper tests a model incorporating noncooperative behavior within a context of formal commitment, using data from the U.S. auto industry. This 'close, but adversarial' model appears to be reasonably well supported by the data, suggesting that even within professed cooperative buyer-supplier relationships adversarial behavior persists. In contrast, a small but significant minority of the relationships were found to be characterized by high levels of trust as well as informal commitment. The results suggest specific strategies for developing cooperative supplier relations.