Vanneste, BS;
Ranjay, G;
(2022)
Generalized Trust, External Sourcing, and Firm Performance in Economic Downturns.
Organization Science
, 33
(4)
pp. 1599-1619.
10.1287/orsc.2021.1500.
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Abstract
Going beyond prior research that has focused on dyadic, party-specific trust, this study investigates the importance of generalized trust, which is not specific to a counterparty and originates from a broader context. We analyze how generalized trust at the regional level affects the extent to which a firm relies on external suppliers and the performance effects of doing so. Furthermore, we assess how these relationships are impacted by an economic downturn. We exploit differences in generalized trust across 145 regions in 12 European countries and use data on more than a million small- and medium-sized enterprises (SMEs) before and during the Great Financial Crisis (from 2008 to 2010). Control variables are selected via a double-selection procedure based on machine learning. We find that firms in high generalized trust regions, compared with those in low generalized trust regions, source more externally (but do not reduce external sourcing less in an economic downturn) and benefit more from external sourcing during an economic downturn.
| Type: | Article |
|---|---|
| Title: | Generalized Trust, External Sourcing, and Firm Performance in Economic Downturns |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.1287/orsc.2021.1500 |
| Publisher version: | https://doi.org/10.1287/orsc.2021.1500 |
| Language: | English |
| Additional information: | This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License. You are free to download this work and share with others for any purpose, even commercially if you distribute your contributions under the same license as the original, and you must attribute this work as “Organization Science. Copyright © 2021 The Author(s). https://doi.org/10.1287/orsc.2021.1500, used under a Creative Commons Attribution License: https://creativecommons.org/licenses/by-sa/4.0/. |
| Keywords: | Generalized trust, trust, interorganizational relationships, strategic alliances, partnerships, external sourcing, economic downturn, Great Financial Crisis, small- and medium-sized enterprises (SMEs), regional studies, machine learning |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices > UCL BEAMS UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science > UCL School of Management |
| URI: | https://discovery.ucl.ac.uk/id/eprint/10128551 |
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