The Determinants of Local Suppliers' Trust Towards Foreign Buyers

Abstract

This study examines how local suppliers' trust towards their foreign buyers is developed in international buyer-supplier cooperation. By identifying cognition- and affect-based trust as two primary dimensions of interfirm trust in international buyer-supplier cooperation, we investigate how the two types of trust are determined by structural and social exchange attributes, and whether the two types of trust are complementary. A survey and analysis of 155 buyer-supplier relationships between Chinese local suppliers and foreign buyers indicates that opening information exchange and institutionalization of cooperation have positive influence on cognition-based trust, while inter-firm diversity exerts a mixed impact on cognition-based trust. In addition, socialized interaction and assistance offered by foreign firms are strongly related to affect-based trust. We also find that Chinese firms' cognition- and affect-based trust towards their foreign partners are complementary. © 2010 Gabler Verlag.