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Trust and Entrepreneurship

A West–East Perspective

Edited by Hans-Hermann Höhmann and Friederike Welter

In this innovative book, international scholars investigate trust and its role in relation to the entrepreneurial behaviour of small firms across a variety of institutional and cultural settings. The contributors draw on original empirical material from a number of West European and East European countries, highlighting the role of culture and the significance of a multi-disciplinary approach in researching trust and its importance in entrepreneurship.
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Chapter 7: Trust-Building in Different Forms of Systemic Transition

Hans van Ees and Reinhard Bachmann


1 Hans van Ees and Reinhard Bachmann INTRODUCTION Institutional factors constitutively contribute to the nature of exchange relationships in various ways. For example, trade associations, legal codes and practices and so on are suggested to determine the quality of relationships within and, particularly, between organisations (for example, Lane and Bachmann 1996; Sorge 1996; Whitley 1999). With regard to exchange relationships, differences also translate into the preferred use of underlying forms and combinations of social co-ordination mechanisms like trust and power (for example, Bachmann 2001). Research indicates that trust and power are elements in exchange relationships in all parts of the world. The forms and the intensity of behavioural dispositions, however, have strong cultural and institutional roots, which can have a considerable impact on the performance potential of business organisations. In general, there are large differences between the institutional environments of transition and (Western) market economies. However, also among transition economies we observe large performance differences as well as large variation in institution-building, which suggests that differences at the national or regional level in terms of routines, culture and institutions contribute to the explanation of a different economic development in these countries. Weak legislative structures and the absence of effective market regulation and property-right enforcement rules prohibit mutually profitable business transactions to various degrees. It can be argued that more efficient governance mechanisms can contribute to more favourable business environments, but this is not to say that this is simply a matter of ‘learning from the West’ (Child and Czeglédy...

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