Ingeniero en sistemas

ARTICLE IN PRESS
Int. J. Production Economics 120 (2009) 79–87

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Int. J. Production Economics
journal homepage: www.elsevier.com/locate/ijpe

Cooperative strategies in customer–supplier relationships: The role of interfirm trust
Toni Laaksonen a, Toni Jarimo b,Ã, Harri I. Kulmala c
a b c

ABB Service Inc., Finland Nokia Corporation, P.O. Box226, FI-00045 Nokia Group, Finland FIMECC Ltd., Finland

a r t i c l e in fo
Article history: Received 1 September 2007 Accepted 1 July 2008 Available online 18 October 2008 Keywords: Cooperation Cost management Game theory Inter-organizational relationship Trust

abstract
In this paper we model the real cost structures of three customer–supplier relationships through a game theory approach.The three cases demonstrate the benefits of mutual interfirm trust in financially measurable terms. Indeed, interfirm trust can decrease the transaction costs of the relationship, thus providing competitive advantage for the partners. Moreover, we present a pricing arrangement that partially compensates the possible lack of mutual trust. A practical implication is that managers should pay moreattention to the role of interfirm trust in partner selection processes. & 2008 Elsevier B.V. All rights reserved.

1. Introduction The importance of interfirm trust has increased as many customer–supplier relationships have become more cooperative by their nature. Thus, several researchers have paid attention to interfirm trust and its benefits from theoretical and empirical perspectives (Das and Teng,1998a; Zaheer et al., 1998; Blois, 1999; Blomqvist et al., 2002; Dyer and Chu, 2003). The benefits from trust can be, for instance, reduction of transaction costs, increased information sharing, and willingness to invest in a specific customer–supplier relationship. Interfirm trust and the benefits provided by it have been measured and evaluated widely by using several approaches (cf. Sako, 1992; Sakoand Helper, 1998; Zaheer et al., 1998; Krishnan et al., 2006). For instance, the IMP group has paid extensive attention on trust in the perspective of business to business relationships

à Corresponding author. Tel.: +358 7180 62331; fax: +358 7180 38884.

E-mail addresses: toni.laaksonen@fi.abb.com (T. Laaksonen), toni.jarimo@nokia.com (T. Jarimo), harri.kulmala@fimecc.com (H.I. Kulmala).0925-5273/$ - see front matter & 2008 Elsevier B.V. All rights reserved. doi:10.1016/j.ijpe.2008.07.029

˚ (Johanson and Mattson, 1987; Hakanson and Snehota, 1989; Blois, 1999). Even though this has made the phenomenon both empirically and theoretically structured and understandable, earlier research has not captured and reported the real financial value and benefits of interfirm trust incustomer–supplier relationships. The typical way to evaluate the benefits provided by trust has been quantitative questionnaires which do not take into account the real financial effects of interfirm trust (Fynes et al., 2005). Instead, the results of these questionnaires are dependent on the opinions of the respondent and thus, they do not necessarily illustrate the actual situation of the customer–supplierrelationship. In this paper, we provide empirical data regarding the potential benefits of interfirm trust in three different case relationships, which are part of an actual supply-chain. We complement earlier studies by measuring objectively the real financial value of interfirm trust experienced in different customer–supplier relationships using game theoretical approach. In practice, we show how a customercan reduce multi-supplier network’s costs by increasing trust. The managerial coordination target is comparable with the approach of Chiou et al. (2007), but the coordination is here directed towards optimisation of

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supplier base instead of pricing algorithms with retailers. This helps further...