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The role of trust and contract in the supply of business advice

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  • Robert J. Bennett
  • Paul J. A. Robson

Abstract

The use of legal contract and personal trust are compared in this paper for the relationships between clients and their different advisers who supply business advice. Personal trust between client and adviser is found to operate as an exclusive means to manage relational exchange only for social and family relationships. Using a sample survey of small and medium sized enterprises, results demonstrate that trust and legal contract are most commonly overlapping categories. Comparing different types of adviser, the level of trust, extent of legal contract, service intensity, service costs and client impact and satisfaction are each found to interact. There are major differences between suppliers, but except in the case of social and family relationships to advisers, higher reliance on trust alone is generally associated with lower levels of client impact and satisfaction received. The combination of trust with contract tends to be the route which is most associated with higher levels of client impact and satisfaction. Copyright 2004, Oxford University Press.

Suggested Citation

  • Robert J. Bennett & Paul J. A. Robson, 2004. "The role of trust and contract in the supply of business advice," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 28(4), pages 471-488, July.
    • Handle: RePEc:oup:cambje:v:28:y:2004:i:4:p:471-488
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    File URL: http://hdl.handle.net/10.1093/cje/beh021
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    Citations

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    Cited by:

    1. Bennett Robert J., 2016. "Management adaptation of business association services: long-term stability 1783-2012 and ‘change points’ for Irish chambers of commerce," The Irish Journal of Management, Sciendo, vol. 35(1), pages 58-73, April.
    2. Boxer, Rosie & Berry, Aidan & Perren, Lew, 2012. "Differing perceptions of non-executive directors’ roles in UK SMEs: Governance conundrum or cultural anomaly?," Accounting forum, Elsevier, vol. 36(1), pages 38-50.
    3. Kevin Mole & Robert Baldock & David North, 2013. "Who Takes Advice? Firm Size Threshold, Competence, Concerns and Informality in a Contingency Approach," Research Papers 0009, Enterprise Research Centre.
    4. Kevin Mole & David North & Robert Baldock, 2017. "Which SMEs seek external support? Business characteristics, management behaviour and external influences in a contingency approach," Environment and Planning C, , vol. 35(3), pages 476-499, May.
    5. Paola Valbonesi & Federico Biagi, 2016. "Incentivising Innovation and Adoption of ICT: ICT Innovation Voucher Programmes," JRC Research Reports JRC104057, Joint Research Centre.
    6. Praxmarer-Carus, Sandra, 2014. "Why the proposal of a complex contract may harm or foster a partner's trust," Journal of Business Research, Elsevier, vol. 67(7), pages 1421-1429.
    7. Zahid Ali & Ghulam Mustafa, 2023. "On Accounting Firms Serving Small and Medium‐Sized Enterprises: A Review, Synthesis and Research Agenda," Australian Accounting Review, CPA Australia, vol. 33(3), pages 313-332, September.
    8. Huo, Baofeng & Ye, Yuxiao & Zhao, Xiande, 2015. "The impacts of trust and contracts on opportunism in the 3PL industry: The moderating role of demand uncertainty," International Journal of Production Economics, Elsevier, vol. 170(PA), pages 160-170.
    9. Margareta Heidt & Jin P. Gerlach & Peter Buxmann, 2019. "Investigating the Security Divide between SME and Large Companies: How SME Characteristics Influence Organizational IT Security Investments," Information Systems Frontiers, Springer, vol. 21(6), pages 1285-1305, December.
    10. Nick Williams & Colin C. Williams, 2012. "Evaluating the socio-spatial contingency of entrepreneurial motivations: A case study of English deprived urban neighbourhoods," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 24(7-8), pages 661-684, September.
    11. Capelleras, Joan-Lluis & Mole, Kevin F., 2012. "How ‘buzz’ reduces uncertainty for new firm founders," MPRA Paper 38170, University Library of Munich, Germany.
    12. Perrons, Robert K. & Cosby, Tonya, 2020. "Applying blockchain in the geoenergy domain: The road to interoperability and standards," Applied Energy, Elsevier, vol. 262(C).
    13. Nikolova, Natalia & Möllering, Guido & Reihlen, Markus, 2015. "Trusting as a ‘Leap of Faith’: Trust-building practices in client–consultant relationships," Scandinavian Journal of Management, Elsevier, vol. 31(2), pages 232-245.
    14. Kevin Mole & Joan-Lluís Capelleras, 2018. "Take-up and variation of advice for new firm founders in different local contexts," Environment and Planning C, , vol. 36(1), pages 3-27, February.
    15. Nick Williams & Colin C Williams, 2011. "Tackling barriers to entrepreneurship in a deprived urban neighbourhood," Local Economy, London South Bank University, vol. 26(1), pages 30-42, February.
    16. Somosi, Agnes & Stiassny, Alfred & Kolos, Krisztina & Warlop, Luk, 2021. "Customer defection due to service elimination and post-elimination customer behavior: An empirical investigation in telecommunications," International Journal of Research in Marketing, Elsevier, vol. 38(4), pages 915-934.

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