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Information Cost, Learning, and Trust Lessons from Co-operation and Higher-order Capabilities Amongst Geographically Proximate Firms

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  • Mark Lorenzen

Abstract

In this short paper, I put forward an argument about trust based upon an information cost perspective. I argue that, in different contexts, different origins of trust come to dominate. This is so, because different possible origins of trust have a different information cost, and different contexts have different information availability. Agents learn about this, and place their trust accordingly. I provide an empirical example, and list some traits of information availability between geographically proximate firms. The information cost argument explains why a particular way of trusting is prevalent in some proximate ‘communities’ of agents.

Suggested Citation

  • Mark Lorenzen, 1998. "Information Cost, Learning, and Trust Lessons from Co-operation and Higher-order Capabilities Amongst Geographically Proximate Firms," DRUID Working Papers 98-21, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    • Handle: RePEc:aal:abbswp:98-21
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    References listed on IDEAS

    as
    1. Nicolai J. Foss, 1998. "Firms and the Coordination of KnowledgeSome Austrian Insights," DRUID Working Papers 98-19, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    2. Esben Sloth Andersen, 1998. "Escaping Satiation in an Evolutionary Model of Structural Economic Dynamics," DRUID Working Papers 98-9, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
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    Cited by:

    1. Katariina Ala-Rämi, 2006. "Communication and Distance in Collaboration between High-technology Enterprises in Northern Finland," European Planning Studies, Taylor & Francis Journals, vol. 15(8), pages 1047-1062, January.
    2. Peter Huber, 2003. "On the Determinants of Cross-border Cooperation of Austrian Firms with Central and Eastern European Partners," Regional Studies, Taylor & Francis Journals, vol. 37(9), pages 947-955.
    3. Kevin P. Heanue, 2008. "Measuring Industrial Agglomeration in a Rural Industry: The Case of Irish Furniture Manufacturing," Working Papers 0830, Rural Economy and Development Programme,Teagasc.
    4. Charles Edquist & Marie-Louise Eriksson & Hans Sjögren, 2002. "Characteristics of Collaboration in Product Innovation in the Regional System of Innovation of East Gothia," European Planning Studies, Taylor & Francis Journals, vol. 10(5), pages 563-581, July.
    5. Wilfried Altzinger & Peter Egger & Peter Huber & Kurt Kratena & Michael Pfaffermayr & Michael Wüger, 2000. "Teilprojekt 5: Transnationale Direktinvestitionen und Kooperationen," WIFO Studies, WIFO, number 19587, January.
    6. Masuku, Micah B. & Kirsten, Johann F., 2004. "The role of trust in the performance of supply chains: A dyad analysis of smallholder farmers and processing firms in the sugar industry in Swaziland," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 43(2), pages 1-15, June.
    7. Masuku, Micah B. & Kirsten, Johann F., 2004. "The role of trust in the performance of supply chains: A dyad analysis of smallholder farmers and processing firms in the sugar industry in Swaziland," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 43(2), pages 1-15, June.
    8. Peter Huber & Daniela Kletzan-Slamanig, 2001. "Unternehmenskooperationen mit den MOEL," WIFO Monatsberichte (monthly reports), WIFO, vol. 74(2), pages 103-110, February.
    9. Peter Huber & Daniela Kletzan-Slamanig, 2000. "Bestimmungsfaktoren der Integration von Unternehmen in internationale Netzwerke," WIFO Studies, WIFO, number 19531, January.

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    More about this item

    Keywords

    Trust; governance; information cost; organisational learning; industrial districts;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R39 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other

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