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Reputation Flows: Contractual Disputes and the Channels for Inter-firm Communication

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  • William Pyle

Abstract

Inter-firm information exchange with respect to the reliability of trade partners may be unmediated in the sense that it involves direct communication between the personnel of two firms. Alternatively, this information flow may be channeled by or through an organization such as a trade association. We assess the relationship between these two mechanisms for conveying reputational information. Based on evidence from five transition countries, we find that trade associations??? role as informational intermediaries in this regard is sensitive to the geographic relationship between a potential supplier (demander) of reputational information and the firm whose behavior may be reported (acquired). What is more, the use of trade associations as conduits for reputation flows seems to be more strategic than the use of unmediated communication in that it is highly sensitive to the effects of market structure.

Suggested Citation

  • William Pyle, 2003. "Reputation Flows: Contractual Disputes and the Channels for Inter-firm Communication," William Davidson Institute Working Papers Series 2003-633, William Davidson Institute at the University of Michigan.
    • Handle: RePEc:wdi:papers:2003-633
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    More about this item

    Keywords

    reputation; transition; trade associations;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • P3 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions

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