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The Impact of Trust on the Mode of Transaction Governance between Manufacturer and Distributor: Evidence from Georgia

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Author(s): George BERULAVA | David LEZHAVA

Journal: Eurasian Journal of Business and Economics
ISSN 1694-5948

Volume: 1;
Issue: 2;
Start page: 1;
Date: 2008;
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Keywords: Georgia | trust | transaction costs | vertical integration | transactional relationships

ABSTRACT
The goal of the paper is to explore main determinants of the mode of transaction governance between manufacturers and distributors. We examine a number of types of transaction governance, viz., markets, relational transacting, and hierarchies. The model proposed in the paper integrates the concept of trust with key dimensions of transaction cost economics, being estimated with data from a sample of Georgian manufacturing industries. The main finding of the study is that trust along with traditional dimensions of transaction cost economics has a significant impact on the choice of exchange governance mode
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